Bailout Money for Dairy Cows? Glut of Milk to Send Prices Plummeting
By Mike Adams, January 16, 2009 | Key concepts: Milk, Dairy and Prices
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The dairy industry is bracing for a price collapse that will mean some dairy farms will receive less than half of what they got paid last year for cow's milk. The problem? Thanks to economic woes, public demand for milk has plummeted, and the laws of supply and demand dictate that when there's too much supply, prices will plunge.
But the dairy industry doesn't agree with the laws of supply and demand, so like a fish swimming upstream, it tries to fight them. It wants more artificial price protections in place to boost the amount of money it gets for producing too much milk. Milk production in California already exceeds the ability of the milk processing plants to handle. What's America going to do with all that extra milk? Nobody knows. Maybe they can pour it in the streets of some small town in California and stage a "pus fest" (cow's milk contains a lot of pus and blood, in case you didn't know).
The rational solution would be for dairy farms to simply downsize. They do that by "retiring" the cows. But this is no retirement program you'd wish on anyone else: It means the cows get slaughtered and sent into the food supply as beef. And that, it turns out, has the effect of causing beef prices to plummet, which angers the cattle ranchers who then scream for their own price protections.
It seems there's no easy interventionist solution for the glut of cows in America today, and much like the banks and auto makers, the dairy industry wants the government to bail them out and keep financially supporting bad business practices.
In response to all this, some dairy farmers think they've found the solution: Buy more cows and produce MORE milk to cover plummeting prices! Brilliant, huh? That will, of course, only result in yet greater supply of a commodity that's already in a state of over-supply, plunging prices even further and making the dairy farms scream for yet more bailouts.
Well, at least milking cows is one thing left that America is still good at. The nation can't make decent cars anymore, and it has no manufacturing base. The banks are run by financial idiots, the government is run by criminals and the food industry is run by chemical companies. But at least we can still squeeze milk out of a bovine creature, pasteurize it, homogenize it and convince mainstream consumers it's good for them!
From Dailygazette.com: The dairy industry is seeing reduced demand for cheese and butter and the export market has declined, so farmers are currently producing more milk than the market can bear.... more
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