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Dairy Stakeholders Lose Out Through Farm Bill

11 May 2012

US - Two dairy economists recently released intriguing reports on the dairy provisions of the 2012 Farm Bill issued last month by the Senate Committee on Agriculture, Nutrition and Forestry. The reports indicate that dairy stakeholders may not be getting their fair share of Farm Bill outlays and that the Dairy Market Stabilization programme included in the Farm Bill would have limited the milk supply to processors nearly one-fifth of the time over the last five years.

Andrew Novakovic is the E.V. Baker professor of agricultural economics in the School of Applied Economics and Management at Cornell University. Mark Stephenson is the director of dairy policy analysis at the University of Wisconsin. Together they provide an Information Letter series and occasional briefing papers on dairy policy developments for educators and industry.

In "The Challenge of the Congressional Dairy Baseline," Professor Novakovic notes that dairy's share of gross farm cash receipts projected for the next 10 years is 24 per cent, yet the projected share of government spending for dairy is "virtually undetectable" at 0.1 per cent.

"As Congress continues to look for that fair balance that levels the playing field, participants in the dairy industry could understandably question whether or not they are getting their fair share and just how much of their current, small baseline they should give up for the greater good," Professor Novakovic said.

In "Dairy Provisions of the Senate Agriculture Reform, Food and Jobs Act of 2012 – An Estimation of Farm-Level Impacts," Mr Stephenson and Professor Novakovic review what might have been had the supply management programme included in proposed Farm Bill been in place from 2007 to 2012.

The report shows that the Dairy Market Stabilization programme, which mandates supply management, would have been active for 16 months during January 2007 through December 2012. That means the programme would have been active about 19 per cent of the time.

"This frequent interruption of free markets is more than double the amount of time that was mentioned by Scott Brown at the House subcommittee hearing in April," said Jerry Slominski, IDFA senior vice president of legislative and economic affairs.

Mr Brown, assistant research professor at the University of Missouri, had estimated that the supply management programme would be triggered only 7.5 per cent of the time.

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