Note to Farmers, Farm Bill not exactly free market guys.

If there were two industries that have benefited most from government involvement, it’s got to be the farm and dairy producers. Government programs have insulated these industries from the ravages of the free market and saved farmers large and small from natural disasters. 

Star Tribune: Dairy farmers expressed frustration this week with Congress' failure to pass a farm bill, saying … some could go under without changes to the federal milk program.

Farmers also worried … a 64-year-old law will kick in, sending milk prices spiraling … $6 a gallon. Here’s how things are set up to protect farmers from oversupply and short supply:

The Agricultural Act of 1949 sets a much higher price for government purchases of cheese, butter and other dairy products … The government cut the price in recent decades because if it didn't, more companies would sell to the government than to retailers, unless consumer prices rose to match.

Pete Kappelman, a Wisconsin dairy farmer and board chairman of Land O'Lakes, has a 450-cow farm in Manitowoc, Wis. … proposed a margin protection program that pays farmers when the price difference between milk and feed shrinks to a certain point. He also supports a market stabilization program that would require farmers to either reduce the amount of milk produced when prices drop too low or give up a portion of their margin protection payments. The U.S. Department of Agriculture would then use that money to buy and donate dairy products to food banks and help low-income families … The programs would be voluntary.

The Senate passed a farm bill last week that included both the margin protection and market stabilization programs, but House Republicans voted to remove the market stabilization program.   

A number of Wisconsin farmers were featured in the article, and a few of them are big free market Republicans. Kind of weird when you consider the roll government has played in their survival. You’ll notice the larger farms want the “margin protection program,” but not the “stabilization program" (it would cut the handout they receive or give surpluses to food banks and low-income families). By dropping the stabilization program, taxpayers/government would just keep forking over money to “free market” farmers. 

That’s my summary. The article goes on to explain this bizarre dynamic:

Randy Roecker, 40, and his wife farm with his parents in Loganville, Wis. They were doing well in 2008 … 300 cows. The next year, milk prices plummeted and feed prices rose. At one point, they were losing $100,000 a month; Roecker lost his savings, his parents lost their retirement and the farm went into debt. "Just last Friday, another one of my friends got rid of his cows," Roecker said. "... It's just getting to the point where you can't afford to keep going anymore."

Dean Strauss, 41, who milks 1,900 cows in Sheboygan Falls, and described himself as a "free-market" person, opposed the market stabilization program fearing that any reduction in milk production would stifle growth in the Wisconsin cheese industry, which buys most of his milk. Jamie Bledsoe, who has 1,300 cows in Riverdale, Calif., had similar concerns; "My personal view is, the government does not effectively manage anything, let alone the supply of milk."

But Kappelman said that without a way to control supply when milk prices fall too low, farmers would keep producing, the margins would stay low and the government would have to keep shelling out.