Dairy Programs:

Effects of the Dairy Termination Program and Support Price Reductions

OCE-93-1: Published: Jun 15, 1993. Publicly Released: Jun 15, 1993.

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GAO provided information on the estimated long-term consequences of the Dairy Termination Program (DTP) and other support price reduction initiatives on the government's purchases of excess dairy products.

GAO found that: (1) DTP and support price reduction initiatives are a cost-effective means of reducing the quantity and expense of government dairy support purchases and could reduce government purchases by about 10 billion pounds annually between 1988 and 2001, save the government $8.3 billion and consumers $3.3 billion in price supports, and result in net losses for producers totalling $2.3 billion; (2) although some DTP program participants will return to dairy production, they are not expected to significantly expand dairy production, and will do so with lower price supports and added health safety legislation; (3) although the DTP program has reduced government purchases, helped producers mitigate losses, and eased the transition to lower support levels, support price reductions are gradual, long-term, and permanent; (4) government purchases of excess dairy products are expected to remain near current levels for several years; (5) the government has substantially reduced its price support program costs due to general support price reductions and downward price adjustments in the government purchase price for butter; and (6) previous dairy price support reduction programs may not be adequate to reduce future excessive government purchases.

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