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Impact of Reducing Federal Order Class I Differential on Representative Texas and New Mexico Dairy Farms

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  • Outlaw, Joe L.
  • Knutson, Ronald D.
  • Schwart, Robert B.
  • Holt, John
  • Richardson, James W.
  • Garis, Dalton H.

Abstract

The General Accounting Office (GAO) recommended that the USDA substantially reduce or eliminate the extent of price discrimination practiced under federal milk marketing orders. The purpose of this study was to quantify the impacts of alternative means of implementing the GAO proposal on the economic viability of Texas and New Mexico dairy farms. Five dairy farms were simulated for six years under the current dairy policy and five alternative proposals. Results of the analyses indicate that large New Mexico dairies can remain economically viable under all of the alternatives. On the other hand, federal order policy changes would accelerate the loss of equity for moderate size Texas dairy farms.

Suggested Citation

  • Outlaw, Joe L. & Knutson, Ronald D. & Schwart, Robert B. & Holt, John & Richardson, James W. & Garis, Dalton H., 1991. "Impact of Reducing Federal Order Class I Differential on Representative Texas and New Mexico Dairy Farms," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 23(2), pages 19-28, December.
    • Handle: RePEc:cup:jagaec:v:23:y:1991:i:02:p:19-28_01
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    1. Pratt, James & Keniston, Maura & Novakovic, Andrew, 1989. "Geographic Price Relationships In The U.S. Fluid Milk Industry: A Mathematical Programming Analysis," 1989 Annual Meeting, July 30-August 2, Baton Rouge, Louisiana 270486, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Pratt, James & Keniston, Maura & Novakovic, Andrew, 1989. "Geographic Price Relationships in the U.S. Fluid Milk Industry: A Mathematical Programming Analysis," Staff Papers 197573, Cornell University, Department of Applied Economics and Management.
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    Cited by:

    1. Wackernagel, Rick, 1998. "Potential Economic Impacts Of The Northeast Interstate Dairy Compact On Vermont Dairy Farms," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(1), pages 1-10, April.

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