To subsidize or not to subsidize: Dairy

CP,
I'm not sure I have a comprehensive answer. I've worked in the dairy industry for 10 years. I subscribe to Hoard's and have read analysis and opinions on the subject. I still don't think I'm well-versed enough to propose a solution.

I do think we need to move toward a freer market. As I stated earlier, one of the big problems I see is farmers putting on even more cows when there is a glut of milk, in order to keep their income stable when milk prices drop. Frankly, this doesn't make sense, but I'm not sure how to discourage it, other than with a quota system. (Totally eliminating price supports would, IMO, be too risky in terms of destabilizing the industry.)

My question to you would be, are you still willing to implement a free-market solution if it means fewer American farmers, lower domestic milk production and a greater reliance on imports?

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"I love all of this mud," said no one, ever.

I'll add to the above that saving small dairies is not a sacred cow of mine -- it has been my observation that bigger farms tend to produce higher-quality milk, and the cows generally fare better, too.

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"I love all of this mud," said no one, ever.

I trust free markets to do the net best for all over time. While I acknowledge that free markets sometimes result in bad people doing do bad things to good people, it can't happen long without politicians protecting the bad people. And more harm is done from politicians trying to protect us than good - e.g. war on drugs.

I don't know that eliminating milk price fixing will cause fewer farmers, lower domestic production, or more imports. It might happen. Milk isn't sacred and none of that means there will be less milk or more expensive milk in the grocery store. I buy cheap grapes and strawberries all year long because of imports when domestics aren't available. Some will blast me for not buying local or buying out of local season produce, but the marketplace thinks it is a good thing or the groceries wouldn't stock it.

As to all dairy getting consolidated into a few hands, that might happen as well. I hope it doesn't, but there will always be people who prefer local milk the same way I prefer local crafted cheeses. Good local tomatoes are available everywhere I've ever lived. There would be more local dairy in my area if the gov't didn't prevent it with expensive rules and regs and market fixing.

I don't see that getting rid of the government price fixing and regulations would mean fewer dairy farmers.

I chose not to start a dairy because of the government price fixing and over regulation. Instead I went into hogs. I get no subsidies, have no government price fixing, virtually no regulations and am very successful. I even compete successfully against the big hog farms. While they're making or losing $5 per hog I'm doing far better.

Getting rid of the government hyper control and domination of the market would result in more small farmers getting into the dairy business. I know because I'm one who would have. I still may setup my own dairy, but to feed my pigs since it isn't worth milking for humans with the price fixing on milk.

Subsidies, over regulation and price fixing warp the market. This has been shown over and over in economics and history. We're better off when we don't have those things.

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SugarMtnFarm.com -- Pastured Pigs, Poultry, Sheep, Dogs and Kids

If they get it signed before Jan 1st.

http://www.nbcnews.com/business/dair...east-1C7753064

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There are ways to avoid selling your milk for the federal order price if you wish. One local farm operates its own processing plant ... Google 'Brunton Dairy' for more information.

I'm not so sure of that. Even a small farm has whopping start-up costs. Who (bank or farmer) is going to invest their capital without the assurance of price supports?

A crop farmer can leave his land fallow or switch to a different crop if there is a surplus of what he grows, or if returns aren't high enough to cover expenses. But dairy farming requires considerable infrastructure, and operates over a long time span ... for instance, the two years it takes to raise a heifer to milking age.

The swings in milk prices that occur under the federal order system already cause a lot of stress and put some farmers out of business. (I knew a very good dairyman who had the misfortune of starting his business just before milk prices went down drastically ... he lost his shirt.) Less government involvement would, IMO, make the market even more volatile and thus risky for farmers.

A recent article in Hoard's looked at milk prices in a state (somewhere out West, I think ... sorry, can't remember the specifics) vs. the federal order price and concluded that farmers who don't operate under the government system are paid less for their milk.

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"I love all of this mud," said no one, ever.

ANswer - most entrepreneurs. I've invested in lots of small businesses and maybe one day one of them will score big, maybe not. I have had no guarantees or price supports in any of them. I plowed my entire life savings into one business and gave it 15 years of my life. No price supports.

You don't sound like you have a lot of entrepreneurial spirit. That's fine, most Americans don't. But there is a portion of Americans who thrive on it. Farming is in many ways like other service and manufacturing businesses. There are all sorts of variables the business owner can't control, and rarely can the owner of a small biz control the demand and prices of his product.

That's funny; I have my own business. I also work nights on a dairy farm, and have been a herd tester, and thus have known dozens of dairy farmers and have seen their operations up close and personal, and have a heck of a lot of respect for them and what they do.

I also follow the doings of the industry as a whole in Hoard's, so I know that many alternatives to the federal order system have been bandied about for years, by people with a lot more knowledge and experience than I have. It's fine to speak in terms of general principles -- "The free market is best!" -- but remember that you're toying with the livelihoods of thousands of hard-working Americans.

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"I love all of this mud," said no one, ever.

I didn't mean it as a put down and apologize if that's how it came out. You might be Bill Gates and Steve jobs entrepreneurial for all I know. However, the words you have used in this thread, do not sound like someone with a lot of entrepreneurial spirit, IMO.

I've been around lots of entrepreneurs, and none of them were concerned they didn't have price guarantees. But all of them worried about gov't over regulation and running afoul of some over zealous auditor or reg enforcer.

What about all those thousands of hard working americans in the auto repair field? I think they need subsidies and price fixing.

The market pays them what the market thinks they're worth. It takes lots of time and capitol for that poor mechanic to buy tools and learn about the new cars and where is their assurance that they will be able to make a living? I think the government needs to step in and make things right for them. I mean we NEED auto mechanics just like we NEED milk.

Why stop at the dairies?
The better question is, Why start in the first place?

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U.S. Constitution -10th Amendment
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Different markets, different situations.
Auto mechanics have the ability to set their prices, auto mechanics sell value added services at retail not commodities at whole sale.

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Deja Moo; The feeling I've heard this bull before.

Yeah, and if auto mechanics, of which there are a thousand more of per one dairy farmer, set their prices to high, then they arent auto mechanics anymore. There are waaaaaaaaaaaaaaaaaaaaaay too many ready and close by, to take their place with fair , more or less, prices for their work.

heard this morning that they extended the farm bill for 2 years

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Brenda Groth
http://restfultrailsfoodforestgarden.blogspot.com/

I heard one year. Either way, once again some politicians in $3,000 suits did nothing and got paid well fir it.

We get what we put up with, and lots of it.

Haven't seen any auto mechanics out of business, and I haven't seen their prices drop in half for no particular reason.

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Deja Moo; The feeling I've heard this bull before.

Milk producers would have the ability to set their prices, at least as much ability as auto mechanics can and not price themselves out of the market, if gov't regs didn't interfere. See, this is the problem with gov't intervention into capitalism. Gov't does one thing, has to fix were it created unintended consequences, then fix that fix and the next set of unintended consequences and pretty soon, no one can do anything without bumping into some gov't reg or bureaucrat that is interfering with business.

Coal, steel, water (sometimes), some other crops all produce commodities that don't need gov't price fixing to keep them in business.

come to Ocala, FL. Lots of mechanics are out of biz because of the poor economy and jobs leaving the area. I pay $25/ hour to my mechanic who used to charge twice as much and have a dozen employees. He closed his shop and now works out of his backyard.

bad things happen to good people and gov't can't stop it.

Good. Like I said, I would rather subsidize milk than pay for anything else. I want my tax dollars to pay for good deeds not extemporaneous things.

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Let he who is without sin cast the first stone.

All of the undocumented workers will thank you on their next payday.

Heck around my area most mechanics that work for GN, Chrysler or Ford make right at $80k. I live in a town that has less than 3k people we have two full time mechanics and that doesn't include the implement dealers. Both mechanic own very nice houses and drive new vehicles. Ones hourly rate is $50 and the others is $70, they are both overly busy.

Those regulations are in place because a small number of producers don't want to follow the rules. You can't get rid of all regulation and expect a business to survive. I believe that if you got rid of the regulation that the only survivors would be big business.

Bobg