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Whither Dairy Policy? Evaluating Expected Government Outlays and Distributional Impacts of Alternative 2013 Farm Bill Dairy Title Proposals

John Newton, Cameron Thraen () and Marin Bozic

No 153750, 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. from Agricultural and Applied Economics Association

Abstract: In this analysis we compare the total expected government outlays and distribution of benefits under newly proposed dairy margin insurance programs to those under existing counter-cyclical payment programs. We combine simulation and structural modeling techniques to forecast milk price and dairy income-over-feed-cost margins. Using the price forecasts we employ Monte-Carlo experiments to evaluate the total expected government outlays for a sample of 5000 representative farms given a constant relative risk aversion utility framework. We find that expected outlays favor large farm operations and are an order of magnitude higher than those under existing programs. Under the current policy framework (MILC), farms with less than 100 cows (76% of farms) account for 42% of net payments and farms over 1000 cows (2% of farms) account for 6% of net payments. Under the new policy regime farms with fewer than 100 cows will get 17-21% of net program benefits, and farms over 1000 cows will get 36-43% of benefits.

Keywords: Agribusiness; Agricultural and Food Policy; Demand and Price Analysis; Farm Management; Livestock Production/Industries; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 30
Date: 2013
New Economics Papers: this item is included in nep-agr, nep-for, nep-ias and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea13:153750

DOI: 10.22004/ag.econ.153750

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