California Dairy Market Demonstrates Price Control Danger

Written By: The WealthCycles Staff

California dairy prices have long been subject to a complex and arcane regulatory system, operated independently from U.S. Department of Agriculture price controls on dairy products nationwide. For most of the more than 75 years it has been in place, California milk producers were paid more for their products than other U.S. dairies. However in the past couple of years, a combination of high feed prices and falling demand have put hundreds of California dairy farms out of business, diminishing competition and ultimately hurting consumers. Viewed from a macroeconomic perspective, the heartbreaking scenario offers a perfect demonstration that price controls—even those that are institutionalized over generations—simply don’t work.

California Beach Cows

Dairy Price Control History

The U.S. government began regulating milk prices in the 1930s under the auspices of the U.S. Department of Agriculture, adding a dairy price support program in 1949 and an income support program for dairy farmers in 2002. California

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testiomials California’s archaic system of dairy price supports has wreaked havoc in the market and will ultimately leave the industry in the hands of a few mega-farms. Yet, evidence to the contrary, central planners remain convinced that price controls work, even as Argentina’s government institutes another devastating round.”

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