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Proposed Dairy Policy May Have Hidden Costs

Last updated on September 6th, 2012 at 11:27 am

A new study of the impacts of proposed dairy policy legislation on federal nutrition programs has found millions of dollars in hidden costs. Behind typical estimates of the price of the National Milk Producers Federation’s Foundation for the Future dairy policy ­proposal are large and unintended additional taxpayer costs, ­reductions in the effectiveness of federal nutrition programs and reduced access to the programs for low-income women and ­children.

The study, commissioned by the International Dairy Foods Association and conducted by a Ph.D. economist at M + R Strategic Services, found that, had the program been in place in 2009, more than 178,000 qualifying participants would have lost access to the already strained Women, Infants and Children (WIC) program, unless $92 million more in spending was appropriated. The proposals also would have affected USDA’s donation programs for food banks and senior centers.

“With one in six Americans currently living in poverty, we need a cost-effective federal safety net more than ever,” said Connie Tipton, president and CEO of IDFA. “This report shows that Foundation for the Future and Rep. Collin Peterson’s proposal would impose unnecessary hidden costs on taxpayers and would ­significantly reduce our nation’s ability to help those who are most in need.”

Using the Food and Agricultural Research Policy Institute (FAPRI) analysis of the Dairy Market Stabilization Program and the NMPF estimate of the effect of its proposed changes to Federal Milk Marketing Orders on (beverage) milk prices, the report found that the hidden costs of the proposal’s price increases on the federal nutrition assistance programs and their beneficiaries would have totaled $655 million in 2009 alone. Taxpayers also would have been hit with a previously unrecognized $379 million increase in federal spending triggered by mandatory inflationary adjustments in the nutrition programs.

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