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Dairy Policy and the Next Farm Bill

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 Conference December 2005. What We’re Still Doing. Dairy Price Support Program

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Dairy Policy and the Next Farm Bill

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  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 Prepared by Andrew Novakovic

  2. What We’re Still Doing • Dairy Price Support Program • Milk Marketing Orders • Federal • State • Trade • Dairy Export Incentive Program • Market Access • Tariffs Prepared by Andrew Novakovic

  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 Prepared by Andrew Novakovic

  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? Prepared by Andrew Novakovic

  5. Trade Issues • DEIP • Ineffective • Too little • Too late • Likely to be abandoned for WTO • Trade Restrictions • See WTO • Don’t forget FTAs, including NAFTA Prepared by Andrew Novakovic

  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 Prepared by Andrew Novakovic

  7. Who is advocating what? • Current mood is • Wait and see • Budget • Doha • Economy (sales, costs, returns) • Politics (next election) • Don’t volunteer anything until you see • Something as good or better on the table • The “whites of their eyes” Prepared by Andrew Novakovic

  8. Don’t Expect Much to Happen Before 2007 Prepared by Andrew Novakovic

  9. Cornell Program on Dairy Markets and Policy For more information: http://www.dairy.cornell.edu Andrew M. Novakovic, Ph.D. Program Director, amn3@cornell.edu Mark W. Stephenson, Ph.D. Senior Extension Associate, mws5@cornell.edu Charles F. Nicholson, Ph.D. Senior Research Associate, cfn1@cornell.edu Angela M. Gloy, Ph.D. Research Associate, amg69@cornell.edu Prepared by Andrew Novakovic

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