Ag economists discuss dairy policy, Farm Bill
Leading ag economists discussed dairy policy during the Agricultural and Applied Economics Association’s annual meeting, held in Washington, D.C. The symposium “Whither Dairy Policy? Economics and Politics of New Dairy Programs,” was organized and moderated by Dr. Marin Bozic (University of Minnesota). Panelists included Dr. Bruce Babcock (Iowa State University), Dr. Scott Brown (University of Missouri), Dr. Andrew Novakovic (Cornell University) and Dr. Daniel Sumner (University of California–Davis).
John Newton, PhD candidate at Ohio State University, summarized analysis on the distributional effects of new dairy programs. In the recent paper, the authors reported 70% of expected dairy policy benefits would accrue to just 10% of dairy farms producing the majority of nation’s milk.
Brown stated that potentially billions of dollars could be spent on margin insurance in low-margin environments. One such scenario may be if an event shuts down dairy trade, and the domestic price of dairy products drop. The market stabilization program (DMSP), in tandem with margin insurance, is “stepping on the break and the accelerator pedal at the same time” to glide the markets to a better outcome, limiting government exposure, he said.
Novakovic, speaking on DMSP, remarked that it may impact farms of different sizes in different ways. In his opinion, the small and the very large farms are more resilient, while the “most punished” category would be farms with 250-1,000 cows. Read more ...