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An Analysis of Policy Alternatives to the Dairy Price Support Program

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  • Kaiser, Harry M.

Abstract

This paper investigates the impacts of alternative federal dairy policies on the U.S. dairy sector. In addition to the current dairy price support program, five alternatives are investigated: (1) immediate deregulation, (2) gradual deregulation, (3) target price-deficiency payment program without supply control, (4) target price-deficiency payment program with supply control, and (5) mandatory supply control. An econometric model of the national dairy industry is used to simulate quarterly equilibrium price and quantity values at the farm and wholesale levels for each policy over the period 1980–90. Consumers are better off under both immediate and gradual deregulation, as well as the target price-deficiency payment scenarios because prices are lower, enabling them to consume more dairy products. Farmers, as a group, are better off under the two target price-deficiency payment program and supply control scenarios, where milk prices and producer surplus are highest.

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  • Kaiser, Harry M., 1994. "An Analysis of Policy Alternatives to the Dairy Price Support Program," Agricultural and Resource Economics Review, Cambridge University Press, vol. 23(2), pages 158-170, October.
    • Handle: RePEc:cup:agrerw:v:23:y:1994:i:02:p:158-170_00
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    References listed on IDEAS

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    1. Jeffrey T. LaFrance & Harry de Gorter, 1985. "Regulation in a Dynamic Market: The U.S. Dairy Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(4), pages 821-832.
    2. Blaylock, James R. & Blisard, William N., 1990. "Effects of Advertising on the Demand for Cheese, January 1982-June 1989," Staff Reports 278346, United States Department of Agriculture, Economic Research Service.
    3. H. E. Doran & J. J. Quilkey, 1972. "Harmonic Analysis of Seasonal Data: Some Important Properties," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(4_Part_1), pages 646-651.
    4. Bruce L. Dixon & Calvin R. Berry & Dwi Susanto, 1991. "Supply Impact of the Milk Diversion and Dairy Termination Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 633-640.
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    1. Nicholson, Charles F. & Resosudarmo, Budy & Wackernagel, Rick, 2001. "Impacts of the Northeast Interstate Dairy Compact on New England Milk Supply," Agricultural and Resource Economics Review, Cambridge University Press, vol. 30(1), pages 93-103, April.

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