U.S. Dairy at a Global Crossroads

Abstract

Current dynamics in world dairy markets and the potential for global and domestic trade policy reform are bringing the U.S. dairy sector to a new crossroads as it faces competitive forces from outside its borders. Those forces-demand for new products by consumers in industrialized countries, changes in technology, rapid economic growth in emerging developing countries, particularly in Asia, and the increasing role of multinational firms in domestic and global dairy markets-are leading to increased dairy consumption, more opportunities for dairy product trade, and foreign direct investment benefiting both U.S. consumers and producers. As global demand for milk and new dairy products expands, the roles of policies that support prices are diminishing, while the roles of flexibility and innovation aimed at improving competitiveness are growing.

Impact of market deregulation on the competitiveness of commercial milk producers in East Griqualand: a unit cost ratio (UCR) analysis: 1983–2006

“…Research has shown, however, that the benefits of government support are modest in the long-run, producer incentives are distorted (Pasour & Rucker, 2003:316) and producers are discouraged from pursuing new marketing opportunities (Blayney et al, 2006). Furthermore, taxpayers and consumers ultimately bear the costs of implementing such support programmes through higher food prices while the owners of specialised resources (e.g.…”

“…With increasing global demand for milk and new dairy products, emphasis on government support policies is diminishing while greater emphasis is being placed on flexibility and innovation to improve dairy industry competitiveness (Suzuki & Kaiser, 2005;Blayney et al, 2006). The South African (SA) dairy industry, previously regulated by the Marketing Act of 1937 (Act 27 of 1937) and later by the Marketing Act of 1968 (Act 59 of 1968), was gradually deregulated from the early 1970s, when legislation governing the colouring of margarine changed, and was completely deregulated following the promulgation of the Marketing of Agricultural Products Act of 1996 (Act 47 of 1996).…”

“…Competitiveness, however, also reflects gains in efficiency and international studies have found that deregulation acts to enhance rather than constrain the competitiveness of market participants over time by encouraging innovation (Cantwell, 2005), entrepreneurship (Stiroh & Strahan, 2003) and increased agricultural productivity (Doucouliagos & Hone, 2000;Blayney et al, 2006). This implies that in response to lower producer prices and increased cost pressure brought about by deregulation, milk producers may have become more innovative and efficient over time, producing milk at a lower total cost per litre.…”

Dynamic PEATSim Model: Documenting Its Use in Analyzing Global Commodity Markets

“…PEATSim is a simulator in the sense that it is a mathematical-based system that attempts to find analytical solutions to problems, given a set of parameters, data, and initial conditions. Previous versions of the PEATSim model have been used in numerous studies (see Blayney et al, 2006;Dyck et al, 2008;Langley et al, 2003Langley et al, , 2005Langley et al, , 2006Stillman et al, 2005;Zahniser et al, 2010;Valdes et al, 2010, Meade et al, 2010and Shane et al, 2009). For example, PEATSim was used to analyze global dairy markets, examine the effects of agricultural trade liberalization, estimate the effects of biofuels expansion on global agricultural production and trade, and analyze the impacts of biofuel mandates on worldwide grain, livestock, and oilseed sectors (see Peters et al, 2008Peters et al, , 2009Peters et al, , 2010and Stillman et al, 2007and Stillman et al, , 2008aand Stillman et al, , 2008b.…”

Tracing the evolution of the aggregate U.S. milk supply elasticity using a herd dynamics model

“…1 1 A more detailed description of the U.S. dairy industry and recent dairy policy can be found in Blayney (2002) and Blayney et al (2006). …”