The Milkweed, August 2001:p.12
Dueling Economists: PSU’s Bailey vs. UConn’s Cotterill
by John Bunting

“The heresies we should fear are those which can be confused with orthodoxy.”
–Jorge Luis Borges, 1889-1986

One problem in dairy is that our economists seem to have a common, shared brain.  If you’ve heard one, you’ve heard them all.  Their current fad is “risk management,” telling farmers to sign up for dairy futures/options, in case of a big milk price drop.

Ken Bailey, who wasn’t going to make tenure at the University of Missouri, now bombards Pennsylvania dairy farmers with his expertise.  Bailey, a New York City boy, has an opinion about everything in dairy, as he pushes his way among fellow economists to the sweetest part of the feeding trough.  Bailey’s (often for pay) show takes him everywhere defending the status of corporate truth.

Bailey’s career has been lifted by writing fiction about dairy compacts.  When Dr. Robert Yonkers graduated from Penn State to polish numbers for E. Linwood Tipton’s International Dairy Foods Association, Bailey moved up from Missouri to Penn State.  Bailey’s study of the Northeast Dairy Compact, done at Missouri, has been widely quoted by Compact opponents (after all, they funded it).  But Bailey’s Missouri study was so poorly done that pressure from Pennsylvania farmers caused Penn State administrators to delay Bailey’s intended vacation, last summer, while he did a follow-up study.

But Bailey’s anti-Compact bile persists.  Bailey has emerged as one attack dog (with Yonkers), challenging the recent study done by Dr. Ronald Cotterill of the University of Connecticut.  Cotterill’s 300-page study, released this past spring, challenged many claims made about the Northeast Compact made by opponents.  Using data from supermarket checkout scanners, Cotterill showed that supermarkets and processors in New England took the lion’s share of the 18-cent per gallon price increase in gallons of whole milk registered since the Compact arrived in July 1997.

Nowadays, it’s Ken Baily vs. Ron Cotterill: dueling economists.  Interested persons may follow this evolving debate on the economists’ respective web sites.

Bailey’s web site is:
http://www.aers.psu.edu/dairyoutlook/reports/NECompactStudy.htm

Bailey lists Cotterill’s study, but at the top, interested persons will note a letter he wrote recently to Dan Smith, director of the Northeast Dairy Compact Commission, under:
http://www.aers.psu.edu/dairyoutlook/reports/CompactStudy/DanielSmithCompact.htm

Bailey’s letter to Smith thoroughly trashes Cotterill’s study, even challenging the UCONN study’s reliance on supermarket checkout scanner data as a price basis.

Cotterill, who takes pride in applying academic discipline to consumer issues in the areas of food and economic concentration, has his own web site:
http://www.sp.uconn.edu/~cotteril/CompactStudy.html

Cotterill’s web site offers a range of information on the Northeast Compact and dairy pricing.  One paper, “Competition, or the Lack Thereof in local Fluid Milk Markets: San Francisco, Chicago, Miami, and Dallas-Fort Worth,” is a worthy read to understand the depth to which Cotterill probes issues with hard data.

This study concludes: “one cannot uncritically assume that farm prices and farm-to-retail price transmission models accurately predict retail prices in a local market.”  After years of simple propaganda from Extension dairy economists, that’s a refreshing conclusion.

Cotterill has taken serious offense at Bailey’s letter to Dan Smith at the Compact Commission, one more example of Bailey’s “academic for-hire” status.  Keep an eye on Cotterill’s web site at the UCONN Food Marketing Policy Center.  It should be even more interesting…soon!

12—August 2001