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November 8, 2010

Pushing Cheese is the Least of USDA's Problems

The New York Times article by Michael "Tainted Beef Pulitzer" Moss on the USDA and dairy producer-funded Dairy Management Company that spends $140 million dollars per year to convince Americans (successfully, it turns out) to eat more cheese has gotten a surprising amount of attention as the Bailout You Never Heard of. Firstly, let me say that I object to that label!

It's not fair to Big Pork which in 2009 received the real Bailout You Never Heard of -- to the tune of $150 million dollars of direct government purchases of surplus pork for use in school lunches.

The fact is this latest agricultural support outrage is simply business as usual at the USDA.

Indeed, if the article has a shortcoming, it's Moss's tendency to downplay the link between ag policy and these marketing efforts. For example, the major "conflict" that he cites is "in the Agriculture Department's historical roles as both marketer of agriculture products and America's nutrition police."

No, the real conflict is between the USDA as a marketer and the USDA as a regulator of agricultural production -- the confused nutritional message is honestly just window-dressing to this larger problem. After all, amping production to levels far beyond what the market can bear isn't the only way to provide support to farmers, but that's pretty much all we do.

In Canada, for example, dairy and poultry are subject to supply management programs. With supply management, producers set targets based on domestic demand, prices are stable and thus the need to produce more to make the same amount of money goes away. For you doubters, I would point out that the one US group that uses its own version of supply management, the farmer-cooperative Organic Valley, was the only group to come out of the recent milk price crash virtually unscathed. Dairy is especially sensitive to extreme price swings because the price of milk is set by its price on the Chicago Board of Trade Commodity Market, which has proved highly volatile and prone to manipulation by speculators.

Of course, there's a big problem with supply management: You can't do it if you're trying to up production to meet big export targets, as with President Obama's announced goal of doubling US exports. And the USDA's main solution to the troubles of the rural economy is to send Tom Vilsack and US Trade Representative Ron Kirk flitting across the globe looking for new markets for our vast agricultural surpluses.

The point is that, despite blogger Matt Yglesias's assertion that if Republicans were sincere about their deficit-cutting zeal, they'd help attack -- pardon the pun -- federal pork like this, this kind of waste is baked into the federal agricultural policy cake. It's not that we have a "market-based" system for ag products. We don't. It's also not the case that we have a system designed to create surpluses. We have a system designed to keep prices low and "help" farmers through development of export markets. When you throw out all the rhetoric about rural economies and aiding small farmers, that's what you're left with. And as any economist will tell you, those kinds of goals inevitably lead to huge oversupplies.

Moss mentions that, before the Dairy Management group existed, the government "solved" the problem of surplus cheese by storing it caves in Missouri and calling it a "stockpile." Does anyone think that was a better program?

The problem, which we are nowhere near solving -- in fact, we're still at the "unwilling to admit we have a problem" stage -- is that USDA farm policy is an unmitigated disaster. The marketing programs are the least of it. After all, let's say USDA Chief Tom Vilsack woke up tomorrow morning and declared an end to all federal marketing compacts that conflict with USDA nutrition policy. From this day forward, we will finally have the vegetable marking blitz of which nutrition advocates have dreamed for years.

What on earth would we then do with all those millions of pounds of cheese?

Flickr photo: Patrick Hoesly

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Anonymous Anonymous said...

In the early 1990's American Dairy Farmers cried they were not making money causing them economic grief, from the Government cheese distribution to the Needy. The American Dairy Farmers rallied the various Government Agencies claiming that noone was buying enough cheese from local shopping stores because of the distrubution program to Food Banks. That because of Food Banks, there was no need for those in need to buy it and caused them losses. It did not seem to matter that the Needy could not afford the cheese anyway. The programs ended and forced those who relied upon local Food Banks to go without, whilst the same populous that could afford grocery store cheese continued to buy it as they always had in the first place. This surplus cheese that once went to the needy in the United States now gets shipped elswhere oversee's or destroyed. There has not been any significant increase in the sales of cheese from the Food Banks downfall.

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