Farm Subsidies

The Nation's Biggest Dairy Is Failing Despite Relentless Government Intervention

Government has tilted the scales in milk's favor for so long that dairies forgot how to compete.

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In early November, Dean Foods, the nation's largest dairy producer, filed for bankruptcy protection. The company, which has secured nearly a billion dollars in debtor financing to keep it afloat temporarily, is looking to sell off some or all of its assets as it attempts to reorganize and survive.

The filing isn't exactly a surprise. As I explained in a column earlier this year, Dean Foods was a sinking ship. 

Many factors caused the company to fail. For one, Americans are drinking less cow milk. "Overall, dairy consumption (including fluid milk, cheese, and butter) has plummeted over the past four decades," I wrote. "Per capita, Americans are drinking nearly 100 lbs. less fluid milk than they did in 1975." In place of cow's milk, Americans are turning in small but growing numbers to cow's milk alternatives, including almond, soy, coconut, and oat milk.

Other factors, including falling cereal consumption and competition from Walmart—once one of its largest customers—have also hurt Dean Foods. Rising pension costs also ate into the company's line. Its stock lost nearly all of its value last year. What's more, decreasing demand for cow milk also comes as dairy farmers continue to break production records. Low demand and robust supply have driven dairy prices to a 50-year low.

But changing consumer preferences, overproduction, and competition from non-dairy producers only tell part of the story of the downfall of Dean Foods. The big picture has the government's messy fingerprints all over it.

For starters, the U.S. Department of Agriculture (USDA) is deeply involved in promoting dairy producers and production.

"USDA dairy marketing orders set minimum dairy prices, while the [agency's dairy] checkoff program takes money from dairy farmers to promote milk and other dairy products," I detail in my book Biting the Hands that Feed Us: How Fewer, Smarter Laws Would Make Our Food System More Sustainable. "Taxpayers have the dairy checkoff program to thank, for example, for the ubiquitous 'milk mustache' advertising campaign. If there are any benefits to be had from either program, they aren't likely to be enjoyed by your local farmer, creamery, or dairy."

The failure of Dean Foods indicates these wasteful programs didn't help larger dairy producers thrive, either. In fact, they encouraged dairy producers to ignore the signals they were receiving from consumers. All the while, many dairy producers in the United States have demanded that the government protect them from competition by forcing the makers of dairy alternatives to label their products with ridiculous and unappealing names. The government has, of course, obliged

The feds, I wrote, seem more than willing to go to almost any length to manipulate the market in favor of large dairy producers. To help boost dairy prices, for example, the USDA buys up surplus cheese and pays pizza giant Domino's to produce cheesier pizzas. (I detailed the bizarre Domino's saga here.)

While the USDA works really hard to make the dairy industry thrive, agency actions have produced the opposite outcome. To fix the problem, I urged the feds to get out of the way and to allow the free market alone to manage dairy production. I also cautioned that bad times will only get worse for U.S. dairy producers. The failure of Dean Foods is just more evidence of that fact. Given that neither Congress nor the USDA has seen fit to rein in or eliminate the programs that got dairy producers into this mess, this bad situation will likely only continue to worsen still.

NEXT: Today in Supreme Court History: November 30, 1981

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  1. Dear Dairy,

    I cannot tolerate you any longer. Good-bye.

    1. Lactose article intolerant?

    2. I have no tolerance for lactose, and I won’t stand for it.

      1. Now you’re milking the joke for all it’s worth!

        1. Don’t have a cow, man.

          1. Beware! The cows are revolting!

            https://www.youtube.com/watch?v=FQMbXvn2RNI
            Cows With Guns – The Original Animation

            1. Mooove over.

              1. These comments are a bunch of bull.

                1. This is udder nonsense. I’m going to hoof it home now, thankyouverymuch.

                2. They are the cream of the crop.

    3. Cows milk is for baby cows.

  2. And it’s not just the USA. Was it James Bovard who wrote 20+ years ago about the world’s being awash in surplus butter and cheese? Seems any country with a significant milk industry subsidizes its production ridiculously. The policy chases its own tail as producers pump resources into cattle, hormones, and other inefficient investments to milk the udderly bottomless breast of government payouts, resulting in endless surpluses for bleating taxpayers to beef about sheepishly. Eventually they’ll be squeezing milk out of mice.

    1. Mice milk, yum!

      But “just say no” to slutty mouse milk! No slutty mice on MY dairy!

      Q: Why did Micky Mouse divorce Minnie Mouse?

      A: She was totally fuckin’ Goofy!

    2. Gun vs Butter

      Guns win! As in Endless War.

  3. This article leaves out the other big reason for changed consumer preferences, the governments pushing of (now known to be false) dietary data that high fat foods like whole milk were bad for you. In fact, whole milk is good for you, in moderation, like most things.

    1. What’s this moderation claptrap?

      1. All things in moderation.

        Moderation is a thing.

        Therefore, moderation in moderation.

    2. Yeah this. People who are drinking soy, almond and good God “oat milk”. Have problems. Raw milk is the way to go.

      1. It’s Milk Plus or nothing!

      2. Shame the FDA bans the stuff.

    3. If combined with Kahlua and vodka. Otherwise I’m not touching that stuff.

      1. Why didn’t you just say White Russian?

        1. Don’t want to be accused on anything 😉

    4. Moderation is for monks.

  4. Have they tried marketing flavored milk vapes? Or maybe just flavored milk – pumpkin spice milk, chocolate mint milk, grape milk, fruit punch milk, coffee milk, cola milk, mango-pineapple milk – why shouldn’t the milk aisle be as variegated as the ice cream aisle? Which might be part of the problem – ice cream isn’t even ice cream these days, it’s a frozen dairy dessert product because they throw so much crap in there that the milk fat percentage drops too low to qualify as ice cream. Chocolate chunk cherry walnut cookie dough marshmallow Butterfinger ice cream has almost no milk in it, it’s a garbage bucket of a trip down the candy aisle.

    1. Give me plain old vanilla ice cream with a side of water and get off my lawn.

      1. Yes… The water must be pure rain water, though, and add some pure grain alcohol… I am watching the purity of my essences these days, and keeping them clean!

  5. Disgusting!!! Americans are giving up eating and drinking as much MILK and milk products as they used to!?!? What’s next, giving up on apple pie?!?!?

    Me, I LoOoOove MILK!!! As fresh as possible, straight-from-the-teat-raw is best…
    Also I like my cows that look like this… GMOoOoOoOoOo vows! (Scroll down a TINY bit when opening the link)
    http://www.scoop.co.nz/stories/PO0310/S00003.htm

    1. Anything more than a handful is a waste.

      1. And doesn’t look good when gravity is allowed to do its work.

    2. Unspoken is that the ability to digest cow milk was a genetic mutation only prevalent in Europe. Most people with Asian or African ancestry cannot drink milk beyond infancy These cultures used a number of techniques, like yogurt, fermentation, and cheese – which consume the lactose sugar.

      Given that the education experts thought the solution to poor performance in African American schools could be solved by giving out free milk to children, it makes you wonder what else they had wrong.

      The reduction in milk consumption may be little more than the changing demographics of an increasingly lactose intolerant gene pool.

      1. “Given that the education experts thought the solution to poor performance in African American schools could be solved by giving out free milk to children, it makes you wonder what else they had wrong.”

        Nearly all such experts are employed by the government. That in and of itself should be enough to make you wonder if they ever got anything right.

      2. Another mutation for milk tolerance in adults arose in east Africa. At the extreme, the Maasai traditional diet was mainly raw milk mixed with raw cow’s blood, and smaller amounts of raw meat. Vegetables were optional. The Maasai were exceptionally healthy until European colonizers forced a change in their diet. (Of course, the European doctors only saw Maasai men that had survived herding cows in lion country, which must have been a powerful selection factor for strong, fast, healthy, and large.)

        But that was a long ways from the west coast of Africa, where the ancestors of most American blacks were purchased or kidnapped.

  6. I have one drawer in my fridge for cheese, hard, soft , shredded . I use whole milk and half and half mostly for cooking. I’m doing my part.

    1. I think I’ll make a pizza for the Ohio State game and use some up. And tacos for the Browns Steelers tomorrow. Excuse me while I run out to get some beer.

      1. Tacos for the Browns AND the Steelers?!?! Most of these guys are BIIIIIGGLY YUGE, and there’s boatloads of them!!! Better make that a BUTT-TON of tacos!!!

      2. If there is no blood on the field it ain’t Browns – Steelers. Get ‘em dawgs.

  7. Despite Relentless Government Intervention?

  8. What ever happened to this (below)? I haven’t read squat (new) about it in years now…

    https://www.telegraph.co.uk/news/earth/agriculture/geneticmodification/8423536/Genetically-modified-cows-produce-human-milk.html
    Genetically modified cows produce ‘human’ milk
    Scientists have created genetically modified cattle that produce “human” milk in a bid to make cows’ milk more nutritious.

    1. Do the udders look like breasts? Asking for a friend.

  9. Correct me if I’m wrong, but wasn’t Thomas Jefferson con minced that Farmers were deserving of special government support? That would make the history of government meddling in farm business as old as the Republic, if not older, and as American as apple pie.

    And about as healthy as apple pie as an unvaried diet.

    1. The original cities and their governments in Mesopotamia were probably about administering water rights and the irrigation for farms.

      Military leadership was important before that, too, but people apparently didn’t go from hunters and gatherers to intensive farming because farming was easier. Just like with Native Americans, tribes were often forced out of prime hunting grounds after losing military conflicts.

      Okay, so now we can’t follow the herds anymore. Let’s build irrigation canals and farm. Who gets the water from irrigation and how much? The answer to those questions was probably the beginning of government as we think of it. It takes a lot of people to build irrigation canals and walls around your city.

      1. FWIW:

        “The nutritional standards of the growing Neolithic populations were inferior to that of hunter-gatherers. Several ethnological and archaeological studies conclude that the transition to cereal-based diets caused a reduction in life expectancy and stature, an increase in infant mortality and infectious diseases, the development of chronic, inflammatory or degenerative diseases (such as obesity, type 2 diabetes and cardiovascular diseases) and multiple nutritional deficiencies, including vitamin deficiencies, iron deficiency anemia and mineral disorders affecting bones (such as osteoporosis and rickets) and teeth.[84][85][86] Average height went down from 5’10” (178 cm) for men and 5’6″ (168 cm) for women to 5’5″ (165 cm) and 5’1″ (155 cm), respectively, and it took until the twentieth century for average human height to come back to the pre-Neolithic Revolution levels.[87]

        https://en.wikipedia.org/wiki/Neolithic_Revolution#Social_change

        Just think of the time and effort necessary to raise a domesticated cow to maturity relative to the time and effort necessary to hunt a bison, and you definitely don’t need a government to coordinate hunting a bison. Meanwhile, it takes 20th century sanitation and medical discoveries to counteract the diseases we suffer from living together in density?

        If I’d been a warrior from a tribe on the plains of North America, I’d be pissed about the white man bringing “progress”, too. I sure as hell wouldn’t be thanking them for bringing the government.

        1. Have you ever even been hunting, Ken? It is fraught with uncertainty. Raising a cow may take more effort, but it is much more of a sure thing. The Native Americans didn’t domesticate any mammals (beside the dog), because there weren’t any suitable species on this continent, not because they weren’t interested.

          1. No question killing a bison can be fraught with uncertainty. It was an uncertainty that was a lot less uncertain when you could follow the buffalo herds around and there were millions of them. Did you know that bison once roamed all over the continent of Europe?

            I hope you appreciate that I’m not the genius who first noticed that intensive farming requires more effort for less payoff than hunting and gathering. I’m just well read enough to have been exposed to it.

            People have been more or less as we are for about 100,000 years. For the first 90,000 of those years, we hunted and gathered–because it was easy. People started domesticating animals and plants in the Levant and Mesopotamia about 10,000 years ago because they didn’t have a choice–out of necessity–not because it was easy.

          2. “The Native Americans didn’t domesticate any mammals (beside the dog), because there weren’t any suitable species on this continent, not because they weren’t interested.”

            No one is disputing this.

            The cities that emerged first during the neolithic revolution were concentrated in the Levant, Mesopotamia, and places where species that were easier to domesticate were more plentiful.

      2. Wow, Ken Schultz gamboling with the White Indian! But I’m sure there’s something to it, can’t easily dismiss it.

    2. The Democrats got tied up with farming interests early, yeah. At first that was good for individual liberty, later not so much.

      Same more recently with the Free Democrats in Denmark, as we were told by some radical libertarians traveling from there a few decades ago. It’s, the Free Democrats were the party of liberty, but also the party of the farmers, apparently because the interests were aligned at first, but then not always, and they roll logs….

      That’s how it’s bound to be in a democracy with democratically controlled political parties. You’d be stupid not to have your political party be democratic, because you really cut yourself off from influence if you don’t. But the influence flows both ways, leading to ideologic drift. Still better, though, than staying “pure”, because then you wind up like LP, attracting only a narrow sector who come to identify the organization’s interest with their own, personally, so it becomes all about them, while they honestly believe they’re upholding “purity”. It can even lead to situations like HyR, where some of the bloggers probably sincerely believe they’re laying down the line of individual liberty, while in reality it’s been hijacked by a quirky interest in…I don’t know what — caricatured here as “cocktail parties” but it’s something else we can’t identify. I don’t think it’s business interest of Charles Koch, either.

  10. The stabbing attack in London wouldn’t be as big of a deal if it hadn’t taken place two weeks before the general election in the UK, which will decide if, how, and when the UK leaves the EU. Of course, Boris Johnson is looking for an outright majority in parliament so he can Brexit like he wants to Brexit.

    When people allege that Brexit had a lot to do with anti-Muslim sentiment and being fed up with EU immigration rules in the aftermath of Africans flooding north across the Mediterranean after the Qaddafi regime fell as well as refugees from the Syrian conflict flooding across the channel, they’re telling the truth. The suicide bombing at the concert in Manchester was a big one, but terrorist attack from a couple of days ago is particularly reminiscent of the London Bridge attack in 2017, when three terrorists plowed their van into a crowd of innocent people and then randomly started stabbing everyone in sight.

    The suspect in the knifing the day before yesterday was previously convicted in 2012 of plotting to blow up the London Stock Exchange. He was released in 2018. I suspect he would have been given at least 40 years in the federal pen if he were convicted of the same offense in the U.S., wouldn’t be eligible for parole until he’d done 80% of his time, and would never be granted parole.

    if the people of the UK can’t trust their government to keep duly convicted terrorists locked up and away from innocent people, I suspect they’re likely to try to keep them out of the country entirely by writing immigration laws that are quite different from those adopted by the EU–and that’s regardless of the way things should be. Indeed, when free democratic people feel like they have no say in the way immigration laws are written or enforced, they turn to anti-immigration populists, whether it’s in France, Germany, Italy, the UK, or the USA.

    Elitism and opprobrium are inadequate substitutes for democracy and persuasion. That’s the lesson for those, like myself, who would like to see the U.S. Senate ratify a treaty with Mexico to allow more open immigration between our countries.

    1. Agreed, Ken!

      “Islamofascism” is a “thing”, and I feel way bad for Europeans who have to deal with it… The sins of who-knows-how-small a fraction of Islamic folks really mess it up for the rest of them. But Islamic suicide bombings are all too real, as are hot-headed Islamofascists running around destroying and killing… Because they seemingly want to prove correct, the cartoonists who accused them, graphically, of being destroyers and killers!

      “Hispanifascism” is NOT a “thing”, in anywhere near the same sense! Yet Hispanics on our side of the globe suffer for the sins of some fraction of Islamic folks… It sucks! Hope it will get better soon…

      1. It’s funny the way the definition of “Islamofascism” has changed over the years. When I first heard the term used, in the aftermath of 9/11, it was used to describe both the Taliban and the likes of Saddam Hussein. Back then, average people didn’t know anything about Islam, much less the ideological differences and differences in goals between Al Qaeda and the Baath party. Still, the term “Islamofascist” was mostly used for Baathists.

        LIke I said, regardless of whether Congress should violate the First Amendment and make laws that discriminate on the basis of religion, the fact is that people will turn to anti-immigration populists when they feel like they have no voice in how immigration policy is made and enforced. If we don’t want people to turn to supporting anti-immigration populists, then we should respect their right to have a voice in immigration policy and how those laws are enforced.

        Because I oppose the Iraq War doesn’t mean I need to oppose Congress having the power to declare wars. Congress declaring wars is well within the legitimate purview of democracy. Because I oppose all income taxes doesn’t mean I need to oppose the legitimate democratic requirement that Congress approve all federal taxes. And just because I don’t like our current immigration policy, that doesn’t mean I need to oppose Congress setting the rules of naturalization in accordance with the wishes of the American people–insofar as that is appropriate and respects things like the First Amendment.

        If we don’t like policies and the way they’re being implemented by our politicians, the appropriate solution is not to denounce everyone who supports them as racist, xenophobic, or unwoke, and then support using the bureaucracy and the presidency to completely ignore the voice of the American people. The only solution is for democracy to be respected within its proper purview, so long as it doesn’t exceed its proper bounds, and to persuade our fellow Americans to change their minds.

        Any other “solution” will only serve to drive more support for anti-immigrant populists–and that has been proven time and time again, cross culturally and throughout history.

        1. Congress already make laws that discriminate on the basis of religion,namely polygamy. Utah was denied statehood until the Mormons got rid of it. It’s still popping up in Utah, Federal courts have been involved. If the Feds ever relent it will be to supplicate Muslims not Mormons.

          1. Because the government is wrong about one thing doesn’t justify them doing anything else wrong or doing the same thing wrong on a bigger scale or more often. Being wrong more often and in more ways is worse. The First Amendment plainly states, “Congress shall make no law”, and when Congress makes laws that discriminate on the basis of religion, then they are clearly violating the First Amendment–and even if I did support the goal, for some reason, I would oppose such a law on the basis that it violates the First Amendment alone.

            1. P.S. I also oppose unconstitutional wars, that I would have/might have supported otherwise, solely on the basis that they’re unconstitutional.

    2. One of the mysteries about US immigration, which may apply to the EU too, is how much refugee immigration is brought about by the host government doing its damnedest to being in refugees who otherwise would rather stay put or go elsewhere; to do “their fair share”, so to speak. Considering that of the 9-11 terrorists, only 4 knew it was a suicide mission, and the shoe and underwear bombers were as inept as could be, I have the gut feeling that purely voluntary immigrants would not turn into terrorists. But I don’t know enough about how the industrial-scale refugee business works, other than to guess governments fuck it up for entirely non-refugee reasons.

    3. Meanwhile, the NY Times abstains from reporting on this latest London terrorist attack.

      1. There really isn’t an anti-Trump angle, so why bother?

        If a tree falls in a forest and kills a bus load of children, it doesn’t really make a sound in the NYT press room–unless Trump can be blamed for it in some way.

        1. NYT — “Trump’s forest cutting bill kills a bus load of children.”

          Inside the REAL details – That tree fell because lefties insisted it not be cut down even though it was marked a hazard and scheduled too be cut down for natural root rot. “Save the Trees!!!” mobsters came out of the wood-work the week before.

          Same old story — Over and over and over again.

        2. “All the news that’s fit for our narrative”?

  11. Any time a business in the US is failing, we Koch / Reason libertarians know the solution — unlimited, unrestricted immigration and no minimum wage.

    #OpenBorders
    #ImmigrationAboveAll

  12. decreasing demand for cow milk also comes as dairy farmers continue to break production records

    That’s incredible. And it tells you everything you need to know about the problems with the industry.

    1. It says even more about how well government works.

      It’s hard to blame the industry itself as much. Certainly they had some lobbyists pushing for their own special kind of protection and subsidy. But individual dairies get little choice in the matter. They can’t opt out of the checkoff programs; the government will advertise for them whether they like it or not. Any individual dairy opting out of subsidies would be committing business suicide.

      There was a case a few years back about some prune or fig orchard trying to opt out of the checkoff program and go it alone. Memory says the courts told them no, they had to accept government help. “We’re from the government and we’re here to help.”

  13. Are there any Americans left that do not want the federal government to manipulate other people (and their wealth) in order to fulfill a nefarious vision of how we should behave (and spend)? Does anyone believe in liberty, autonomy, and personal responsibility anymore? (And not just for themselves)

    1. I believe that most Americans would rather go about their daily lives minding their own business and ignoring the government as much as possible, but government has expanded to the point of making this impossible unless you want to live a skulking existence in a forest. I believe that most people, if given the chance to live in a society with vastly reduced government interference, would choose to do so, except they would have to be convinced it would affect everybody. No favoritism.

      But people aren’t fools, and very few are so altruistic as to give up their government benefits if no one else will. Didn’t Ayn Rand take her SS pension? That’s what I mean.

      Similarly, any business which refused government largesse would probably go bankrupt. Any business obeying government regulations would be crazy to not inform on other businesses flaunting the same regulations. Need to get an EPA permit to change oil in cars? You’re sure not going to tolerate a new competitor who decides to skip that paperwork and expense. Need to spend a year getting the right permits to start a company? You’re going to make sure a competitor doesn’t skip a few steps.

    2. The truth is that men are tired of liberty.
      ~ Benito Mussolini

      1. Don’t know whether that quote is real or not, but it’s certainly immaterial. A deluded master propagandist dictator is not a very enlightening source except as to what his thoughts were,and then only indirectly.

    3. “Are there any Americans left that do not want the federal government to manipulate other people” — Ya; probably the majority in the [R] camp. Of course many have their quarks but most push for a limited government in the big picture.

  14. This is a good news for someone and also in an opposite betta fish, this is a bad news for someone.

    1. That’s one of the deepest things I’ve read on the Internet. None betta.

  15. OT –

    Michigan judge complains that she put $7,000 in the vending machine, but it wouldn’t dispense a Communion wafer:

    https://www.theamericanconservative.com/dreher/sara-smolenski-politicizing-catholic-communion/

    1. I’ve heard them Catholics don’t even accept the divinity of Mohammed or the Buddha and frown on Satanic rituals. They’re quite intolerant and non-inclusive that way.

  16. So, how long before England bans narwhal tusks?

    1. One of the funnier tweets in followup boasted how all Americans could think of was “Guns!” and I thought briefly of opening an account just to ask (a) how legal it would be in Britain to walk around everywhere with a 5 foot narwhal tusk, (b) are narwhal tusks so common in Britain as to be handy for self-defense,and (c) if so, would it not be just as likely for terrorists to grab them off walls for terroristic purposes.

  17. Some wise man will look at this and say Karma!

    When businessmen get in bed with government force to ensure their profits, the politicians and business gain in the beginning. But government comes with restrictions and limitations on how the business is run. Market forces eventually put the inefficient government controlled businesses, out of business, because the government model isn’t run by market forces.

    The only dairy farmers I have some sympathy for, are those who recently entered the business without their eyes open.

  18. Dean Foods was a conduit for milk coop based in Kansas City, which is considered the likely buyer. Dean Foods was pushed out of much of the Midwest when Walmart opened its own dairy operation. Walmart cancelled Dean’s contracts which trickled back to the milk co-op, giving farmers 90 days that the co-op would stop sending trucks to pick up milk. Walmart was private labeling as Great Value in addition to carrying Dean’s products.

    For at least the past few months, whole milk has sold for $.58 per half gallon in my area I wonder if Walmart vertically integrating milk production, distribution and retail sidesteps government rules forcing artificially high milk prices. Even Aldi is charging close to $2

    1. Wow. I live in the rural Midwest and half gallons are about $2.25, and have been for the last 2-3 years. A gallon of milk has been stuck between $2.85 and $3.15 for at least 3 years.

      I wish I could get a half gallon for $0.58. We go through a half gallon a day in my house.

  19. I have no tolerance for lactose, and I won’t stand for it.

    https://www.programs-gulf.com/

  20. I grew up in California dairy country. Used to be small family farms. Only one small family farm left. They’re all huge now. The economies of scale is one thing, but when it comes to subsidies, economies of scale are everything. There are entire villages consisting of nothing but the workers for a single dairy. Literally.

  21. Day by day the quality will decreasing that’s why it will create problem for there consumer. You can also see ca va in english

  22. Is Dean Foods actually a “producer”, or a “processor”? Does Dean actually own the cows?

    And don’t kid yourselves, alternatives to real dairy products such as soy and almonds benefit from various government subsidies as well.

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