Dairy Policy and the Next Farm Bill

1
Dairy Policy and the Next Farm Bill

• Andrew M. Novakovic
• The E.V. Baker Professor of Agricultural
  Economics
• and
• Director of the Cornell Program on Dairy Markets
  and Policy
• Presented to the
• Agribusiness Outlook ConferenceDecember 2005

2
What Were Still Doing

• Dairy Price Support Program
• Milk Marketing Orders
• Federal
• State
• Trade
• Dairy Export Incentive Program
• Market Access
• Tariffs

3
Dairy Price Support Issues

• The level unchanged since 1989 (9.90/cwt,
  manufacturing class milk)
• Not likely to change
• Budget
• WTO
• Issue of the tilt between butter and skim milk
  powder
• Last vestige of support?
• Misalignment with market
• Export more SMP
• Without consequence for butter

4
Milk Marketing Issues

• Product Price Formulas
• Adjust make-allowances?
• Number of classes?
• Class I differential alignment (cf.
  transportation costs)
• Classification of new products
• Pooling standards and issues
• Tighten up access from long distance supply
• Producer-Dealer exemption
• The CA Problem?

5
Trade Issues

• DEIP
• Ineffective
• Too little
• Too late
• Likely to be abandoned for WTO
• Trade Restrictions
• See WTO
• Dont forget FTAs, including NAFTA

6
What Else?

• Is MILC dead?
• Since 30 September 2005
• Some effort to restore it
• Wrap into larger Counter Cyclical Payment program
  in 2007?
• Payment limits are a BIG political issue for this
  program
• Budget is a BIG practical issue for this program

7
Who is advocating what?

• Current mood is
• Wait and see
• Budget
• Doha
• Economy (sales, costs, returns)
• Politics (next election)
• Dont volunteer anything until you see
• Something as good or better on the table
• The whites of their eyes

8
Dont Expect Much to Happen Before 2007
9
Cornell Program on Dairy Markets and Policy

• For more information
• http//www.dairy.cornell.edu
• Andrew M. Novakovic, Ph.D.
• Program Director, amn3_at_cornell.edu
• Mark W. Stephenson, Ph.D.
• Senior Extension Associate, mws5_at_cornell.edu
• Charles F. Nicholson, Ph.D.
• Senior Research Associate, cfn1_at_cornell.edu
• Angela M. Gloy, Ph.D.
• Research Associate, amg69_at_cornell.edu