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GAO discussed federal dairy policy, focusing on: (1) dairy industry changes since the original enactment of federal dairy legislation; (2) federal involvement in the dairy industry; and (3) federal programs' effects on milk supplies. GAO noted that: (1) annual milk production per cow has grown from about 4,500 pounds in 1930 to about 14,200 pounds in 1988, due to advances in technology, better management, and improved breeding; (2) between 1930 and 1988 the average herd size increased from 5 to 46, the cow population declined from 22.2 million to 10.2 million, and the number of dairy farms decreased from about 4.5 million to about 220,000; (3) in 1988 the upper Midwest accounted for 28 percent of U.S. milk production, the Southwest accounted for 14.9 percent, and the Corn Belt accounted for 20 percent; (4) the federal government established programs intended to control the surplus and reduce the amount of milk farmers marketed, but those efforts achieved only temporary success; (5) Congress passed legislation in 1985 which instituted a supply-demand adjuster, but suspended the adjuster in 1988 due to a drought; and (6) federally guaranteed purchases of all production and increased price supports increased milk production, despite accumulating dairy surpluses.

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