Dairy’s 1 Percent

09Mar12

Adam Davidson, economics journalist and Wall Street apologist, turned his attention to dairy farming in today’s New York Times.

Davidson borrows the language of the Occupy movement and he rightly points out that when financial markets allow the bundling and trading of agriculture futures, small-scale farmers suffer.  Only big farms can monitor and trade their risk.

Davidson’s milk argument sours, however, when he proclaims “[b]y the early aughts, to accommodate global trade rules and diminishing political support for agricultural subsidies, the government allowed milk prices to follow market demand.”

Dean Foods is the milk monopoly unfairly controlling prices.

Davidson is wrong about both the existence of government regulation and market demand.

Milk prices are set, not only by consumer demand, but by the harmful and illegal milk processing monopoly, Dean Foods. Dean controls 70 percent of milk in the Northeast.  Their near total market power forces dairy farmers to sell at too-low prices.

The government is not powerless against this detrimental company, however.  The Justice Department should launch an anti-trust investigation into their practices.  The government should also use the so-called Milk Marketing Order to support small-scale farmers.

Davidson implies the government doesn’t regulate milk prices.  While it’s true that Congress tried to phase out subsidies in the 1996 Farm Bill, they succeeded only in consolidating, not eliminating, dairy market regulation.

The federal Department of Agriculture tightly controls the price of milk with Milk Marketing Orders.  The orders set a minimum price that “handlers,” the middle-people of milk sales, pay the dairy producers.

It’s not surprising that Adam Davidson, a free-market cheerleader, would imply a market is open when it’s actually controlled by a conglomerate.

It is surprising he would omit the discussion of the Milk Marketing Order.  Perhaps he thinks his readers are not smart enough to understand an economic picture that does not break easily into “free market vs. regulation.”  But it is an integral part of dairy markets, and one that can be used to structure a more just food system.

Join Milk Not Jails in opposing Dean Foods and promoting small, local dairy farmers.



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