The Executive Branch of the Federal Government

On November 5, 1993, the U.S. Food and Drug Administration (FDA) approved the metabolic protein hormone, bovine somatotropin (bST), for commercial use in the U.S. bST is used to increase milk production in dairy cows. Since FDA's action, experts in various Federal agencies have reviewed the available scientific evidence and other data related to the impact of potential bST use. This report presents their findings on bST's implications for U.S. consumers, the dairy industry, and the economy. Key findings are:

Safety

• There is no evidence that bST poses a health threat to humans or animals. It has been studied more than any other animal drug, and been found safe by FDA and many other scientific bodies in the U.S., Europe, and around the world. FDA also concludes there is no legal basis requiring the labeling of bST milk, since the milk is indistinguishable from non-bST milk. Voluntary labeling is permitted.

The Dairy Industry

• Income for individual farmers who adopt bST is likely to increase. Productivity and profit per cow should rise for both small and large farms. bST favors good herd management rather than small or large farms.
• bST is likely to reinforce productivity changes that have been occurring for decades in the U.S. dairy industry. bST use will increase U.S. milk production by about one percent through fiscal year (FY) 1999. This production will likely lead to slightly lower prices for milk, averaging about two percent lower over the next six years. These lower prices are expected to result in declines in aggregate farm income from dairy farming of about one percent over this same period.
• Lower milk prices from bST are also expected to contribute to higher Federal Government dairy price-support costs, but decreased Federal costs for nutrition programs like Food Stamps and the Special Supplemental Food Program for Women, Infants and Children (WIC).
• Federal dairy price-support program costs would increase by approximately $150 million in the peak year, FY 1999, and decline in later years. This would represent a 1.8 percent increase in total projected Federal farm commodity subsidies for that peak year.
• Savings in the costs of Federal feeding programs would begin in FY 1997, and could completely offset the increased cumulative costs of the Federal dairy price-support program over 10 years. While there would be savings in the feeding programs before FY 1997, those savings would be used to either increase program participation rates or provide additional benefits to participants.

Consumption of Dairy Products

• Consumers are expected to benefit over the next six years with bST use due to the availability of more milk at lower prices. Largely because of this increase, the net national economic impact of bST usage is expected to be positive.
• No significant reduction of demand for milk and dairy products is expected to result from bST use. While some surveys reveal strong consumer resistance to bST, others indicate confidence in the U.S. milk supply, and no substantial intent to forego use of bST milk. There appears to be a need for nutrition education on bST's effects.

The Environment

• bST is expected to have a minor, but beneficial net impact on the environment. It should lead to a slightly smaller U.S. dairy herd, and therefore less pollution through decreased use of fertilizers for feed production, and less cow manure and methane production.

Exports

• bST should have little, if any, effect on U.S. dairy exports. Nearly half of U.S. dairy exports volume goes to countries that have approved the use of bST, and more countries are expected to do so. The European Union (EU), a major dairy exporter, recently decided to extend its bST moratorium for one year, instead of the anticipated seven years. For countries to ban bST use, after the hormone has been scientifically found to be safe, would undermine efforts to eliminate unfair trade barriers to U.S. exports.

Biotechnology Industries

• U.S. leadership in biotechnology, as well as private-sector investment for research and development in the biotechnology industry, would be enhanced by proceeding with bST, and would be impeded if there were new government obstacles to such biotech products following their approval for use by FDA and other regulatory agencies.

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