Be Careful About Government Intervention for Dairy Solutions
Mar 11, 2011
Let’s consider fixing our current dairy programs before we put more layers of government control on our farmers.
By Bob Topel
Do dairy farmers really need more government intervention?
Volatile milk prices along with high feed costs have created unprecedented challenges for dairy farmers in the past two years. As we search for solutions and consider changes to federal dairy policy, we should make sure proposed changes will be in the best interest of the dairy industry long term.
Every government program has unintended consequences and a supply management program will be no different. How will supply management affect our growing export market and will it encourage more imports? Will supply management affect domestic consumption by encouraging food processors to use more imitation ingredients?
When looking at the collapse of the dairy prices in 2009, we find it was triggered by the financial crisis and not overproduction here in the United States. Is more government intervention going to solve our problems? Many think we need to simplify our current dairy policy and not develop yet another layer of government programs for the dairy industry.
Some of the current programs, like the dairy price support program, may in fact do more harm than good for our industry. This program makes us unreliable as a supplier to the world market as well as hampers new product development by the U.S. dairy manufacturers. Another suggestion is that a two-class system, with prices being determined by competitive pay, may encourage competition in the marketplace and be a better price discovery mechanism for pricing milk.
Once again, these programs were well intended, but there were unintended consequences once implemented. A September 2010 study by Informa raises some additional questions on just how effective supply management has been in the European Union and Canada.
As a dairy farmer, I think we need to be very careful in what we ask for. I know there is a real sense of urgency to do something, but we need to be careful in what we ask for because there are always unintended consequences from government programs. Let’s consider cleaning up and simplifying our current dairy programs before we put more layers of government control on our farmers.
Bob Topel is a Wisconsin dairy producer. Contact him at email@example.com or 920-478-4509.