Rethinking Dairyland: Background for Decisions about Wisconsin's Dairy Industry; Growing Wisconsin Dairying: Is Liberalized International Trade the Answer?

William D. Dobson

No 12701, Marketing and Policy Briefing Papers from University of Wisconsin-Madison, Department of Agricultural and Applied Economics

Abstract: The Uruguay Round World Trade Organization (URWTO) agreement and the North American Free Trade Agreement (NAFTA) created both benefits and costs for dairy farmers. The URWTO agreement benefits include border protection that helped to keep U.S. prices for cheddar cheese, butter, and nonfat dry milk 40 percent, 78 percent and 36 percent, respectively, higher than world prices during 1995-2001. Wisconsin's dairy industry benefited from expansion of dry whey and lactose exports under the URWTO agreement. Costs under the complex agreement included an unanticipated increase in milk protein concentrate (MPC) imports. Benefits under the NAFTA include the scheduled elimination of Mexico's tariffs on major imports of U.S. dairy products by 2003. Over the longer-run, the more important benefits and costs produced by trade agreements may be those related to changes in the business environment for the U.S. and Wisconsin dairy industries. The URWTO agreement has encouraged U.S. dairy exporters to focus on (a) products not priced out of international markets by border protection and the USDA's dairy price support program and (b) highly differentiated products. Because the changed environment provides incentives for expanded exports of dry whey, lactose, and specialty cheeses, it should generate benefits for Wisconsin's dairy industry. Much as predicted by proponents of free trade, the NAFTA has made Mexico's dairy companies stronger competitors. This will limit gains in dairy product market share by U.S. firms. However, this development will create opportunities for U.S. and Wisconsin companies to supply genetics, dairy equipment, and technical services for Mexico's dairy industry.

Keywords: Agricultural and Food Policy; International Relations/Trade; Livestock Production/Industries (search for similar items in EconPapers)
Pages: 20
Date: 2002
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/12701/files/mp02078e.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:waaebp:12701

DOI: 10.22004/ag.econ.12701

Access Statistics for this paper

More papers in Marketing and Policy Briefing Papers from University of Wisconsin-Madison, Department of Agricultural and Applied Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().