U.S. Dairy Policies Should Be Pro-Exports, Not Anti Imports

Rallying dairy farmers in opposition to imports of dairy products has been a focus of many politicians and often a means of energizing farmers to become active in political and legislative affairs.
But the conditions that made this strategy a staple of dairy debates have shifted dramatically. Dairy farmers and most manufacturers will do far better by increasing exports than by fighting imports.  
In 2002, the fear of increased dairy imports led to contentious debates during consideration of the Farm Bill. But now, just five years later, U.S. dairy exports have doubled while imports are declining. Even more importantly, dairy exports are likely to continue to grow — indefinitely and by significant amounts. These facts call out for clear, consistent, pro-export policies as opposed to the anti-import efforts of the past.
Dr. Ken Bailey, associate professor of agricultural economics at Penn State, has estimated the total amount of dairy solids imported and exported since 2001, the year before the 2002 Farm Bill. His data, which confirms this pattern of soaring exports and declining imports, supports these arguments for new, export-oriented dairy policies.  
The policies necessary to continue this positive trend are in stark contrast to some of the unfortunate proposals before the Congress this year, including the Dairy Import Assessment. This proposal would impose a 15-cent per hundredweight equivalent assessment on all imported dairy products, which would go to the dairy farmer national advertising program. The groups overseeing the program would gain about $12 million with the import assessment, but would place at risk the $1.89 billion of dairy exports, which could double or triple in the next five years.
The Dairy Import Assessment was passed in 2002, but the law required the Bush administration to implement the new law only if it was consistent with our international trade obligations.  The administration found the new law violated U.S. trade commitments and, therefore, it was not implemented. New proposals have been offered that claim to bring the assessment into compliance with WTO obligations, but other serious trade issues remain.  
Under WTO rules, countries harmed by this new tax would have the right to challenge its imposition. If a WTO panel upholds the challenge, the U.S. dairy industry could be subject to retaliatory tariffs that would cut off access to the very markets that are the principal source of growth for our industry. This is the type of consequence that would not have caused significant harm in past years since the export market represented a comparatively smaller part of total dairy farm revenue. In order to be sure the industry can seize all of its opportunities abroad, we must be more attuned to these new realities.
Policies to build unsubsidized exports will pay the greatest dividends for U.S. dairy farmers and manufacturers. The Dairy Import Assessment, and other policies like it, put critical export markets at risk without delivering any meaningful benefit to U.S. dairy farmers.
U.S. dairy policies should focus on growing export opportunities rather than counterproductive efforts to restrict imports.
Tip Tipton, chairman and chief executive officer of the Washington, D.C.-based Tipton Group, is the former CEO of the International Dairy Foods Association.