There are about 50,000 dairy farmers in the United States, and they decide independently how much milk they’re going to make. And this, very simply put, makes the dairy market really volatile.
If prices get too low, “the federal government becomes a buyer at the wholesale level, just like Pizza Hut,” said Andy Novakovic, a professor at Cornell University. He said the government becomes a competitor, forcing the prices to realign for all buyers.
But some politicians feel that farmers should have more skin in the game. They want a program that acts more like insurance — if farmers’ profit margin dips below a certain point, the insurance would kick in, said Mark Stephenson, a professor at the University of Wisconsin.
“Then you’d make a decision about how much of my milk do I want to protect,” he said.
But if the price of the grain used to feed cows go up, it generally go up for all farmers. That would mean a huge payout by taxpayers. On the brightside, Stephenson no matter which course congress takes milk prices should remain about the same.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.