How the U.S. Government is Rescuing a Dying Industry
It was reported that the dairy industry was dumping gallons of milk during this Covid-19 pandemic, but this is not new news. In 2016, the American dairy industry drained 43 million gallons of excess milk into fields and neighboring areas. This is all simply due to people consuming less milk. In fact, the United States Department of Agriculture (USDA) reported milk consumption has dropped from 275 pounds per capita in 1975 to 149 pounds per capita in 2017. And because of this, the dairy industry is currently operating at a substantial loss.
So to keep the dairy industry afloat, the federal government purchases millions of dollars with excess milk. But since dairy doesn’t keep, this milk is stored as cheese. As of 2019, the USDA has 1.4 billion pounds of surplus cheese - and this cheese is stored in huge rooms that are paid for by our government.
The government’s source of all this money comes in the form of subsidies. Subsidies are “a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive” (and I should add paid by the American people within the American economy). And this can be seen with the American Agricultural Act (AAA) of 2014, which reframed commodity and crop insurance programs, a venture which was sure to benefit the decaying dairy industry (however it helped other areas of agriculture too). And it can be concluded that the dairy industry had a large say it being passed as it is one of the most entrenched lobbies in Washington, which they thus can yield immense power.
But it makes sense that the dairy industry lobbies so aggressively in Washington; it’s paying off. The American government, in part due to the AAA, spent $24.7 billion in direct and indirect subsidies to the dairy industry. It then spent $43 billion in 2016 and $36.6 billion in 2017. It is these absurd and insane amounts of money that are propping up this pseudo realm of our economy. A study done in 2018, suggests that 42%* of US dairy producers’ revenue came in the form of various government supplements. HALF of the revenue from dairy production isn’t “real.”The government and lobbyists are undermining the agriculture market and creating an artificial part of the economy.
Should we forget where the government gets its money from? Us. The taxpayer. Citizens. The government is using our money to perpetuate a dysfunctional system, support a declining industry and waste billions of taxpayer dollars every year. As with all other goods, dairy products should be tied to consumer demand in the free market, and if people are drinking less milk, I think that speaks for itself.
*Other research suggests that this number could also be more, such as 73% revenue coming from the government.
Congress Thumbs Its Nose at WTO and The DOHA Round - U.S. Federal and State Subsidies to Agriculture. Grey, Clark, Shih and Associates, Limited, Grey, Clark, Shih and Associates, Limited, 2018.http://www.greyclark.com/wp-content/uploads/2018/02/US-Subsidies-Post-2014-Farm-Bill-FEB-2018.pdf
Eyermann, Craig. “Why Does the Federal Government Have 1.4 Billion Pounds of American Cheese Stockpiled?: Craig Eyermann.” FEE Freeman Article, Foundation for Economic Education, 5 Mar. 2019, fee.org/articles/why-does-the-federal-government-have-14-billion-pounds-of-american-cheese-stockpiled/.
Gee, Kelsey. “America's Dairy Farmers Dump 43 Million Gallons of Excess Milk.” The Wall Street Journal, Dow Jones & Company, 12 Oct. 2016, www.wsj.com/articles/americas-dairy-farmers-dump-43-million-gallons-of-excess-milk-1476284353.
Raphelson, Samantha. “Nobody Is Moving Our Cheese: American Surplus Reaches Record High.” NPR, NPR, 9 Jan. 2019, www.npr.org/2019/01/09/683339929/nobody-is-moving-our-cheese-american-surplus-reaches-record-high.
