Congress reorganized dairy policy in the Agricultural Act of 2014 when it eliminated three programs and created the Dairy Margin Protection Program. The new program aims to provide farmers with financial protection against risks from increasing vola - tility in milk and feed prices. These developments occurred amid ongoing structural change toward larger dairy farms, as well as ongoing change in dairy product demand, away from fluid milk, and toward manufactured products sold in domestic and export markets. This report focuses on the interrelated topics of structural change in dairy production, changes in dairy product markets, growing price volatility, and dairy policy. It details the major developments in each, traces the linkages among them, and identifies the challenges that structural change, evolving product markets, and price volatility pose for policy. ----- Errata On May 17, the following corrections were made to ERR-205, Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry . Three cells in Table 3 were updated as follows: “Western States, 3,000-3,999 head in 1992" (19), “Traditional States, 1,000-1,999 head in 1997" (54), and “Other States, 1,000-1,999 head in 2002" (56). On page 10, the State in which Shamrock Farms is located was corrected. In addition, Appendix table A-2 was updated to reflect return-on-equity calculations for the full rather than a restricted sample of dairy farms.