Creating viable dairy policy isn't easy, farm economists say

Coming up with a solid dairy policy is one of the biggest challenges in agricultural policy, for several reasons, Harwood D. Schaffer and Daryll E. Ray of the University of Tennessee write in their latest "Policy Pennings" column.

For one thing, milk is a perishable product with a short shelf life, which makes for a shorter marketing window than many other agricultural products. And as more dairy processors declare bankruptcy or consolidate, many dairy farmers have only a single buyer. "For the most part farmers who are selling milk are not in a competitive market where they can seek out the highest price. They are in a take-it-or-leave-it situation," Schaffer and Ray write.

Also, because it's easier to increase capacity and production in dairy than it is for row crop growers (just keep the cows alive a little longer and milk them more), it's easy to flood local markets with milk products. That leaves smaller dairy farmers especially vulnerable to being unable to find buyers because of supply chain economies of scale, they write. 

Read more here.