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Dairy Facts 2016

New Report Suggests Framework for Evaluating Federal Milk Pricing

Feb 03, 2016

A report recently released by the National Academies Press, titled “A Framework for Assessing Effects of the Food System,” presents an analytical framework to assess the health, environmental, social and economic aspects of the U.S. food system. The report challenges researchers and policymakers to consider the consequences of food system policies and actions beyond a single dimension. IDFA believes that the development of a new analytical framework consistent with this report would be valuable to broaden the understanding of milk price regulation.

The report was written by a committee composed of academics in the fields of nutrition, public health, economics, food and agriculture from leading institutions across the country. The Food and Nutrition Board of the Institute of Medicine (IOM) appointed the committee in collaboration with the Board on Agriculture and Natural Resources of the National Research Council (NRC).

Meeting 21st Century Challenges

While it does not critique the U.S. food system, the report examines the system’s complexity and finds that most policy research does not consider all of the interconnections. To meet 21st century challenges to the U.S. food system, the authors recommend that food policies and practices be measured against this systemic framework. While no specific methodology is endorsed, optimal analysis of food policies should consider implications on health, environmental, social and economic implications, committee members said.

“Policies that aim for a particular outcome, such as an adequate fluid milk supply for the U.S. population, can have significant health, environmental and economic consequences in other domains, which our industry should examine,” said Ruth Saunders, IDFA vice president of policy and legislative affairs. “This report suggests that more needs to be done to evaluate the public costs and benefits of the Federal Milk Marketing Orders.”

Currently, the U.S. Department of Agriculture uses an econometric model of the U.S. dairy industry to classify and estimate milk prices to achieve equilibrium conditions for milk supply and demand. The USDA model is based on economic theory, but it does not include factors other than the components of milk and regional supply and demand.

The full report is online and available here.

For more information on the report, contact Saunders at

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