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Fair Dairy Policy

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  • DANIEL A. SUMNER
  • TOM COX

Abstract

Dairy policy in the United States has gone through many changes over the years, but the basic instruments have remained in place for decades. The Federal Agricultural Improvement and Reform (FAIR) Act of 1996 is best seen as a relatively small scale reform of dairy policy. Most of the income transfers from consumers and taxpayers to dairy farms remain intact, and the major economic distortions are unaffected. The major change from phasing out price support program is more one of form rather than substance. Some consider this a fundamental shift in U.S. dairy policy, but its quantitative impact is likely to be minor. Further, because dairy assessments associated with the price support are eliminated immediately, the net transfer from taxpayers to the dairy industry is likely to be higher than it would be if the price support program were left in place. This paper reviews the effects of this change and other dairy policy provisions in the FAIR Act and compares the implications of the new dairy program to implications of three alternatives: continuing the previous program, eliminating marketing orders and the price support program, and eliminating all policy interventions including import barriers.

Suggested Citation

  • Daniel A. Sumner & Tom Cox, 1998. "Fair Dairy Policy," Contemporary Economic Policy, Western Economic Association International, vol. 16(1), pages 58-68, January.
    • Handle: RePEc:bla:coecpo:v:16:y:1998:i:1:p:58-68
    DOI: 10.1111/j.1465-7287.1998.tb00500.x
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    1. Cox, Thomas L. & Chavas, Jean-Paul & Jesse, Edward V., 1994. "Regional Impacts of Reducing Dairy Price Supports and Removing Milk Marketing Orders in the U.S. Dairy Sector," Staff Papers 200580, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    2. Jesse, Edward V. & Cropp, Robert A., 1996. "Dairy Title: The Federal Agriculture Improvement and Reform Act of 1996," Marketing and Policy Briefing Papers 12722, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    3. Daniel A. Sumner & Christopher A. Wolf, 1996. "Quotas without Supply Control: Effects of Dairy Quota Policy in California," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 354-366.
    4. Chavas, Jean-Paul & Cox, Thomas L. & Jesse, Edward V., 1993. "Spatial Hedonic Pricing and Trade," Staff Papers 200574, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    5. Ippolito, Richard A & Masson, Robert T, 1978. "The Social Cost of Government Regulation of Milk," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 33-65, April.
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    1. Balagtas, Joseph Valdes & Sumner, Daniel A., 2004. "Milk Marketing Orders And Milk Sanitation Regulation: Re-Evaulating Marketing Orders' Welfare Effects," 2004 Annual meeting, August 1-4, Denver, CO 20399, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. de Gorter, Harry & Abbott, Philip C. & Barichello, Richard R. & Boughner, Devry S. & Bureau, Jean-Christophe & Choi, Jung-Sup & Coleman, Jonathan R. & Herrmann, Roland & Kramb, Marc Christopher & Shel, 2001. "Issues In Reforming Tariff-Rate Import Quotas In The Agreement On Agriculture In The Wto," Commissioned Papers 14617, International Agricultural Trade Research Consortium.

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