Two years ago, there was a milk shortage. Dairy producers expanded operations and cashed in on market conditions. But they overcompensated. Now we have a milk glut. As a result, prices tanked.
Through the first eight months of this year, producers simply dumped 43 million gallons of milk.
Prices now signal cut production. Inefficient dairy farms need to go out of business. But producers don’t like the market when it puts the squeeze on them.
Enter Uncle Sam.
On Tuesday, the USDA pledged to buy $20 million of cheddar cheese to help struggling farmers. It was the second $20 million buy in two months.
Meanwhile, dairy farmers are on track to set production records this year.
Government buying incentivizes production. Why stop when Uncle Sam has your back?
This is not “free market.”