Like a lot of strong medicine, past federal dairy programs have cured some industry ills but caused some unpleasant side effects.
A group of dairy policy specialists from Missouri and Wisconsin want the industry to remember that as debate ramps up on dairy provisions for the 2012 Farm Bill. So they have produced a pair of reports, one an overview, the other in-depth, on the benefits and unintended consequences of past dairy policies.
"These reports are like the slip of paper that comes with a prescription drug," says Scott Brown, a dairy economist at the University of Missouri. "We list some of the side effects."
The reports are the product of the Dairy Policy Analysis Alliance, a partnership between the University of Missouri's Food and Agricultural Policy Research Institute and the University of Wisconsin-Madison Department of Agricultural and Applied Economics. Co-authors include Brown and UW-Madison agricultural economists Bob Cropp, Brian Gould and Ed Jesse.
The reports focus on what's been tried in the past, rather than delving into current policy proposals. Recent decades provide plenty of lessons about the strengths and weaknesses of various policy strategies, Brown notes.
"Dairy herd owners liked the whole-herd buyout program used in the 1980s to reduce milk supplies and raise milk prices. Beef producers didn't like all of those cows added to the meat supply," he says.
"Likewise, producers liked price supports, but if the price is set too high, the U.S. can collect surplus dairy products from around the world. Taxpayers didn't like owning warehouses full of cheese, butter and nonfat dry milk in the 1980s."
One of the reports, Dairy Policy Briefs, provides one-page descriptions of 11 key concepts: volatility, price supports, income loss, supply management, revenue insurance, trade, milk marketing orders, classifications, pricing and pooling. The other report, a 54-pager titled Dairy Policy Issues for the 2012 Farm Bill, goes beyond the basics.
The reports came out just in time. Rep. Collin Peterson (D-Minn), chair of the House Agricultural Committee, has already announced a series of hearings on the next Farm Bill and has called on commodity groups to join in the discussion.
Legislators have their work cut out. Producers are very concerned about price volatility (since the last Farm Bill was passed, the industry has seen some of its best and worst markets in the past half-century). But Congress is under tremendous pressure to limit spending.
"We've tried supply management and direct payments. All of these programs had costs," Brown points out.
The dairy policy reports can be downloaded at www.fapri.missouri.edu or http://future.aae.wisc.edu/alliance_index.html. A limited number of printed copies are available by contacting Scott Brown ([email protected] ) or Ed Jesse ([email protected]).