Economic Issues and Implications of a United States Milk Quota Program

Abstract

Interest in adoption of a national mandatory milk quota program has grown considerably in the last 2 yr primarily due to mounting dairy surpluses and burgeoning costs of the dairy price support program. If this type of program were to be adopted, all segments of the dairy industry would be affected. This article examines the potential economic issues and implications of such programs on current and future generations of dairy farmers, milk handlers, government, and consumers. In part, it is argued that a national mandatory milk quota program would most likely raise farm milk prices, reduce milk surpluses, provide windfall gains to current producers, reduce government budgetary costs, increase retail prices for consumers of dairy products, increase costs of production, encourage the use of substitutes for dairy products, and slow adoption of new technologies by farmers. Although the political climate in Congress and the Administration is not very receptive, support for these programs has grown during the past year among farmers and the dairy lobby. At the very least, there undoubtedly will be political pressure for a national mandatory milk quota program in the near future.