Their production costs are low and they have product to sell. It is also clear that production capacities of these two countries is rather limited. However, in a world of free trade there appears to be no reason why even larger, similarly structured forage-based industries could not develop in countries like Argentina and Brazil. The U.S. industry probably has a competitive advantage over Canada, but our position with respect to the EC is unclear. With lower grain prices resulting from changes in domestic programs Europe's cost of production could be lowered substantially.
Negotiations are difficult in the face of so many possible outcomes.
International trade will play only a limited role in shaping dairy policy in the 1990 farm bill. It is also questionable whether major modifications in dairy programs will need to take place following the GATT negotiations. Nevertheless, dairy organizations need to be increasingly aware of the complex issues involved in world trade. Ours is a shrinking world and eventually the dairy industry may have to adapt to that fact. If it is not an issue in the 1990 farm bill, trade could very well be a dairy policy issue later in the 1990s.