Righting the Wrong of Cheaper Milk

Jacob Sullum | December 11, 2006

The Washington Post  tells the sad but instructive tale of a dairy farmer who took advantage of a "loophole" in milk price regulations (for producers who bottle their own milk) to undersell his competitors. Consumers benefited from lower prices, and he made a nice profit. When members of Congress heard about this scam from other dairy farmers, who also happened to be campaign donors, they shut it down. Rep. Devin Nunes (R-Calif.), whose district is thick with dairy farms (including one founded by his grandfather), calls passage of the cartel-enforcing legislation a victory for "every dairy farmer in America except those who were gaming the system." Tellingly, Nunes makes no mention of consumers, who spend an extra $1.5 billion or so a year because of the government's milk marketing restrictions, according to Citizens Against Government Waste. He explains that "people out there were making millions of dollars a year off the backs of America's dairy farmers....That was a wrong that was finally righted."

[Thanks to Paul Davis for the link.]

Comments

|12.11.06 @ 3:02PM|#

For more background info on this, Cato put out a study recently on U.S. dairy policies.

Deus ex Machina|12.11.06 @ 3:06PM|#

Nunes makes no mention of consumers, who spend an extra $1.5 billion or so a year because of the government's milk marketing restrictions, according to Citizens Against Government Waste.

This just gives Congress an excuse to call for a new program to provide subsidized milk for low-income families.

|12.11.06 @ 3:44PM|#

Deus,

They are so way ahead of you:

Ridiculous program to make you feel good about helping people who make bad choices and the dairy farmers who love them

Plus there is that whole school lunch program.

Captain Spaulding|12.11.06 @ 3:47PM|#

One thing to note is that Harry Reid's condition for supporting the bill was making his state immune from milk price regulations.

|12.11.06 @ 3:52PM|#

Republicans believe in free enterprise, and independent small businesses! Republicans would never let this sort of government distortion of the market happen!

Hahahahahahahahahahahahahahahah!

|12.11.06 @ 4:01PM|#

The dairy compacts are a depression era boil on ass of capitalism that should have been lanced years ago. The Republicans are just as hopeless as the Democrats. After they retook the Senate in 2002, they had the perfect chance kill the Northeastern compact off. Jefferds had stabbed them in the back by switching parties in 2000. In 2002, they could have paid that rat bastard back by killing off the Northeastern Compact. They could have helped consumers all over the Northeast, done the right thing morally and politally and had one of the great political paybacks of all time. Of course they did nothing of the sort.

|12.11.06 @ 4:01PM|#

Milk, reasonably priced and available to children who, evidence indicates, benefit from it.

The intrusive government response, "Hey this works really well, let's fuck it up"!

Not Democratic legislators, not Republican lawmakers, just trough feeders, one and all.

|12.11.06 @ 4:03PM|#

I take it all back; it's FDR's fault!

|12.11.06 @ 4:06PM|#

RE: link by swillfredo pareto

Soy milk - no
Chocolate Milk - yes

So sad, so sad.

|12.11.06 @ 4:15PM|#

A friend of mine grew up on a successful dairy farm (80 cows). It's been in the family since the family homesteaded it in the 1850's.

In addition to the dairy operation, the family owns 800 acres of tillable land used to grow feed for the cows. 20% of what is produced goes to the dairy herd, the remaining 80% is sold. The money earned from these sales is used to purchase supplements for cows that are not easily grown. The farm is entirely debt-free.

My friend has an agri-business degree (double major) from a top-shelf agri-school and would like to carry on the family tradition of family farming.

But there is a catch. Because the land is now fairly close to a fast-growing urban center, it is now worth a small fortune. Because of this, if this debt-free farm were now passed down to my friend, the tax implications would necessitate acquiring a debt burden that would destroy the present business model. It appears the farm will have to be sold.

The money that goes to the government will not be used as efficiently as it has been by my friend's ancestors. So when someone tells me that calling inheritance taxes "a death tax" I can tell them, well, it does kill both dreams and the efficient use of capital.

|12.11.06 @ 4:21PM|#

The last part should have read (Sorry. I ain't had no formal learning):

So when someone chides me for calling inheritance taxes "a death tax" I can tell them, well, they do kill both dreams and the efficient use of capital.

|12.11.06 @ 4:39PM|#

Why doesn't congress just cut out the middle man and pass a bill allowing dairy farmers to beat kids up and take their lunch money? The more cattle you own, the more kids you can beat up.

Answer: Although it would basically be the same redistribution of wealth, it takes government oversight out of the picture and is therefore too efficient.

|12.11.06 @ 5:02PM|#

John: Most (not quite all, but the great majority) of Ag. Dept. programs our boils on the ass of capitalism.

|12.11.06 @ 5:06PM|#

Todd, well put.

Jennifer|12.11.06 @ 5:10PM|#

The money that goes to the government will not be used as efficiently as it has been by my friend's ancestors. So when someone tells me that calling inheritance taxes "a death tax" I can tell them, well, it does kill both dreams and the efficient use of capital.

Tom, it sounds like that specific story does not highlight problems with the estate tax, but problems with how property taxes are calculated; if your friend's farm is worth $1 million as a farm, but would be worth $80 million if it were bulldozed over and turned into a McMansion subdivision, the taxman will charge tax on an $80 million piece of property. Many farmers are being driven out of business for just that reason--they can afford to pay the taxes on a 100-acre farm, but can't afford the taxes on a 100-acre subdivision with a fake English name like Ye Centre Towne Estates.

|12.11.06 @ 5:22PM|#

Many farmers are being driven out of business for just that reason--they can afford to pay the taxes on a 100-acre farm, but can't afford the taxes on a 100-acre subdivision with a fake English name like Ye Centre Towne Estates.

Dairy farmers have another problem when it comes to encroaching subdivisions -- the new residents who want the "country life" of the rural suburbs usually can't stand the smell of cow s#*t.

And in true American fashion, they get the local zoning board to hound the farmer until he gets tired and sells out...to a developer, who in turn builds houses.

|12.11.06 @ 5:22PM|#

People, only one way and one way only to stop this crap and it ain't electing new politicans or appealing to their lackey's.
ITS REVOLUTION.
Where is the sign up sheet for the Libertarian milita?
It is now the only way.
WAKE UP before its too late.

Dan T.|12.11.06 @ 5:22PM|#

if your friend's farm is worth $1 million as a farm, but would be worth $80 million if it were bulldozed over and turned into a McMansion subdivision, the taxman will charge tax on an $80 million piece of property.

So sell it and enjoy your $79 million windfall.

|12.11.06 @ 5:35PM|#

If you all want to really have fun, put the dairy farmers, the middlemen, and the retailers in the same room and watch them do a fabulous job of explaining how the other two groups are the ones who profit from price controls, while they are the ones getting stiffed. It is truly a sight to behold.

|12.11.06 @ 5:51PM|#

Someone figures out a business model to offer a consumer what they want for a cheaper price and bypass inane government regulations?

We can't have that kind of revolutionist capitalist crap in free America!

|12.11.06 @ 10:21PM|#

"Why doesn't congress just cut out the middle man and pass a bill allowing dairy farmers to beat kids up and take their lunch money? The more cattle you own, the more kids you can beat up."

That almost made me spill my beer -- I mean my milk!

|12.12.06 @ 9:15AM|#

"So sell it and enjoy your $79 million windfall."

Yeah! It's the government's RIGHT to exchange your liberty for governmet issued script!

JD|12.12.06 @ 11:52AM|#

John: Most (not quite all, but the great majority) of Ag. Dept. programs our boils on the ass of capitalism.

Indeed. The New Deal-era "Rural Electrification Administration", formed in a time when supposedly only 10% of rural homes had electricity (I'm just quoting them, so don't ask me for details), survives to this day in the form of the USDA's "Rural Utilities Service", which seems to exist mostly to subsidize expensive water, telecom, and electricity in rural areas. Your government: taking your money and giving it to service providers so that other people don't have to pay market rates.