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Supply Management Could Raise Prices

16 April 2012

US - A new analysis from the American Enterprise Institute (AEI) says supply management initiatives currently being discussed as part of the Farm Bill would be detrimental to US interests.

The paper, “Market Structure and Competition in the US Food Industries: Implications for the 2012 Farm Bill,” concludes that a dairy supply-management programme proposal introduced in both the House and Senate would increase consumer prices, increase milk production costs and diminish the competitiveness of US dairy products in the world market.

The paper examines the potential impact of several current initiatives designed to expand regulation of the food industries with the goal of increasing competition and the commodity prices farmers receive.

According to AEI, many of these initiatives will probably have the unintended consequences of raising consumer prices and lowering farmers’ prices while reducing the quality and variety of food products available to consumers.

The International Dairy Food Association (IDFA) opposes the government-mandated supply management program introduced by Representative Collin Peterson in the Dairy Security Act, H.R. 3062. IDFA also opposes efforts to include this act in the upcoming Farm Bill.

“The American Enterprise Institute is another in a growing list of think tanks that are opposed to the Peterson bill," said Jerry Slominski, IDFA senior vice president for legislative affairs and economic policy. “They obviously share our concern about policies that will limit our ability to create jobs and to allow producers to grow their businesses."

The report was written by Richard Sexton, professor of agricultural and resource economics at the University of California-Davis, and Tina Saitone, a post-doctoral economics scholar at the university. AEI is one of the oldest and most influential conservative think tanks in Washington, D.C., with a focus on free markets and smaller government.

Further Reading

- You can view the full report by clicking here.

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