The Real World of Dairy Policy

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The Real World of Dairy Policy

• Hal Harris, Clemson University
• Dairy Economists Workshop
• Reno, Nevada
• October 2001

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Objectives
Outcomes
Methods
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Rhetoric Versus True Objective

• Ex. Save the Family Farm

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• Who Benefits from Farm Programs?

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Dairy Politics

• Electoral/Legislative
• Administrative/Regulatory
• Internal Leadership

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Us Academics are on the Sidelines

• Testimony
• Research/Extension Reports
• Specific Work with Industry and Public Groups

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University Role

• Unbiased Research/Analysis
• Alternatives and Consequences
• Facilitate the Process

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30-Year History of Dairy Policy-Making
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• 1970s early 80s Industry Could Get What it
  Wanted
• Zenith in 1976-77

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Industry won campaign promise from J. Carter. As
a result, Congress passed and Carter signed a
bill mandating

• Support price at 80 of Parity, Semiannual
  Adjustments

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Bad Economics

• Set in Motion Structural Upheaval
• Annual Fixes for the Surplus Problem

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• Cost of Program Forced a True Fix Lower Support
  Price

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• Result A Market Driven Industry

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• Can the Industry Do Better?

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Perception

• Welfare Queen or Hungry Child?

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Bucolic, Pastoral, Family Farmor

• Corporate Agriculture
• Polluters of Environment
• Bickering Backstabbers

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Reality

• Family Farms
• A Great Deal of Industry Distress
• Tremendous Structural Upheaval
• Within Regions
• Between Regions
• Extremely Modest Program Cost
• No Serious Distortions to Market
• Big Discrepancy in Taxpayer Support

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Dairy Policymakers Then

• Congress
• Co-ops/Producers
• Federal Order System
• Processors

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University Support Then
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Leadership/Followship
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Congress Then

• Bottom-up Power
• Subcommittees Dominated
• Chairs Stable
• Bipartisan Policy not Politics

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Congress in 1996

• Top Down Power

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Congress Now

• House Ag Combest, Chair
• Senate Ag Harkin, Chair
• House Approp. Young, Chair
• House Livestock Pombo, Chair
• House Ag Approp Bonilla, Chair

• Stenholm, Ranking Dean
• Lugar, Ranking Rep
• Obey, Ranking Dean
• Peterson, Ranking Dean
• Kaptur, Ranking Rep

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The Economy Then

• Inflation, High Interest Rates
• Domestic Dominated
• Deficits Expected

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The Economy Now

• No Inflation, Low Interest Rates
• Global Economy
• More Complex
• Low, Stable Grain Prices
• Budget Surplus Disappearing
• Dichotomy Between Crops Livestock

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Money Then

• Dairy Spent More than all Other Ag Combined

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Now??

• Less Money
• Spent at Cross Purposes

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• Regional Dominance to Regional Cleavage
  Dissensus

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• Regionalism
• Lack of agreement, Punted Policy back to
  Government
• Lack of Unity
• Who Are Our Allies?

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• Structural Issues/ Payment Limits

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• Green Payment Alliances Are Here! Just like 86

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• Payment Envy

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• Pareto Optimal Rule Does Not Apply to Dairy

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(No Transcript)
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• Dairy Still has Clout!