The Federal Government’s Dairy Err

Often times we hear how Congress and other elements of DC are broken.  To fortify this statement, many point to the fact that Washington can’t get anything done, but that’s not always a bad thing. Take the Federal Agriculture Reform and Risk Management Act (FARRM) Act, aka the new farm bill, for example.  The passage of this bill was held up not because of the milk subsidies portion – though it should have been (more on this later) – the part that stopped the wheels from rolling is the controversial food stamp provision, Supplemental Nutrition Assistance Program (SNAP), which House Republicans want to cut.  And for good reason, the funding should be cut.  Let’s look at just one example of how SNAP benefits are being used.  Fox News reported one of the more colorful entries from Sen. Tom Coburn’s 2012 Wastebook, “widespread abuse of the food stamp system — including an exotic dancer who earned more than $85,000 a year in tips, but also collected nearly $1,000 a month in food stamps while spending $9,000 during that time period on ‘cosmetic enhancements.’”

Thankfully, Congressmen were unable to come to an agreement on the SNAP payments portion of the farm bill before leaving town to campaign for the upcoming election.  As a result of their inability to strike a deal, the taxpayers may just end up being saved a few billion that will not be paid out in the form of farm subsidies – some of the largest and most heavily lobbied for in all of DC.  Generating all the hoopla this time around is the dairy subsidy and the Milk Income Loss Contract (MILC).

The government sets minimum prices that processors must pay for Grade A milk, and milk producers are forbidden to sell their product outside their designated region.  Because of transportation problems decades ago, these prices are based on a series of federal Milk Marketing Orders, which are based historically on the milk producers’ distance from Eau Claire, Wisconsin.  These mandated prices vary from region to region and require that purchasers pay more for milk that will be sold as fluid milk rather than for milk destined to be used in other products.

MILC is a program that dates back to the 1940s that provides a “safety net for dairy farmers when milk prices fell… The program compensated dairy producers when farm milk prices fell below a specified level. It was aimed at smaller farms especially to help them cover operating expenses until prices returned to higher levels.”  A flawed policy from its inception, there’s no excuse to perpetuate it now.

If there ever were a question of just how effective lobbyists are at lobbying on behalf of their industry, just look at what the National Milk Producers Federation’s spokesman, Chris Galen, had to say about the possibility of the milk subsidy ending, “we’ve never had this happen before. We’re not in the type of situation where there’s a precedent.” Translation: for at least the last 60 some years or so, government has stood at the ready to provide the hefty handout that industries, such as the milk industry, have become accustomed to – if not being nearly completely dependent upon.

If that’s what the lobbyists are telling the milk farmers to assuage their fears, look what some farmers actually think may happen if the farm bill is not passed, ‘“I think people wouldn’t buy products anymore,”’ said Melissa Greenbacker, who runs a dairy farm in Connecticut with her father. Melissa’s statement seems pretty off-base.  Even if as the article states, “The retail price, now over $3 a gallon, could go to $7 a gallon or more.” It’s hard to imagine that people would actually stop buying milk altogether. Besides the fact that milk is a necessity, many in the current market are freely choosing to purchase organic milk, which usually runs around $6 per gallon. In fact, people are not only buying organic milk, they’re demanding it.  Greenbacker’s father, like the milk lobbyists knows better, he notes that the government won’t ever really let the milk subsidy expire.  He explains, “I can’t believe that the federal government, even if they didn’t pass the farm bill, there wouldn’t be some executive order to prevent that from happening.”

At least some in the dairy industry are beginning to recognize the smell of this spoiled MILC program.  Karen Gefvert with the Wisconsin Farm Bureau has noted that if farms are unable to remain in business if and when the subsidy may disappear then “maybe they weren’t the most viable businesses anyway.”  Once Washington gives a handout, all sorts of lobbyists and interests that previously did not exist come out of the woodwork and cry to Congress that their industry will die without the federal government’s monetary assistance.  Sure if MILC goes away for good, the staff of the National Milk Producers Federation lobbying arm may get trimmed down because they’ll have one less issue to lobby on, but so much the better for Washington, DC and taxpayers across the country.  We’ll all be able to live with one less lobbyist, who’s carving out his fair share of the government’s special interest pie.  At least we’ll have milk to drink with the pie that’s left.