This economist says the problem with the dairy industry isn\’t too many cows or too much production per cow.  It\’s too many cow farmers.  Artificially high prices tend to do that.

2 thoughts on “Aye”

  1. Uh, Tim, my husband is involved in this legislative proposal, so I know a bit about it. Normally, for simple Econ 101 supply/demand reasons, I would agree with Mr. Haab. However, in the U.S. dairy in almost every state is regulated by a little nightmare called the Federal Milk Marketing Orders. Don’t ask me to explain them, because I don’t understand them – and I don’t know anyone who does, really. They’re every bit as bad as the Internal Revenue Service regs. All by way of saying that supply/demand price movement in dairy has never been the straightforward relationship one might expect.

    As for the proposed herd reduction: That has been suggested by an organization called National Milk, and yes, Obey did throw it back in their face on ‘earmark’ grounds. It does not call for mass culls. I’m simplifying this, but the Nat’l Milk proposal is a bailout, pure and simple. It wants a gov’t guaranteed loan to buy cows farmers can’t support. The loan would be paid back by the ALL dairy farmers via their dues to their co-ops. If the farmers default, well, it’s guaranteed by the gov’t – that would be the taxpayers.

    My hair nearly ignited when I read this crap. There are several mechanisms already in place to help dairy farmers, e.g., the MILC payments (Milk Income/Loss Compensation) and we got a feed adjuster included last year when commodity prices were so high. We’re looking at getting the trigger price that results in payments adjusted.

    As for Mr. Haab’s sly ‘too many dairy farmers’ remark – we have been losing dairy farmers at a staggering pace. The family dairy farm in many regions is becoming less and less economically sustainable. What we think is most likely in the future is a vertical structure, much like we see in pork and poultry.

    Oh, and I see the EU is going to reinstate subsidies for dairy farmers also.

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