Got subsidies?

Name a white powder that is consumed by millions, generates huge profits, and is smuggled in and out of the United States.  Nope.  It’s milk.  Here’s another classic story of how our farm program wastes billions.

For years, the government has periodically purchased powdered milk
— as well as butter and cheese, the other byproducts of raw milk — as
part of a congressionally mandated price-support program for milk
producers. By 2003, the Agriculture Department had accumulated a record
1.4 billion pounds of powdered milk in warehouses and in a huge
limestone cave in the Kansas City area.

The bulging stores
coincided with a drought that left livestock pastures burned in about a
dozen states. Some livestock owners were faced with selling their
herds, Farrish said. Giving them the powdered milk as an emergency
source of feed seemed like a good way to help out….

In 2003,
the government released 390 million pounds of powdered milk for the
ranchers, giving it to the states for $1 a truckload.

The true value of the milk was somewhere on the order of 3 thousand dollars a truck load (the article is a little unclear) so you can imagine that the milk did not long stay with the ranchers.

Thanks to Ramin Seddig for the pointer.

Comments

Govt. subsidies and other interference have horribly skewed the agricultural industry. ;-(

Ag people simply point to hurricane, fire, and blizzard disaster relief programs and say, "If they get pork for their natural disasters, why shouldn't I get mine for a drought?"

Ag subsidies, including disaster relief programs, need to be eliminated (or at least reduced) and so do all of the other "state of emergency" relief programs. If you are going to live in hurricane, drought, or fire prone areas, you have to recognize the risks associated with the location. The current system incentivizes people to live and work in areas otherwise financially unsuitable for either.

I hate giving hundreds of dollars a year to farmers and I am tired of paying for other people to rebuild their homes because they knew the government would bail them out if a very forseeable natural disaster occured. Using tax dollars to switch people's risk assesments from red to black is ridiculous.

"You mean to tell me other people won't pay for me to rebuild my house if Another hurricane comes through? Those greedy, cold hearted --------!"

Move away from the ocean if you want to reduce your risks. Otherwise, accept the consequences of your decisions/actions.

Farm lobyists have often used the argument that society needs to protect farmers because people need food. As one econ text astutely pointed out (I think it was in Heyne's text), while it is true that "people need food" there is actually no such thing as "food." I challenge anyone to go to a grocery store and ask for "food", the response from the store manager will certainly be to ask "what kind". The typical grocery store has about 30,000 different food items. The point of course is that there are substitutes in ambundance, so if for example, cow's milk became suddenly available in smaller supply, we would just get our calcium and vitamin D from a plethora of other products. So the scare tactic used by farm lobyists the "people need food" is entirely without merit. I often mention the old Heston movie Soilent Green when I give this lecture ; only in such a science fiction world is there only one kind of food for which there are no substitutes.

+1 for Daniel's point. The extra supply hitting the market would depress the price that current producers could demand.

If this were really about mitigating risk, there wouldn't be zillions of pounds accumulating. The program would have to empty out their stock in better years. No, it's obviously not about smoothing out the bumps, but about transferring wealth.

I used to live in the San Joaquin Valley of California near Bakersfield. I would drive through the valley
and see all the land just sitting fallow and wonder why. I learned later why. Makes me sick to think that
there are farmers getting money for NOT farming.

Just think of how much money our gov't would save by eliminating farm subsidies. Wow.

And they should. What a waste.

David, the 'inexpensive' government programs reinforce the mentality that it is okay for those who are thrifty, hard working, wealthy, and responsible [not all at the same time necessarily] to be coerced into subsidizing those who are wasteful, lazy, poor, and irresponsible. These in turn make it that much easier to implement the killers like out of control entitlements and defense.

Let's work this supply chain the other way...dairy farmers give their cows bovine growth hormones to increase milk production then the Feds pay farmers for their excess milk? So ultimately, this leads to corporate welfare for Monsanto, etc.

Meanwhile, I give my kids organic milk because I don't want them ingesting BGH. ARRGH!!

Comments for this post are closed