Structural Changes in U.S. Dairy Farming and the Role of Government Policy

Agricultural policy faces conflicting social goals. On one hand, efficient large-scale agriculture provides an adequate, low cost food supply, but many Americans continue to idealize the smaller family farm, believing that it promotes a democratic society with strong values. The changing structure of agriculture from many small farms to fewer but larger farms is a concern often expressed. Many causes have been suggested to explain the decay in farm numbers and continual growth in average farm size. These include technological changes, lower production costs on larger operations, barriers to expansion due to large required investments in land, buildings, and equipment, opportunities for earning income by working off the farm, and government policies that affect farm profitability. This research examines these factors and their interactions in the dynamic context of the U.S. dairy industry, with an emphasis on government policy intervention.