Wikicommons: United States Department of Agriculture
It would also milk taxpayers to pay for dairy subsidies and cost them at the grocery store.
Dairy subsidies and protectionist policies that favor dairy farmers have been around for over 70 years, dating back to the New Deal era.
But as the congressional “super committee” grapples with deficit reduction, all manner of spending is under scrutiny. A small group of farm-state lawmakers is proposing an overhaul of dairy subsidies that would supposedly reduce outlays by $131 million over 10 years.
In a new report, Heritage Foundation regulation expert Diane Katz points out that by limiting supplies to maintain higher prices, consumers are bearing the brunt of increased costs for milk, butter, cheese and various other milk products.
“Americans are taking a double hit on dairy,” she writes. “Tax revenues are used to subsidize producers, and production limits raise the cost of products.”
She notes, the upside of the new Dairy Act would
end the Dairy Product Price Support Program, under which the USDA guarantees the purchase of dairy products to prevent a drop in prices. In practice, the program was dysfunctional; the guarantee of a price floor prompted investment in production facilities for the very products that the government was buying to reduce supply.
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