Alternatives To Reduce Dairy Surpluses

Federal dairy policies and programs are designed to ensure an adequate milk supply, but the U.S. dairy industry has continually produced more milk than can be marketed commercially at established market prices. The surplus is purchased by the government in the form of dairy products such as cheese and butter. The dairy price support program uses parity price as the standard for determining the support level and is considered to be the principal cause of surpluses. Its object is to set a support price that will: (1) ensure an adequate supply of milk to meet current needs; (2) reflect changes in production costs; and (3) ensure a level of farm income adequate to maintain productive capacity sufficient to meet anticipated future needs. A study was made to evaluate the strengths and weaknesses of existing federal programs and the consequences of possible new programs for controlling or minimizing surpluses.