Why is government involved in prices for farmers?

Editor:

I am not a farmer. That may be why I don’t get it. I don’t understand why farmers want or need the government to get involved with milk prices.

If a price on any commodity is artificially set or, worst yet, controlled by the government, what is the long-range sustainability of the that market?

Why not let the market dictate it? Wouldn’t the long-term result benefit the farmer?

As an outsider, I look at some farmers in Ohio wanting the government off their farm (as pertaining to the board being set up for animal welfare), but yet want them on their farm when it comes to pricing.

Again, I’m not a farmer, but most people aren’t. Can anyone explain?

Tommy Doyle
Charleston, S.C.

6 Comments

  1. Jared says:

    Tommy,
    I would much rather the gov’t get out the the milk pricing business. Do what they were set up to do and oversee that the market is transparent. Here in PA, consumers are paying $3.50-$4.50/gallon for milk.

    I got paid $1.30/gallon last month for the milk we produced. Thats the gov’t hard at work.

  2. Mike Sowers says:

    I have farmed since I was a kid like most of you have. i started helping my neighbor milk when I was 14. He, like many others he is no longer in business. I have a beef and hay operation but still have a love for the dairy industry. The Dairymen work too long and too hard for their pay, regardless of the amount. My family buys and uses about 8 gallon of milk a week. I like the local prices of around 2.25 a gallon, but would happily pay twice that if the money went to the local dairy farmers. Keep up the good work gentlemen.

  3. CM says:

    There is not near enough space here to fully explain. I will start by saying I know of NO farmer who wants government intervenment but it has been around for years, and, as a result, comes to haunt us occassionally. We dairy farmers cannot just sell our milk to anyone-we would lose our licenses and be fined.(govmt.control)Since the govmt. will not let us sell to the public, the number of dairy facilities that we can sell to has greatly dwindled, until most of us have no choice as to who to sell to, and those processers know that and VERY frequently take advantage of this fact. On top of this, atleast 2 more “middlemen” pass our milk to the consumers, all adding more costs to the final price (we see none of this added money-infact, we PAY to have our milk delivered to the dairy plants) Please do the math: (from 1970′s-the earliest I remember)
    Gas: .30-.35 cents/gal.-now approx. $2.80/gal.;pickup truck $5000. now $40,000plus; land-most well under $500/acre now most $3000plus
    GOOD paying job- $5.00/hr now $20.00/hr. and finally, the price of milk…$7 to $8 per cwt. compare that to March 2009…$9.31 per cwt. Does that seem fair to you? (this is not counting the fact that my feed costs doubled in the past 5 years) Mind you, this past year, the dairy processors that bought our milk had double-diget profits, and did not lower the price of dairy products in the stores. Remember a couple years ago when milk prices were at an all time high, and people were complaining about $5-$6/gal. milk? Just remember this..farmers got $1.82/gal. (holstein milk)Who do you think got the balance?
    There is so much more to this-let it suffice to say that the govmt. has a chain on us, but knows that we are needed or people will go hungry-so it wakes up when things get bad for us and throws us a few scraps to keep us from starving. Meanwhile, we are too busy making ends meet that we cannot effectivly band together to decide our own fate…

  4. Gary Haws says:

    I am not a farmer, but need them to survive. Big gov’t. has always pandered to big business,and the dairy farmer is left with crumbs. Farm subsidies have never worked and has strung the dairy farmer out like they are on heroine. As a consumer, I would rather give the dairy farmer $6.00 a gallon for his product than pay it through the gov’t. subsidy programs. It is ironic that the problem is so out of control that the gov’t. may have to be the one to come up with a solution. Check out a bill tagged the Spector-Casey Dairy Bill. Those two jokers didn’t have anything to do with it, but a man by the name of Tewksbury helped craft this simple six page bill. It establishes cost of production and quotas,and abolishes subsidies. It has zero publicity and my be buried somewhere, but please google it and if you agree,call your representitives and get the word out.

  5. AZ says:

    The issue of why government is involved is based on various reasons. Although I don’t agree with them all and believe it should be more liberalized and farmers should definitely have a greater say in the price of milk – the original intentions are good. The cost of producing milk in the U.S. is fairly high compared to many other countries. In order to compete on the international market – the cost of milk must be kept on par with the rest of the world or we lose a competitive advantage. Now – you’re probably thinking – why in the world do we need to be worried about the international market? In fact – we should definitely be concerned with the international market because they pick up much of our excess product and subsequently help to increase the price to U.S. farmers. Another thing is – the government purchases many of dairy products for future storage (NFDM)/ government programs and supports food programs that help low income families buy dairy products. A government run supply management system would not allow farmers to adjust their production during economic distress and would artificially inflate prices and would severely hinder our ability on the international market. That being said – it is quite a complex issue and when it comes down to it – someone is going to get screwed. There definitely needs to be a complete overhaul of the milk pricing system of which input can be contributed from farmers and processors, which is more based on the cost of production. Also – farmers should have a greater say in the products that get produced. One thing that we need to keep in mind is that processors must make sure they manufacture products that consumers want. If that means investing in new technologies and manufacturing equipment – it needs to be done. Farmers also need to look into more economical ways of reducing input costs without sacrificing wages and food safety in quality.

  6. eric says:

    I noticed some good stuff in the comments I have read to the original post. I would like to add my input, but before that I should say that I come from a farming community and my family farm’s.
    The government through it’s de-regulation has allowed the milk processors to monopolize the market. Alot of these companies will not buy milk from family farms unless they are in their system as to give absolute control over it, so in this case to little government has had an adverse effect, driving out the small farmer for no other reason than he chose to be independent.
    That said, in reality there is to much supply side to dairy meaning we produce to much of a product, this in turn drives the pirce of raw milk down. However as mentioned above the large conglomerates have put a monoply on processing and distribution. Also, the large retailers force these suppliers to cut there price or face not being allowed to sell their products on said markets shelf, creating more monoply of the industry,
    In short, too much supply, to little regulation, monopolization of the market has ruined the dairy industry. To that end, price support is a way of getting dairy out of the market, using it for food programs, and artifically setting a bottom for the market. If we could fix the supply, regulation, monopoly problems, the price supports would probably not be needed.

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