Tuesday, July 28, 2009

Dairy Supply Management Proposal

Sometimes when agricultural surpluses mount, people come up with supply management schemes. That's happening with dairy (which already has a voluntary dairy herd buyout program going), via Agweb:

"The Initiative would have three functions:

  • It would set national production levels consistent with national usage
  • Each cooperative would be assigned a production base level consistent with their share of national production
  • CMI would set target prices at levels that would enable their members to profitably produce milk".
I'm a bit sceptical of these ideas--people tried them before the New deal and the "free rider" problem was too big. But it might work for dairy, at least for a while, if coops can control their members.

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