OK, can someone explain to me why prices will double if the farm bill isn’t passed? I always thought that dairy prices were propped up by the government program, not subsidized.
8 thoughts on “The Price Of Milk”
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OK, can someone explain to me why prices will double if the farm bill isn’t passed? I always thought that dairy prices were propped up by the government program, not subsidized.
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I believe it works something like this:
1. FDR got through legislation that provided some kind of floor/price supports on milk (remember the old newsreels of people busting open containers of milk at government order so that the price would go up?). This is some seriously nasty full-bore socialist market interference, and because it’s never really been superseded, the target prices in today’s money are insane.
2. For decades, Congress has been passing short-term exemptions to this law, rather than repealing it altogether. This gives Democrats *excellent* leverage whenever they need to shove largess into the already porked-up farm bills, because the default option is “unthinkable”.
3. ???
4. Profit (at least, for those who receive the largess, and the members of Congress who in turn receive graft and campaign contributions.
You’re correct, but in the absence of a new farm bill the prices will be propped up even higher, at the level defined in the Agricultural Act of 1949. Apparently there’s never been agreement to repeal or permanently replace that law, its effects have merely been temporarily suspended by subsequent farm bills. It reminds me of the Medicare “doc fix”, the series of temporary overrides to a 1990s law (still on the books) that, if left to take effect, would slash doctor’s reimbursement rates. There are hints that Congress may manage to pass a permanent fix to that one in this session.
… is eternal vigilance.
All of this is an academic exercise in today’s political climate. Any and all laws are subject to the discretion of the President. Anything Congress does is just political Kabuki now.
Yeah, but can’t Mr. Obama, like, simply ignore the statute?
Cow farts cause Global Warming, therefore milk is bad, therefore we need high milk prices to discourage milk drinking.
Think of the children!
Price supports are typically set low enough to force out all but the lowest price producers, who then expand production. Thus we have the modern giant corporation/farm. Removing price supports may result in higher prices, and lower prices. Basically, a free market with greater variability in pricing, and in type of producer.
Won’t someone think of the lactose intolerant?