United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2001-09-14 monographic deposited born digital 167 p. GA 1.13:GAO-01-866 https://www.govinfo.gov/app/details/GAOREPORTS-GAO-01-866 P0b002ee18038c890 f:d01866 DGPO 2010-08-12 2011-03-28 GAOREPORTS-GAO-01-866 machine generated eng fdlp REPORT GAOREPORTS-GAO-01-866 GAO-01-866 Agricultural programs Dairy products Farm income stabilization programs Price regulation Price supports Prices and pricing Food Stamp Program National School Lunch Program USDA Northeast Interstate Dairy Compact Special Supplemental Nutrition Program for Women, Infants and Children USDA New England Milk Marketing Order National School Breakfast Program USDA Milk Marketing Order Program USDA Norheast Milk Marketing Order Program Other Written Product A01786 U.S. dairy farmers produced 167.7 billion pounds of unprocessed, raw farm milk in 2000. Federal and state dairy programs influence the minimum prices to farmers for raw milk. These prices are based on how the raw milk is to be used. Minimum prices set for raw milk to be used for making drinking milk (fluid milk) are higher than those for milk used for manufacturing cheese, butter, and other dairy products. About 70 percent of the raw milk produced in the United States is regulated under the U.S. Department of Agriculture (USDA) federal milk marketing order program. The 1996 farm bill established another pricing program -- the Northeast Interstate Dairy Compact (NEDC) -- which is administered by a commission that sets a minimum price for raw milk sold as fluid milk in six New England states. The NEDC works in conjunction with federal and state dairy programs to establish an alternative minimum price for raw milk in the Compact states. When the monthly NEDC minimum price exceeds the federal marketing order or state minimum price, the NEDC price becomes the minimum price. Congress is currently considering legislation that would reauthorize and expand the NEDC and also establish additional interstate dairy compacts. This report reviews the potential economic impacts of different compact alternatives. It is likely that the NEDC has affected dairy sector indicators within the six New England states, but determining the extent to which it has done so is difficult. Although there is general agreement that the Compact was a factor in dairy sector indicators, there is disagreement over what portions of the increases can be attributed to the Compact because other factors, such as consumer demand and the costs of processing and marketing fluid milk, also affect retail prices. According to USDA, while the NEDC has not increased the federal government's net costs for its milk price support program, it may have increased the government's costs for one of its nutrition assistance programs--the Food Stamp Program. The 1996 farm bill requires that the Compact commission compensate USDA for any resulting increase in costs to the milk price support program. As of the end of fiscal year 2000, the Compact had compensated USDA a total of $3.2 million. GAO estimates that for 1999 the impacts of different dairy compact alternatives on farm-level prices, production, and revenue in other regions of the country would have increased as compacts increased in size and accounted for a greater portion of the nation's milk supply. The NEDC, which accounts for about three percent of the nation's milk supply, had a minimal impact on farm-level prices, production, and revenue in 1999. An expanded NEDC would have accounted for approximately 18 percent of the nation's milk supply in 1999, and the interregional impacts of this Compact would have been a little larger but still small in that year. An expanded NEDC in conjunction with a southern compact would have accounted for about 27 percent of the nation's milk supply, and its impacts would have been somewhat larger. The estimated impacts vary from region to region, and greater impacts are estimated to occur in those regions with higher levels of milk production and a larger share of raw milk being used to manufacture products such as butter and cheese. In 2000, national average farm-level milk prices were lower than they were in 1999, resulting in a larger difference between the NEDC's and USDA's minimum prices. Consequently, the NEDC would have greater economic impacts than in years when USDA's minimum prices were high. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-01-866/html/GAOREPORTS-GAO-01-866.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-01-866/pdf/GAOREPORTS-GAO-01-866.pdf GAO-01-866 https://www.govinfo.gov/app/details/GAOREPORTS-GAO-01-866 Other Written Product GAO-01-866; Dairy Industry: Estimated Economic Impacts of Dairy Compacts; Agricultural programs Dairy products Farm income stabilization programs Price regulation Price supports Prices and pricing Food Stamp Program National School Lunch Program USDA Northeast Interstate Dairy Compact Special Supplemental Nutrition Program for Women, Infants and Children USDA New England Milk Marketing Order National School Breakfast Program USDA Milk Marketing Order Program USDA Norheast Milk Marketing Order Program Public Law 104-127