The Price of Milk (and most other foods too)

We ran across this interesting article.. talking about the possibly large spike in mass produced milk prices due to the looming "Fiscal Cliff" at the end of this year. For clarity, the fiscal cliff is the law that will take affect in January, effectively slashing government spending across the board as well as raising taxes if an agreeable deal is not reached before then. Rather than discuss the merits and consequences of the fiscal cliff, I found something more interesting and worth discussing in this article :

The price you pay for milk in the grocery store is supported by tax monies, not actual pricing concerns.

That's right... milk along with many other food products, are supported by the government, to a very large extent. The prices are not real, they are not for food itself at all. In fact the pricing in the store has nothing to do with the cost of producing these foods.  The government PAYS farmers to produce food, then turns around and offers it to the public at a low price.  Therefore, the food price has little to nothing to do with cost of production.

Aside from the obvious complaint of "is this some third world communist country?" ....  This arrangement has some seeming benefits.... the cost of food is kept low and constant. (we'll ignore the fact that our taxes go to create the low prices, we pay taxes, so we ultimately are paying the high price anyway, just in the form of taxation not free choice food buying).  What I'd like to focus on is the huge consequence of government paying certain farmers for producing food.

The key here is the word CERTAIN... only SOME farmers get benefit of tax money to stay in business. Ultimately it is factory type farms, large operations. I know of no local small dairy operations that collect a check from the government each month just for making milk.  As with all government programs, someone chooses who is eligible and who isnt, and it's not you the consumer, it is not us the dairy producers. So ultimately those that receive government funds (mostly large scale factory dairys) have an unfair advantage over small operations.  By extension of this... Pasteurized  milk has a huge advantage over raw.

Consider for a minute, if milk in the grocery store for factory produces pasteurized milk was $8 per gallon instead of $2 to $3, local dairies selling milk based on cost of production would have a fair shot at the general public's business.  Today the price split is just to large for the average person to buy local from small farms unless they have an inherent need or desire to do so.  In essence, the government program of supporting large factory operations creates unfair business advantage for small farmers.

This isn't limited to milk... not by a long shot. Many many food items are paid for by the government to both support factory style farming and artificially keep prices down.  The reality is.. IF factory based, large scale conventional farms had to stand on their own, and price to make a profit without government assistance, they couldn't do it. They could not compete with small local farms.  The model itself... doesn't work unless the government pays for it from your tax money. This is the evil of the current system.

But wait one says,... if we stop paying for food production through taxes, the price of food goes so high people cant afford it! Let's examine this....

First... who pays the taxes? Ultimately all tax money comes from the public.  So.. you ARE paying for your food, just at the tax bill instead of the grocery store.  You loose control over your money when it goes into the tax system. You can decide which farm or farming style to support, that is done for you.

Second.... evidence clearly shows that low quality factory produced food is inferior nutritionally to small scale organically produced nutrient dense foods. There is a health crisis in America today... not a health care crisis, but a health crisis. The reason we are struggling as a nation to pay for health care today is simple, we require too much health care! There is a health crisis! Its not about money, its about health. It stands to reason that inferior food contributes to inferior health. Food is, after all , our sole source of nutrition and life. If the food we consume is inferior, our bodies can not maintain optimum health. So.. if you follow this through... the cost of cheap food is in higher health care.  Now you  save at the grocery store, but pay more in taxes and pay much more in personal health care (and soon public health care also). Not to mention the pain and suffering caused by poor health.

Third... this changes the face of America. Small farms employ more people per production, bringing in more local jobs, keeping more funds within a community. Large scale factory farms fundamentally alter the economy of local communities feeding themselves. This speaks to jobs, local taxation, community self reliance, security in the food system, etc. Lots of fundamental issues are touched dramatically by the government choosing to support certain farming styles, sizes, and operations.

So.. cheap food? Doesn't exist. It is all an illusion   The cheapest food prices are when the price is based on production cost and that alone.  Any other model has consequences and side effect that are not immediately obvious but ultimately raise both cost and human suffering.

I have long maintained that the best thing we could do, as a nation, is to ignore the low prices at the store and start buying nutrition, not cheapness. When you buy cheapness, you raise you own health care cost as well as alter the nature of your community.   Whether the fiscal cliff becomes a reality and factory farms stop receiving support to set prices below cost  is an unknown. But you and I, today, can make a difference in our own world. WE can choose to do things right for our families and our children.

Here is the link to the article that launched this post.

http://www.npr.org/blogs/thesalt/2012/12/05/166513348/milk-producers-peer-over-the-dairy-cliff