Consumers are about to be Creamed!   2 comments

This article comes courtesy of my husband, who likes milk far more than he likes news.

Congress’ ridiculous infighting over inadequate spending cuts and ill conceived tax increases is keeping our attention from something that may hit all of us more personally and much sooner than either these issues. Current farm programs, which consist of massive subsidies, price supports and various market restrictions, were enacted in 2008 and expire December 31. In ordinary circumstances, this would result in competition and a decrease in the price of milk and an incentive for dairy farmers to produce more. For a small government, deregulation, anti-subsidy conservative like me who is also raising a 14-year-old boy who seems to grow a half-inch per week, that sunset should be grounds for rejoicing, except that the system is rigged against consumers and taxpayers.

http://www.indystar.com/viewart/20121230/NEWS/212300346/Lawmakers-back-plan-avoid-dairy-price-jump

 

Instead of Americans enjoying a bounty of low-priced milk after the clock runs out, federal farm policy will automatically revert to a 1949 bill that will compel the Department of Agriculture to roughly double the price supports for dairy and other farm products thanks to a mystical doctrine called “parity”. The Department of Agriculture concocted this doctrine in the 1920s to “prove” that farmers were entitled to higher prices than the market provided. The official parity calculation is based on the ratio of farm prices to nonfarm prices between 1910 and 1914, the most prosperous non-wartime years for farmers in American history.

In this antiquated system, if the market price of milk fell below parity, the Department of Agriculture intervened in markets in various ways to provide a price floor to benefit dairy producers. This mechanism has been gouging taxpayers and consumers for generations, long after dairy farms went corporate and became far wealthier than average Americans.

In recent decades parity was disregarded as the primary gauge for most subsidy programs. Even farm-state congressmen conceded it was nonsensical considering the profound changes in the economy since 1914. Parity, however, remains in statute and, should Congress fail to act, the price of dairy products will necessarily soar.

Currently milk sells for about $3.53 per gallon nationwide, according to the Bureau of Labor Statistics consumer price data. Once parity kicks in the price could quickly soar to $7 a gallon, according to Secretary of Agriculture Tom Vlisack. The USDA could burn through billions of tax dollars buying up dairy products that are unsalable at exorbitant prices.

Farmers will enjoy a brief windfall while consumer demand plummets for their product. Any resulting chaos in the market place will almost certainly produce demands for new bailouts of farmers.

Understand how this looks from my perspective. My grandfather was a farmer. I appreciate the hard work of family farmers just trying to stay in business, but most farms are owned by mega-corporations these days. The dairy lobby has long been one of DC’s most tenacious. Federal dairy policies cost the average American family enough to buy their own cow. Studies in the 1980s showed that high dairy prices contributed to calcium shortages among low-income Americans. Subsequent studies have shown the same, but this has never registered on Capitol Hill.

The absurdity of the “dairy cliff” is that there is no need for federal intervention in dairy markets. Supply and demand for the vast majority of food products made in America function just fine without government price controls. In fact, the worst and most frequent disruptions occur with the handful of items (sugar, corn, and dairy products) that are politically protected. Oddly, politicians have long exploited these disruptions to drum up donations to their re-election campaigns. Go figure!

My prep item of the week is a 50-pound bag of powdered milk. I normally buy non-fat because its cheaper and I’m using it for cooking, but it looks like the whole powdered milk may be what’s on the list this time around, since with a 14-year-old son I have to balance my budgetary options to avoid rickets.

By the way, the local Walmart had NO milk in the case last night. Coincidence? I doubt it.

2 responses to “Consumers are about to be Creamed!

Subscribe to comments with RSS.

  1. We eat paleo so this only affects our family insofar as we want to cheat. I’m not terribly concerned about the lack of calcium in low income diets as the massive push to make people significantly up their calcium intake is also a direct result dairy lobby. I am however quite angered by the fact that this parity law is still on the books. Completely ridiculous. Let the market determine how much milk should cost.

    Like

    • We’re Alaskans, so I guess we sort of eat paleo too — we hunt and fish — caribou and salmon are what’s for dinner often — although we still buy chicken (what’s life without a good curry now and then or chicken and stuffing?). We can grow vegetables in the summer and we’re experimenting with growing some in the house in the winter, but we still eat a lot of frozen vegetables, because we can’t get good fresh vegetables here. “Fresh” here has been cryo-ed for months and they’re pretty much tasteless by the time they get to us — ditto fruit.

      However, I have to disagree with you about dairy. Notwithstanding the dairy lobby, most Americans (at least of Northern European descent) don’t get enough calcium. First, we drink a lot less milk than they did on the farm back in my parents’ day. Before World War II, dairy and eggs were a farm family’s primary source of protein for most of the year. They also spent a lot more time out-of-doors in the sun than we do today. Scientists have done some interesting studies here in Interior Alaska concerning Vitamin D and calcium levels in people living in northern climes. For six months out of the year, we can’t go outside without layers of clothing. Those of Eskimo descent hang onto their Vitamin D and calcium (they also are often lactose-intolerant), but those of us of northern European descent are often critically low in Vitamin D and calcium — it shows in the osteoporosis levels locally. Using suntanning booths (not beds so much) offsets this, but then the dermatologists freak out. And pills don’t really do nearly as much as milk, yoghurt, etc. There’s a problem with absorption with supplements.

      But, yes, the parity law and all subsidies of farm products should go away, period! Food prices would drop significantly and farmers (most of whom are corporations worth billions) would be forced to put more acreage into production to keep making money, increasing the food supply and further lowering prices.

      Like

What's Your Opinion?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

The Libertarian Ideal

Voice, Exit and Post-Libertarianism

CRAIN'S COMMENTS

Social trends, economics, health and other depressing topics!

My Corner

Showcasing My Writing and Me

The Return of the Modern Philosopher

Deep Thoughts from the Shallow End of the Pool

Steven Smith

The website of an aspiring author

thebibliophagist

a voracious reader. | a book blogger.

cupidcupid999

adventure, art, nature, travel, photography, wildlife - animals, and funny stuff

Republic-MainStreet

The Peaceful Revolution Liberate Main Street

%d bloggers like this: