To subsidize or not to subsidize: Dairy

CaliannG · #1 12/26/12, 10:58 AM

http://money.msn.com/now/post.aspx?p...e-9c0a90fc7501

I was wondering what ya'll thought? I read lots of posts that say "End all subsidies!" and that does, of course, make sense.

In this article, they say that unless the dairy subsidies are re-instated, the price of dairy products will double at the grocery store: milk being $7 a gallon, butter going up to $5 a pound, sour cream, cottage cheese, etc., doubling in price. As that will reflect the TRUE price and cost of these commodities, that are only lower at at grocery store because our government subsidizes the industry.

Now, this does not effect MY grocery bill. If the subsidies end and dairy shoots up to double retail price, it doesn't matter to me, as all of my dairy I make at home from my goats. The only way it will affect me, as a small producer, is that the value of my animals and products will sky-rocket.

But for those of you that think the government shouldn't subsidize ANYTHING, but who do not do their own dairy, I am curious as to how you feel when it has the ability to personally effect you?

In all likelihood, Congress will put through new dairy subsidies, and this will be a moot point in a week. Still, I am interested in the discussion.

StL.Ed · #2 12/26/12, 11:07 AM

Well,,the article says:
"The problem is that the vacuum left by the agriculture bill's absence would be filled by a statute dating back to 1949. Under those terms, the government would have to buy back milk at double current prices, which would increase costs across the board for companies like Kraft (KRFT -1.01%), Hershey (HSY -1.10%) and any other that uses large quantities of milk. "

That doesn't sound like an end to subsidies to me, since price guarantees are a form of subsidies.

Tracy Rimmer · #3 12/26/12, 11:10 AM

Canada does not have a subsidized dairy industry. Our milk here in my village is OVER $7 a gallon, and butter is $5 a pound.

CaliannG · #4 12/26/12, 11:43 AM

But...but...but...Tracy! Of COURSE you MUST have subsidies! Doncha know that, as a resident and citizen of Canada, you live in the heartland of Socialism?!

Joking aside, your prices more accurately reflect the cost of production. In the U.S., we have subsidies that are given to industry that must be applied to the sale value of the item (the government gives a dairy farmer $3.50 per gallon of milk s/he produces, therefore, the farmer may only sell that gallon for the market value, minus the $3.50 the government has given him or her for it.) or we go back to the 1949 law, in which whatever the farmer is unable to sell at market value, the government buys from them at that market value. Doing the subsidies is cheaper, as then they government doesn't have to spend money processing and storing the surplus, which is expensive.

CesumPec · #5 12/26/12, 11:51 AM

I drink a gallon of store bought milk every 3 days. Cheese, real butter, yogurt, my family enjoys it all.

End ALL subsidies; let the free market work. At $7/gal I might cut back some, or maybe I'll cut something else out.

PrettyPaisley · #6 12/26/12, 11:59 AM

Quote:

Originally Posted by CesumPec

I drink a gallon of store bought milk every 3 days. Cheese, real butter, yogurt, my family enjoys it all.

End ALL subsidies; let the free market work. At $7/gal I might cut back some, or maybe I'll cut something else out.

BINGO.

End them all. FORCE people off the gov't teat and force them into producing/sourcing their own food - or let them starve.

Why must people be SO far removed from any speck of personal responsibility????

pancho · #7 12/26/12, 12:40 PM

No subsidies for anything.
Either pay what they are worth, produce it yourself, or go without.

CIW · #8 12/26/12, 12:54 PM

If subsidies were eliminated several things are likely to happen.
1) Many large dairy farms are running only a short distance ahead of bank. Some going further and further in debt each year. When the money train stops they will go out of business quickly. (It wouldn't be the lack of subsidies but the poor business practices that would put them down.)
2) Consumer budgets will only go so far. If that is still purchasing at $7 a gallon, then so be it. Don't get stuck on the number. When the market truly comes to that corness, then the market will see itself regulated. Things like prices going down. Those in business who aren't willing or able to adjust to the market will cull themselves out.
Supply and demand always regulates any market. The problems started when the government got into the market regulation business.
3) Other industries will be effected because said product is used in their production process.
4) Some consumers will figure out how to eliminate or lesson the impact on their individual lives. (In this case folks are stepping out of the market through the self-reliance of having their own milk cow.)

If our government doesn't let the market self-regulate (which is what is happening right now) the fallout will be greater at a later date.
The consequences will come. The lesson will be learned. We, as a society, will decide when then lesson is applied. The longer we wait the harder the impact will be.

TheMartianChick · #9 12/26/12, 12:58 PM

America has grown accustomed to cheap food and expects it to always be that way. Get rid of the subsidies and everyone will readjust. Maybe then, farmers will get some respect!

sammyd · #10 12/26/12, 01:03 PM

the end of this farm bill is not the end of subsidies, it ushers in even higher subsidies.
I will move the support price back to 1949 levels and the govt will buy the milk at 38+ dollars a cwt. If the processors want milk they will have to match or beat the price.

Silvercreek Farmer · #11 12/26/12, 01:25 PM

I have no problem ending food subsidies, but I think it should be a gradual process over 3-5 years to allow everyone involved time to adapt. When the prices increase on the currently subsidized crops, the tradionally non-subsidized crops (which are generally healthier) will able to compete.

rambler · #12 12/26/12, 01:29 PM

This was just discussed on a farming forum.

I got the impression milk was very heavily regulated in Canada - said by Canadian farmers. I believe their version is very strict quotas on milk?

This fosters a farm society of haves and have nots.

Not really anything anyone here would favor either.

The farm program lasping and not getting any attention at all with the fiscal cliff nonesense is all balling up into creating a lot of problems for farm areas.

The govt controls farming, whether we will admit it or not, that is how it is.

I'd like that to be different, but it won't happen.

All other segments of society also get subsidies, they won't end.

So, here we are, lot of questions, not direction, no future, no help from Washington.

Going to be interesting......

--->Paul

Tracy Rimmer · #13 12/26/12, 01:38 PM

Dairy industry is highly REGULATED, not SUBSIDIZED. You have to purchase a milk quota in order to produce dairy -- you're not allowed to sell it without one.

"Have's" and "Have nots"?? My neighbour just got out of dairy. I don't think he could be considered a "have" -- they nearly went broke trying to make a go of it, over YEARS, in the dairy industry, for VERY hard, labour-intensive work. Add to that the fact that, had he sold his milk for what it was worth locally, rather than what he was told he was "allowed" to sell it for, he could have made a fortune, but could well have lost his quote license AND faced legal action from the government, along with almost guaranteed jail time.

It's not about food safety -- I've seen his operation, and you could literally eat off the floor in his dairy barn -- it's about control of food supply and production. To quote my grandfather, who grew up in Eastern Europe and saw the mayhem that is caused by the government getting control of the food system, "He who controls the food controls the people".

I've said this before on here, once in the past couple of days, but it bears repeating: read George Orwell. We're already living in an Orwellian society -- all that is left is for people to wake up and realize it.

where I want to · #14 12/26/12, 02:20 PM

There will be changes in costs for schools and welfare too. Those programs are bound to have increased costs too. So tax payers will pay there too. I doubt that children will left with unaffordable milk.

I wonder if we looked back before the subsidies, whether it would reflect a boom and bust cycle that very disruptive. In bust times, cows would be slaughtered. In boom, prices would skyrocket until enough young stock could be grown into production. It is not a year long shortage like grain or veggies - stock takes longer.

Subsidies create their own lobbyists and campaign funding, which leads to more subsidies. It could be a hard cycle to break.

CaliannG · #15 12/26/12, 02:24 PM

As I mentioned in the OP, I really don't have a dog in this fight from a consumer or producer's angle. I don't buy dairy, as I have everything I need to make it myself. I am far too small a producer to be effected either negatively or positively from the price of dairy going up, or staying just as it is. The only benefit I *might* have is that I could sell doelings for more money if dairy goes through the roof....but honestly, it is going to be years before I am willing to sell a dairy doeling anyway, as I am still building my herd.

That being said, I think that with, or without subsidies, I am still paying full price for subsidized items. I buy gasoline. Without the government subsidies, gasoline would be priced much higher. I am *still* paying the higher price, though, as it is my (and your) taxes that go to pay those subsidies.

How much lower would our taxes be if subsidies were wiped off the board?

When it comes to social programs, would we be willing to have more of our taxes go to Food Stamps and Welfare if so much of our taxes were NOT going to subsidies? To me, at least, I would be willing to vote for an increase in Food Stamps, so truly poor families could buy that $7 a gallon milk, and increase Welfare, so those families could buy expensive gasoline to get to their minimum wage jobs, rather than have my taxes go, in the form of subsidies, to Agribusiness or Big Oil so they can have poor business practices and not have to compete in a free market.

To me, at least, it seems more moral to direct my tax tax dollars to support individual persons (and children) then it does to have them support corporate "persons".

~smiles~ I have read Orwell, and I do agree. I shall not be reading him again as I enjoy reading for pleasure, and to me, there is nothing pleasurable in reading Orwell.

rambler · #16 12/26/12, 03:27 PM

Quote:

Originally Posted by Tracy Rimmer

I've said this before on here, once in the past couple of days, but it bears repeating: read George Orwell. We're already living in an Orwellian society -- all that is left is for people to wake up and realize it.

I think computer/ tablet/ internet has more Orwellian overtones than the food industry does. Tho of course it can be a part of it.

Look at how software is going to apps and 'the cloud' where individuals have zero control. Look how instagram, a division of Facebook, plans to take people's photos with no compensation.

That is exactly the Orwell model.

And people continue to give all their info freely to Instagram, Twitter, Facebook, etc.....

--->Paul

**highlands** · #17 12/26/12, 04:49 PM

Quote:

Originally Posted by Tracy Rimmer

Dairy industry is highly REGULATED, not SUBSIDIZED. You have to purchase a milk quota in order to produce dairy -- you're not allowed to sell it without one.

In Canada. Not in the USA.

I would like to see all the subsidies and price fixing eliminated. Milk, crop, farm, petroleum, wind, solar, mortgage (the deduction is a subsidy), etc. These all warp the market place making the real cost of goods higher than they should be. The result is I am taxed to subsidize my competitors so that they can have lower prices at the checkout counter and compete with me. That's not good. Subsidies have produced consolidation and mega farming that we really don't need. Time to eliminate all subsidies.

Tracy Rimmer · #18 12/26/12, 05:45 PM

Quote:

Originally Posted by highlands

In Canada. Not in the USA.

I was responding to rambler's post. Being in Canada, I meant... in Canada.

Ramblin Wreck · #19 12/26/12, 06:19 PM

It would seem that ending the subsidies would encourage more local or home production. I think if every family (at least rural families) had a garden and a milk goat, we'd not only eat better and get more exercise, it would probably save enough energy to lower gas prices by half.

Bob Huntress · #20 12/26/12, 06:57 PM

Usually if we trace the origin of a government subsidy we find that it started in exchange for a regulation that without the price would not have risen anyway. As the regulation becomes permenant, the sudsidy ends and the price shoots up. Because of the subsidy the industry never lost money. The government reimbursed them more than the cost of the regulation, and when the subsidy ends the government is blamed for simply ending the subsudy. If we end the regulation for which this subsidy was most likely justified to begin with, the cost of the product drops even lower than the subsidy provides for. It is like an old Mafia rackeet. They would go around to everyone that sells a product, such as bread, and muscle them into each raising their price a dollar. The mob would get $.50 and the merchant would get $.50. The industry profited as well as the mob, and just like the mafia scam, the consumer in this is the victim. The entire subsidy program smells like a mob scam rat, and if you snife check the politicans you will not find an oder free set of hands. Bear in mind that if you or I were to do any of this, we would be in violation of rackeetering laws.