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Reports provide background for farm bill dairy debate

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 (FAPRI) 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 (brownsc@missouri.edu
) or Ed Jesse (evjesse@wisc.edu).