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> You want to pay $2 dollars for milk, instead of $20? That's thanks to competition between companies. It's not though. "The support granted to U.S dairy produ

> You want to pay $2 dollars for milk, instead of $20? That's thanks to competition between companies. It's not though. "The support granted to U.S dairy producers represented approximately [...] 73% of the farmers' marketplace revenue. USDA data also reveals that US dairy farmers operate at a loss, and have a cost of production that is higher than what they earn from the marketplace."[1] We're subsidizing the low cost of milk via taxes because the marketplace failed to provide both affordable milk and the ability for dairy farmers to make a living. [1] https://markets.businessinsider.com/news/stocks/american-dairy-farmers-depend-on-government-subsidies-1015126442 https://markets.businessinsider.com/news/stocks/american-dai...

cmrdporcupine 6y ago
It's sort of the opposite here in Canada, where dairy production is managed on a quota system (you need quota to produce and sell) and the quota is regulated such that the price remains stable (and more expensive than in the US) for the benefit of the farmers who have quota and in theory the public, who has a reliable "reasonable" price. It's dubious on many levels, but has its defenders.
- R0b0t1 6y ago
  End result of this being if I want to produce milk with dairy cows I can't?
  - winstonewert 6y ago
    Correct. (There are exemptions for farms with a small number of cows)
  - cmrdporcupine 6y ago
    Yes, similar systems are also in place for eggs and poultry. And yes in all cases there are exemptions in place for very small farms, but not enough to make much of a difference. "Alternative" products like duck eggs, water buffalo or goat's milk, etc. do not count, so there is some room for market diversification there, I guess. It has the net effect of keeping dairy prices at what's seen as an acceptable stable level that also keeps dairy farmer's in business, at the expense of diversity in the marketplace and access to new farmers.
  - allannienhuis 6y ago
    If you want to buy an existing dairy farm's quota, you can. Similar to Taxi licenses in many places, no? I think most Canadians feel that the supply-side management of dairy and some other food products works for us fairly well, and that the Taxi license system doesn't. I guess that means the reasons for them working well or not are something other than the concept of supply-side management?
    - cmrdporcupine 6y ago
      I think the perception that it works is more about the perception is that "milk" is a homogeneous category and the population doesn't much care that there isn't much diversity in it. Same goes for eggs. And the price is considered fair. When you go making your own homemade cheese or yogourt though, then you notice how painfully high our (consumer) milk prices are. And when you taste higher quality milk in European countries, and notice the lack of quality milk at reasonable prices on Canadian grocery store shelves, it starts to be a bit more frustrating.
      - romanoderoma 6y ago
        Honestly in Europe we have the same quota system for milk. Quality here is not a function of the market being more free. It's a function of a better food production chain Instead of competing on prices many food products in Europe compete on quality and locality (small areas that produce some unique product of extremely high and renowned quality: Champagne in France, Parmigiano Reggiano in Italy, jamon serrano in Spain, etc. etc.)
aeternum 6y ago
> the marketplace failed to provide both affordable milk and the ability for dairy farmers to make a living. So the price is both two low and too high? This is not a failure of the marketplace (aka price discovery), this is the U.S. deciding that cheap milk and overproduction is in the nation's best interest and we should socialize some of the production costs. There are logical (milk as a staple product and avoidance of shortages), and illogical (milk lobby takes too much effort to oppose) reasons for it, but it is not a marketplace failure. Remove the subsidies and the market would quickly find the higher price at which dairy farmers could produce milk profitably and consumers would purchase it.
- bumby 6y ago
  Aren't there cases where the market fails when considered in broader context? E.g., the market decides to off-shore manufacturing. This is good short-term as it leads to lower prices for consumers. But it's also potentially a failure at a national long-term level as it has reduced our manufacturing capacity. The short-term bias of the market can adversely affect long lead-time strategic interests. See: the inability to quickly pivot to manufacture medical goods in a pandemic or military goods in a large-scale conflict. These types of market failures are what lead to the socialization that you mention.
  - deleted 6y ago
    [deleted]
  - nybble41 6y ago
    > But it's also potentially a failure at a national long-term level as it has reduced our manufacturing capacity. That isn't a market failure. It's just a recognition that the economy is global, not national. The market doesn't optimize for the benefit of one nation against others. As for "short-term bias", the market just reflects the biases of the people making the decisions—the same as any other system. If people are inclined to stockpile medical supplies or materiel for self-defense, the market will support that too. The market's only real "failure" is that it's too democratic for the liking of certain individuals who feel they have a better idea of how a society should be organized than the poor, ignorant, gullible masses that actually comprise that society.
gowld 6y ago
Almost no one buys milk at retail from farmers. We buy milk at retail from stores, which set their own market-based prices.
rezeroed 6y ago
He wasn't talking about milk.
BirdieNZ 6y ago
It doesn't follow that it's a necessary state of affairs, though. New Zealand milk farmers are not subsidised and milk is cheap enough (about USD $2.80 for 2 litres, which is only slightly more expensive than milk in the USA, and due to tax differences and so on, easily accounted for).
- JAlexoid 6y ago
  What about PPP? That USD$2.80 would result in PPP $4.20
marakv2 6y ago
Or is it because wages havnt risen with inflation, reducing buying power for every day goods?

cmrdporcupine 6y ago

It's sort of the opposite here in Canada, where dairy production is managed on a quota system (you need quota to produce and sell) and the quota is regulated such that the price remains stable (and more expensive than in the US) for the benefit of the farmers who have quota and in theory the public, who has a reliable "reasonable" price. It's dubious on many levels, but has its defenders.

R0b0t1 6y ago
End result of this being if I want to produce milk with dairy cows I can't?
- winstonewert 6y ago
  Correct. (There are exemptions for farms with a small number of cows)
- cmrdporcupine 6y ago
  Yes, similar systems are also in place for eggs and poultry. And yes in all cases there are exemptions in place for very small farms, but not enough to make much of a difference. "Alternative" products like duck eggs, water buffalo or goat's milk, etc. do not count, so there is some room for market diversification there, I guess. It has the net effect of keeping dairy prices at what's seen as an acceptable stable level that also keeps dairy farmer's in business, at the expense of diversity in the marketplace and access to new farmers.
- allannienhuis 6y ago
  If you want to buy an existing dairy farm's quota, you can. Similar to Taxi licenses in many places, no? I think most Canadians feel that the supply-side management of dairy and some other food products works for us fairly well, and that the Taxi license system doesn't. I guess that means the reasons for them working well or not are something other than the concept of supply-side management?
  - cmrdporcupine 6y ago
    I think the perception that it works is more about the perception is that "milk" is a homogeneous category and the population doesn't much care that there isn't much diversity in it. Same goes for eggs. And the price is considered fair. When you go making your own homemade cheese or yogourt though, then you notice how painfully high our (consumer) milk prices are. And when you taste higher quality milk in European countries, and notice the lack of quality milk at reasonable prices on Canadian grocery store shelves, it starts to be a bit more frustrating.
    - romanoderoma 6y ago
      Honestly in Europe we have the same quota system for milk. Quality here is not a function of the market being more free. It's a function of a better food production chain Instead of competing on prices many food products in Europe compete on quality and locality (small areas that produce some unique product of extremely high and renowned quality: Champagne in France, Parmigiano Reggiano in Italy, jamon serrano in Spain, etc. etc.)

aeternum 6y ago

> the marketplace failed to provide both affordable milk and the ability for dairy farmers to make a living. So the price is both two low and too high? This is not a failure of the marketplace (aka price discovery), this is the U.S. deciding that cheap milk and overproduction is in the nation's best interest and we should socialize some of the production costs. There are logical (milk as a staple product and avoidance of shortages), and illogical (milk lobby takes too much effort to oppose) reasons for it, but it is not a marketplace failure. Remove the subsidies and the market would quickly find the higher price at which dairy farmers could produce milk profitably and consumers would purchase it.

bumby 6y ago
Aren't there cases where the market fails when considered in broader context? E.g., the market decides to off-shore manufacturing. This is good short-term as it leads to lower prices for consumers. But it's also potentially a failure at a national long-term level as it has reduced our manufacturing capacity. The short-term bias of the market can adversely affect long lead-time strategic interests. See: the inability to quickly pivot to manufacture medical goods in a pandemic or military goods in a large-scale conflict. These types of market failures are what lead to the socialization that you mention.
- deleted 6y ago
  [deleted]
- nybble41 6y ago
  > But it's also potentially a failure at a national long-term level as it has reduced our manufacturing capacity. That isn't a market failure. It's just a recognition that the economy is global, not national. The market doesn't optimize for the benefit of one nation against others. As for "short-term bias", the market just reflects the biases of the people making the decisions—the same as any other system. If people are inclined to stockpile medical supplies or materiel for self-defense, the market will support that too. The market's only real "failure" is that it's too democratic for the liking of certain individuals who feel they have a better idea of how a society should be organized than the poor, ignorant, gullible masses that actually comprise that society.

gowld 6y ago

Almost no one buys milk at retail from farmers. We buy milk at retail from stores, which set their own market-based prices.

rezeroed 6y ago

He wasn't talking about milk.

BirdieNZ 6y ago

It doesn't follow that it's a necessary state of affairs, though. New Zealand milk farmers are not subsidised and milk is cheap enough (about USD $2.80 for 2 litres, which is only slightly more expensive than milk in the USA, and due to tax differences and so on, easily accounted for).

JAlexoid 6y ago
What about PPP? That USD$2.80 would result in PPP $4.20

marakv2 6y ago

Or is it because wages havnt risen with inflation, reducing buying power for every day goods?