Regulation and Protectionism under GATT: Case Studies in North American Agriculture

By Andrew Schmitz; Garth Coffin et al. | Go to book overview

6
Regulation -- The US Dairy Industry
J. L. Outlaw and R. D. Knutson
Abstract
In the spirit of the General Agreement on Tariffs and Trade ( GATT), the US dairy industry is developing a new mindset toward becoming internationally competitive. While the 1995 Farm Bill may not eliminate US dairy programs, substantial restructuring is possible. Reduced levels of government support are an integral part of that strategy. The result is a massive restructuring of US milk production patterns into a more efficient configuration. This contrasts directly with the Canadian strategy of supply management with high supports. Implications of the US strategy for the Canadian dairy industry are explored.
Introduction
Insulated from the world market for decades, the US dairy existed as two quite separate, structural segments:
◆ A large farm, drylot dairying sector (500 cows and up) located primarily in the West, Southwest and Florida.
◆ A small and moderately sized farm sector (less than 70 cows) centered in the Northeast quadrant bounded by Minnesota, Missouri, Kentucky and Maryland.

Production in the drylot sector progressively increased, but few recognized the efficiency advantages held by these farms. Instead, there was extensive denial of the changing economic dimensions of milk production and its potential implications. This was possibly because the structure of the moderately sized farm sector was insulated to a degree from structural change due to a relatively high and stable milk price supported by the federal government.

The high level of support collapsed in the mid 1980s as a victim of overproduction and high government costs. Rejecting the option of

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Regulation and Protectionism under GATT: Case Studies in North American Agriculture
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Acknowledgments vii
  • About the Editors and Contributors ix
  • Section One - Overview of the Effects of Gatt 1
  • 1 - Itroduction: Trade and Regulations in Transition 3
  • References 18
  • 2 - Post-Gatt Assessment of the World Marketplace 20
  • Notes 35
  • 3 - Consequences of Tariffication 37
  • References 50
  • 4 - Supply Management Under Minimum Import Access Requirements 51
  • Notes 62
  • References 62
  • 5 - Imports into Canada: Why Have They Remained Low? 64
  • Notes 76
  • References 77
  • Section Two - Case Studies of Gatt's Effects 79
  • 6 - Regulation -- the Us Dairy Industry 81
  • References 94
  • 7 - Cost Competitiveness in the Canadian and Us Dairy Industries 96
  • Notes 115
  • References 116
  • 8 - Supply Management and Vertical Coordination: the Role of Cooperatives 118
  • Notes 126
  • References 127
  • 9 - Value-Added Economic Potential 128
  • Notes 145
  • References 146
  • 10 - Tobacco Supply Management: Examples from the United States and Australia 147
  • References 158
  • 11 - Gatt and the Us Peanut Market 160
  • Notes 178
  • References 179
  • 12 - The Us Sugar Industry: the Free Trade Debate 180
  • Notes 199
  • References 201
  • Section Three - Regulation and Supply Management 203
  • 13 - Supply Management Canadian Style 205
  • Notes 221
  • References 223
  • 14 - Power Relationships in the Political Process 226
  • Notes 241
  • References 244
  • 15 - Provincialism: Problems for the Regulators and the Regulated 245
  • References 267
  • 16 - Provmcial Versus Centralized Pricing: Protectionism and Institutional Design 269
  • References 283
  • 17 - Venturing into the Political Market 284
  • Notes 296
  • 18 - Vertical and Horizontal Coordination 299
  • Notes 312
  • References 313
  • 19 - Will the Supply Management Cartel Stand? 314
  • Notes 330
  • References 330
  • About the Book 332
  • Index 333
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