Over the Dairy Cliff: How Farm Welfare Harms Consumers


Writing in today's Wall Street Journal, James Bovard highlights the absurdity of U.S. agricultural policy:

Current farm programs—which consist of massive subsides, price supports and various marketing restrictions—were enacted in 2008 and expire on Dec. 31. That should be cause for rejoicing, except that the system is rigged against consumers and taxpayers.

Instead of Americans enjoying a bounty after the clock runs out, federal farm policy will automatically revert to a farm bill drawn up in 1949. That will compel the Department of Agriculture to roughly double the price supports for dairy and other farm products thanks to a mystical doctrine called "parity."

The doctrine was concocted by Department of Agriculture economists in the 1920s to "prove" that farmers were entitled to higher prices than the market provided. The official parity calculation was based on the ratio of farm prices to nonfarm prices between 1910 and 1914, the most prosperous non-wartime years for farmers in American history….

The ultimate absurdity of the "dairy cliff" is that there is no need for federal intervention in dairy markets. The supply and demand for the vast majority of food products made in America function just fine without government price controls. The worst disruptions have perennially occurred for a handful of items such as sugar and corn, as well as dairy products, which are under political protection. Politicians have long exploited these disruptions to help drum up donations to their re-election campaigns.

Read the whole thing here.

In a recent column for Reason.com, Baylen Linnekin made the case for scrapping the farm bill and replacing it with nothing at all. In a recent column of my own, I explained how the Supreme Court's excessive deference to economic regulation has its roots in a protectionist New Deal law passed to benefit America's dairy industry.