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Dairy Imports: How Serious a Threat?¹

Department of Agricultural Economics, Purdue University, West Lafayette, IN 47907

ABSTRACT

The consequences of the current Multilateral Trade Negotiations for future U.S. trade policy cannot be foreseen with certainty, but increased dairy imports may be one result of the talks. In this study, the effects of "normal," "twice normal," and "high" manufactured milk product imports on the U.S. dairy industry are estimated. The impact on the price and production of raw milk, production per cow, and dairy herd size is discussed. Although increased imports are associated with lower prices which discourage production and herd size, much larger than historically "normal" imports are required to bring about a substantial impact upon the dairy industry over a long time.

¹ Journal Paper No. 7244, Indiana Agricultural Experiment Station. This article is based on research from Novakovic's M.S. thesis.