Got Milk (Subsidy)?

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It’s always amazing to me when I hear certain politicians complaining about the waste in government spending, that our deficit is increasing.  Like the past few days, of course.  Not because I don’t think they are right- but because these are almost the same guys voting for stupid things- like a milk subsidy.

The first stupid thing we do with milk is have special rules- ones that they failed to eradicate since 1949.  So, if we don’t overrule these rules (instead of remove them) on a five year basis, the price of milk rises to some astronomic number- not a supply and demand issue, but a “price support” issue.  Like this is critical for American defense.

As if that is not insane, we do more!  We actually appropriate more than $ 4 billion of our treasury dollars to keep the price of milk artificially high. So, that, assuming I even wanted to buy a gallon of milk, it costs me more than it should. Just so farmers will keep producing milk.

I know why grocers care about the sales of milk.  They use milk as a means to draw us into their stores, traipsing through the aisles, hoping we’ll buy something else, as long as we are in their store.  That’s why milk is typically found in the “way back” section of the stores.  But, they could lower the price of the milk (as a loss-leader), if they so choose.   And, some do.

But the dairy lobbies- they lament that milk consumption in the US is falling.  (Note- this is for pure milk; we are not talking about sales of yoghurts and cheeses- those milk product sales are actually increasing.)  Basically, the consumption of milk has dropped some 30% since 1975.

Since most adults consume milk primarily as part of their breakfast meal- and more and more of us are skipping breakfast, why is it surprising that our per-capita milk consumption is way down since 1975, from 28.6 to 21.1 gallons?   If you really think about it, it’s still a fair amount of milk that we consume- almost ½ a gallon a week per person.  (That happens to be about how much milk I consume in a year!)

To counteract this drop, retailers (and milk companies) are packaging milk in smaller packages, ones that cost even more per unit than the gallon or even those half-gallon portions.  The producers are even coming out with protein-enhanced milk versions, like milk is lacking in protein in the first place.   They are also placing commercials, deriding purchases of soy or almond milk, claiming they are simply “imitations”.

But, here’s a simple fact.  Way back in the 50’s (the 1950’s), there was a baby boom.  Lots of kids were around.  And, they are the prime consumers of milk.

Let’s look at the three graphs below…



1955… 29% of the US population was under 14, with the biggest percentage being those kids under 5.

1975… 24% of the US population was under 14, with the biggest bulge, now for those over 10 years old.

2010… 20% of the US population was under 15, about evenly spread.

Given that the price of milk has risen 10% in the past year due to the rising price of grain, and the aging of our population, why would it be surprising that our milk consumption is dropping?  But, the more important question is whether our milk production is important enough that taxpayers provide the milk industry a 65 cent a gallon subsidy.  Is it that important that we spend  more than 0.1% of the total US budget to subsidize it every year?

What do you think?

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18 thoughts on “Got Milk (Subsidy)?”

  1. So we give farmers .65 cents a gallon on a product they sell for more than gas a gallon. I’m trying to wrap my head around this…cheese and yogurt markets are booming, but drinking milk is in a decline. So ok I don’t understand the process of how a farmer goes about selling their milk, but it seems to me that the logical step for the farmer would be to sell a better portion of his milk to the cheese and yogurt industry and a smaller portion to the drinking milk industry to subsidize himself. I’d be in favor the gov. helping to make that happen, but .65 cents a gallon seems like a waste of money, especially when the tax payer is paying so much on the shelves. Enlightening post Roy…one that leaves me shaking my head. I’d be interested to see how much of the drinking milk is purchased by people in programs like food stamps and wic…just out of curiosity because that means in a round about way the government is paying even more to the milk industry as well.
    Lisa Brandel recently posted..Only What You See by Lisa Brandel

    1. Actually, Lisa- that subsidy applies to ALL milk. So, when they sell it for cheese- caching! Another 65 cent subsidy. And, let us NOT forget that Congress has NOT repealed that 1949 law that will make milk prices skyrocket. Let’s kill both of these stupidities and save our budget some money.

  2. I grew up on a dairy farm; my brother had to finally sell the farm because all prices paid for the products–corn, hay, and milk–were so out of line with the cost of production. It’s amazing to me that farmers can make a decent living. Of course, now with incorporation, most large family farms are surviving. Milk consumption, along with other dairy products, could be decreasing because it’s beaten into our heads that any animal by-product is not fit for humans. Farm subsidies has been an issue for many years…one I debated in junior high/middle school nearly 40 years ago! Oh my goodness!

    1. Most milk is now sold via folks like Dean Foods- a big conglomerate that is not exactly friendly to most farmers. I would have less of an issue if the milk coops that existed and thrived two or three decades ago were the primary beneficiaries. This is no different (and just as annoying) as subsidizing petroleum firms, PeggyLee!

    1. Janette:
      We need farming. I, personally, believe we need to help the small farmers. The problem with the system, as it has been engineered by the lobbyists, is that we subsidize the agribusinesses. Whether they decide to try to fool the system by claiming they are small business (using interlocking S corporations) or claim less than 500 employees (a definition that has no bearing on a farm business), we need to eliminate their ability to suck money out of our governments.
      But, we do need to insure that farmers- the individuals growing our grains, our vegetables, our livestocks- can survive in bad years and prosper in good ones. Let’s just make sure they are those that deserve our help.
      The milk subsidy is not among those farming arenas where they need help now.

  3. I do enjoy your rants, because they are full of facts and not just letting off a lot of steam without thought. We are the only animal that consumes the milk of another animal, and we pay dearly for that. Not sure if we still do, but at one time our government was giving a subsidy to clam fisherman because the clam population was dwindling. I guess there is a reason why it’s called adding “pork” to bills in congress. Interesting post, I hope a lot of people read it.
    Chef William recently posted..Detoxification

    1. I have to admit, William, that I never paid much attention to the clam situation (other than the vernacular use of clams- I like having them) since they are illegal additions to my diet. But, I have no doubt that we pay folks to not gather clams, since I recall them being in somewhat short supply.

  4. Roy what an interesting read. I think this is one of the things that really hacks me about these things, is that they say they are set up to help the small farmers to keep their farms and keep us all feed. The fact remains that most of the people that benefit from these are actually not people at all, but corporations that don’t really need help to stay in business.

    There are some really cool ways that those family farmers could keep their farms and really help their own communities as well, but I don’t see it taking off any time soon. It really is interesting to see how the government plans to take care of it. I don’t agree with it, but just interesting.
    Gen recently posted..Tips For Keeping Your New Year’s Resolutions

  5. Yet another creative way the government overspends… it amazes me the number of things federal money goes to. Nope, I don’t think we should be spending 0.1% of the fed budget on this.

    Personally I consume very little milk (except when I’m in a rush at the coffee shop and forget to ask for a non-dairy option). We drink rice or almond milk with cereal.

    I agree with Chef William’s comment – it’s strange that we are the only mammal that consumes another mammal’s milk! My children were breastfed and once they weaned I don’t see it as an absolute necessity in their diets.
    Michelle Shaeffer recently posted..12 Biggest Lessons I’ve Learned from 12 Years in Business

  6. Things work a little differently here so though prices of milk have raised over the past ten years (close to double actually) but milk is still very very affordable. Compared to what milk prices were when I was studying in India. Though if I got them directly from the farmers – they had a home delivery service too, it was way cheaper. But if I wanted to buy the tetra packed versions, I had to pay almost four times the price. So I obviously preferred the fresher version (though, it was not pasteurized and all that jazz).

    What I don’t understand is when you say milk – does it also include milk products?
    Hajra recently posted..Will the real men please stand up

  7. U.S. subsidies on corn put mexican farmers out of business.
    U.S. subsidies on rice put Haitian farmers out of business.So subsidies on milk increase prices rather than lower them?

    1. Kal:
      I would LOVE for your to provide data that US subsidies on corn affect Mexican farmers in such a fasion.
      Haitian rice seemed to diminish because of corruption and failure to maintain irrigation. Data on your assertion would also prove of interest.
      And, yes, the subsidies on milk- not the milk floor- do indeed increase prices. And, that is documented.

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