Attachments 3h, 3i, 3j and 3k were.prepared by James Putnam II of First Pioneer Farm Credit. They provide first for an assessment of the over-order producer payments in the context of farm earnings on the “typical” New England dairy farm with slightly fewer than 100 cows, based on the organization’s financial data base as well as NASS statistics about “typical” farms. The tables establish that the producer payments stabilized farm cash flow and enhanced net farm income so as to allow many farms to operate in the black instead of the red for extended periods of time.
In 1997, when milk prices were low and the price regulation was in effect for only half of the year, the over-order producer payment on the typical farm was $6,807. This represented nearly 40 percent of the net farm earnings, although it was not quite enough to cover family living expenses and taxes. (Attachment 3h).
In 1998, when milk prices were higher, the over-order payments did not play as significant a role. The typical farm had actual net earnings, after meeting family living expenses, of nearly $21,000. In this year, the over-order payments amounted to $3,768 on the typical farm. (Attachment 3i).
By
marked contrast, in both 1999 and 2000, the over-order producer payments made a
significant difference between operating in the black or in the red on the
typical New England dairy farm. In
1999 the actual net earnings of the typical farm would have been a loss of
($4,142) without the over-order producer payment of $7,734. Because of the
payment, the average net earnings rose emerged just in the black, in the amount
of $3,593. (Attachment 3j).
In 2000 the net earnings would have been ($14,800) without the over-order
payments, but the net earnings rose to $395 with the payment of $15,195.
(Attachment
3k).