Title: Can We Afford A Dairy Program
1Can We Afford A Dairy Program?
- The Road to the 2002 Farm Bill
Implications for Dairy - November 27-28, 2000
- Orlando, Florida
2Can We Afford A Dairy Program?
- What are international dimensions?
- Overview of world dairy production and trade --
how does the U.S. fit in? - International levels of support and protection
for dairy - Dairy and the WTO
- International issues for U.S. policy
3World Cows Milk Production
- U.S. output has exceeded worlds
- EU production declining
- Oceania output exploding
- U.S. production about 15 of world output
4World Dairy Trade, 1990-2000
- Butter exports fall
- Rapid growth in cheese, NFDM, WMP exports
- Russian butter, NFDM imports have fallen sharply
5Butter Exports, 2000
- 1990 shares-- U.S. 4-- EU 36-- Aus/NZ
40 - U.S. share ranged from 0 to 22
6NFDM Exports, 2000
- 1990 shares-- U.S. 1 -- EU 36-- Aus/NZ
34 - U.S. share fluctuated from 1 to 19
7Cheese Exports, 2000
- 1990 shares-- U.S. 2-- EU 58-- Aus/NZ
19 - U.S. share has steadily increased, but remains
small
8U.S. Dairy Exports, 1990-2000
9Support Levels by Commodity
10Dairy Support in Major Countries
11What Goes into the AMS?
- Direct payments tied to price or output
- Input subsidies
- Market price support based on high internal
prices generally maintained through border
measures Dairy Sugar Peanuts
12Dairy Support in the WTO
13Dairys Share of the AMS, 1997
14U.S. AMS and Dairy
15Export Subsidy Commitments
16U.S. WTO Notifications, 1998
17 Promise of Uruguay Round, 96 Farm Bill
- Declines in export subsidies, improved market
access - World prices, exports to strengthen
- 1996 Fair Act eliminated dairy price supports
- U.S. to become more competitive
18Where Did the Promises Go?
- Low U.S. milk prices
- Burgeoning NFDM stocks
- Price supports continued
- Traditional dairy exports flat
- NE Compact, direct dairy payments
19NFDM Net Removals vs. Exports
20EU Dairy Reforms Go Slowly
- Dairy reforms delayed under Agenda 2000
- Quotas enlarged slightly
- Small price reductions in 2005
- Multifunctionality?
21Domestic vs. International Affordability
- Continuing price support regime means large
contribution to AMS - Compacts are amber box
- Supply management is blue box but U.S. proposal
calls for elimination of blue box - Direct payments are amber but would be much
smaller than price support regime
22What About Exports?
- Can the U.S. be a competitive exporter under
present regime? - What are implications of no EU export subsidies?
- What are cost-benefits for U.S. dairy of moving
to more market oriented system?