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Impact of Reducing Federal Order Class I Differential on Representative Texas and New Mexico Dairy Farms

Published online by Cambridge University Press:  05 September 2016

Joe L. Outlaw ,
Ronald D. Knutson ,
Robert B. Schwart Jr ,
John Holt ,
James W. Richardson  and
Dalton H. Garis
Joe L. Outlaw
Affiliation:
Department of Agriculutral Economics atTexas A&M University
Ronald D. Knutson
Affiliation:
Department of Agriculutral Economics atTexas A&M University
Robert B. Schwart Jr
Affiliation:
Department of Agriculutral Economics atTexas A&M University
John Holt
Affiliation:
Department of Agriculutral Economics atTexas A&M University
James W. Richardson
Affiliation:
Department of Agriculutral Economics atTexas A&M University
Dalton H. Garis
Affiliation:
Department of Food and Resource Economics at theUniversity of Florida
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Abstract

The General Accounting Office (GAO) recommended that the USDA substantially reduce or eliminate the extent of price discrimination practiced under federal milk marketing orders. The purpose of this study was to quantify the impacts of alternative means of implementing the GAO proposal on the economic viability of Texas and New Mexico dairy farms. Five dairy farms were simulated for six years under the current dairy policy and five alternative proposals. Results of the analyses indicate that large New Mexico dairies can remain economically viable under all of the alternatives. On the other hand, federal order policy changes would accelerate the loss of equity for moderate size Texas dairy farms.

Keywords

dairyfederal market orderClass I differential
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 23 , Issue 2 , December 1991 , pp. 19 - 28
Copyright
Copyright © Southern Agricultural Economics Association 1991

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