Got Milk?

Something that I have come to realize over the past several months is that even as we decry the central planning and control of a socialist/collectivist state, we are actually living the nightmare of socialism. Central planning and social engineering are both failing, as they have always failed but the brilliance of Wilson, Teddy and Franklin Roosevelt and Democrats like Obama is that they have been able to ingrain the cogs of such programs and policies in layers and layers of bureaucracy and then cloak them with sweet sounding, trendy terms.

There is nowhere that this is more evident than in our agricultural policies and the legislation of protectionism and control that is deployed around them.

I had thought a while back when we had the Great Milk Panic of 2012 (“A gallon of milk could cost $8 in 2013!”, screamed the Washington Post) that arose during the idiotic “fiscal cliff” ruse. That thought was that if we needed to pass legislation to fund subsidies to keep prices down and the market value of a gallon of milk was $8.00 when it was selling at 3 bucks and change, we must be pumping at least $5 of subsidies into the production of each gallon…I actually tried to go to the USDA website and decipher the formulas to calculate that but I found them to be impossible to understand. There were mazes after maze of linked regulations and calculations that I doubt anyone but a career Ag Department flunky even understands. The best explanation that I could find to the simple question of “How much does it cost to produce a gallon of milk?” was from 2009 – but it notes the issue:

So the answer is (subject to all kinds of qualifications): The average retail price reported by A.C. Nielsen for June 2009 was $2.72 for a gallon of whole milk. The weighted-average ERS cost of production estimates it cost $2.81 per gallon to produce. According to NASS, nationwide for June, producers received an average of $1.31 per gallon for milk. Those certainly are not exact numbers but at least tell us that the problem measured in real stress at the farm can be seen in approximate estimates.

And from the update in 2011:

The result is that in August 2011, on average, consumers paid $3.40 per gallon and producers received $1.53.

So the simple math from 2009 is this – farmers receive $1.53 a gallon for something that costs roughly $3.00 to produce (was $2.81 in 2009 – I adjusted for feed inflation caused by the Midwest drought and ethanol production) = $1.47 loss. So that means that there is a $0.40 gross margin on a sale (3.40 – 3.00)and the farmer gets 1.53, therefore the taxpayer give the farmer the difference of $1.13 PLUS covers the $3.00 cost, rendering a subsidy of around $4.13 per gallon.

Sound a little socialist? You bet it does.

Same with raisins.

Did you even know that we had a Raisin Administration Committee?

Well, we do and they are just as effective as any Soviet era bureaucracy – which really means, “not effective at all”:

No longer do farmers enjoy the ancient right to sell their produce and enjoy the fruits of their labor.  Indeed, Horne v. U.S. Dept. of Agriculture exemplifies the extent to which all property and business owners are made to suffer a needless, Rube Goldberg-style litigation process to vindicate their constitutional rights.

In this case, the USDA imposed on the Hornes a “marketing order” demanding that they turn over 47% of their crop without compensation.  The order—a much-criticized New Deal relic—forces raisin “handlers” to reserve a certain percentage of their crop “for the account” of the government-backed Raisin Administrative Committee, enabling the government to control the supply and price of raisins on the market.  The RAC then either sells the raisins or simply gives them away to noncompetitive markets—such as federal agencies, charities, and foreign governments—with the proceeds going toward the RAC’s administration costs. (via HotAir and the Cato Institute).

Makes one wonder if this from Hippocratic writing Epidemics (commonly thought of as part of the Hippocratic Oath but isn’t) should be applied to government:

The physician must be able to tell the antecedents, know the present, and foretell the future – must mediate these things, and have two special objects in view with regard to disease, namely, to do good or to do no harm. 

If you wonder why we are having so little success in unwinding Obama’s kingship, it is because the socialist foundation is deep and solid.

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2 thoughts on “Got Milk?

  1. I guess we didn’t learn the lessons of the collapse of the communist system in Russia. The State is not prepared to mandate the production of any commodity. It can best be explained by the old saying “those that can do and those that can’t teach”. You see, those that are in charge of mandating the level of production and allocation of resources come from the academic side of the house. Because those that actually do, have the potential to make much more money and do not wish to give that up for the power of control.

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