What is your take on this article, I want to know the other side.
“Dairy cliff” shows food system “rigged” against consumers
by Joel McDurmon on Dec 31, 2012
From the Wall Street Journal,
Current farm programs—which consist of massive subsides, price supports and various marketing restrictions—were enacted in 2008 and expire on Dec. 31. That should be cause for rejoicing, except that the system is rigged against consumers and taxpayers.
Instead of Americans enjoying a bounty after the clock runs out, federal farm policy will automatically revert to a farm bill drawn up in 1949. That will compel the Department of Agriculture to roughly double the price supports for dairy and other farm products thanks to a mystical doctrine called “parity.”
The doctrine was concocted by Department of Agriculture economists in the 1920s to “prove” that farmers were entitled to higher prices than the market provided. The official parity calculation was based on the ratio of farm prices to nonfarm prices between 1910 and 1914, the most prosperous non-wartime years for farmers in American history.
If the market price of milk, for example, fell below parity, the Department of Agriculture intervened in markets in various ways to provide a price floor to benefit dairy producers. This mechanism has been in place for generations, gouging taxpayers and consumers, long after full-time farmers became far wealthier than average Americans. . . .
Once parity kicks in the price could quickly soar to $7 a gallon, according to Secretary of Agriculture Tom Vilsack. The USDA could burn through billions of tax dollars buying up dairy products that are unwanted at exorbitant prices.
Farmers will enjoy a brief windfall until consumer demand plummets for their product. Any resulting chaos in the marketplace will almost certainly produce demands for new bailouts of farmers.
The dairy lobby has long been one of Washington’s most tenacious. By the 1980s, federal dairy policy cost the average American family enough to buy its own cow. . . .
The ultimate absurdity of the “dairy cliff” is that there is no need for federal intervention in dairy markets. . . .
