Taxpayers Would Pay More, Get Less Return

(Washington, D.C., September 18, 2011) 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 would also have affected USDA's donation programs for food banks and senior centers. An estimated 50 million fewer pounds of cheese would have been available to the commodity distribution programs had the policies been in place in 2009.

“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.

“The increased costs to the federal government are several times larger than any alleged budgetary savings from the Foundation for the Future," noted Tipton. “NMPF is asking Congress to shift the costs of their proposal onto our nation’s consumers, but they apparently forgot that our government buys a lot of milk.”

The full study, "Impact of NMPF’s Price-Enhancing Dairy Policy Proposals on Federal Nutrition Programs: How the Proposals Would Increase Taxpayers Costs and Reduce Program Purchasing Power," is available here.

# # #

The International Dairy Foods Association (IDFA), Washington, D.C., represents the nation's dairy manufacturing and marketing industries and their suppliers, with a membership of 550 companies representing a $110-billion a year industry. IDFA is composed of three constituent organizations: the Milk Industry Foundation (MIF), the National Cheese Institute (NCI) and the International Ice Cream Association (IICA). IDFA's 220 dairy processing members run more than 600 plant operations, and range from large multi-national organizations to single-plant companies. Together they represent more than 85% of the milk, cultured products, cheese and frozen desserts produced and marketed in the United States. IDFA can be found online at www.idfa.org.