Analysis Shows Supply Management to Hurt Exports

US - Jon Davis, president and CEO of Davisco Foods International, followed up his recent testimony at a House Agriculture subcommittee hearing by providing IDFA's economic analysis of the Dairy Market Stabilization program. At the hearing, Ranking Member Dennis Cardoza asked to read the analysis, "A Look at Dairy Market Price Volatility and Options for Dairy Policy Reform," which concluded that data used in previous studies underestimates the programme's likely impact on US exports.
calendar icon 14 May 2012
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In his letter to Republican Tom Rooney, chair of the House Agriculture Subcommittee on Dairy, Livestock and Poultry, Davis pointed out that none of the studies or analyses conducted on the expected impact of supply management has looked at how dairy companies will fare.

"None of them consider how US dairy companies like ours will change how we look at export opportunities," Mr Davis said. "The stabilization programme will create significant market uncertainty and increase risk calculation for businesses that will discourage future long-term investments into new domestic facilities and new export markets."

At the hearing, Mr Davis relayed a potential South Korean customer's concern that US dairy companies wouldn't be reliable exporters if the United States implemented a supply management programme. In the letter, Mr Davis shared a similar story, reinforcing the growing reluctance of global customers to view US companies as committed suppliers of milk ingredients for export markets.

"It is clear that the world is watching to see which path we take, and the supply management debate in Congress is already influencing our existing and potential customers' views,” Mr Davis said.

Further Reading

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