Sunday, December 30, 2012

Ah, Milk!

One of the goofier results of going over the fiscal cliff is what will happen to milk prices. A gallon might now set you back eight bucks. I didn't fully grasp the issue until I read this article in the nytimes this morning. When they drew up the sequestration business, a clause was added that milk prices would be tied to the antiquated and somewhat curdled 1949 farm law.

"Under the current program, the government sets a minimum price to cover dairy farmers’ production costs. If the market price drops below that, the government buys dairy products from farmers to buoy prices and increase demand. Since milk prices have remained above that minimum price in recent years, dairy farmers usually do better by selling their products commercially rather than to the government.
But if 1949 rules go into effect, the government would be required to buy dairy products at around $40 per hundredweight — roughly twice the current market price — to drive up the price of milk to cover dairy producers’ cost."
Certain people are always squawking about socialists hiding under the bed. The biggest marxist game in America is played out every day with farms, water and food. But it mostly takes place in the red states so we don't hear too much about it.

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