Wisconsin dairy farms have faced a number of significant challenges in recent years, including labor shortages, highly pathogenic avian influenza (HPAI), and trade disruptions. This project examines how federal milk policy, specifically the Federal Milk Marketing Order (FMMO) system, influences the way economic shocks reverberate through the dairy supply chain and affect both farmers and consumers. Using a well-established economic framework known as an equilibrium displacement model (EDM), the research will evaluate how shocks impact prices received by dairy farmers and prices paid by consumers. The project will compare outcomes under the current FMMO pricing system with a counterfactual open-market pricing regime to better understand how regulated milk pricing transmits economic disruptions throughout the dairy sector.

Findings from this research will provide insight into whether the FMMO system strengthens or limits the economic resilience of Wisconsin’s dairy industry and will help inform policy discussions around milk pricing, risk management, and consumer access to affordable dairy products. More broadly, the project will contribute to ongoing national conversations about the role of agricultural policy in promoting resilient food supply chains.

Dairy Innovation Hub funding supports the research effort and provides an opportunity for Agricultural and Applied Economics Ph.D. student Maddie Rutten to focus on this topic as part of her dissertation research. The project brings together collaborators from UW Extension (Leonard Polzin), USDA Agricultural Marketing Service (Tristan Hanon), CoBank (Corey Geiger), and policy advisors Emily Pliscott of the U.S. House Agriculture Committee and Mike Stranz of the National Farmers Union.