The Nine Scariest Words in America

Do you know the nine scariest words in America?

"I'm from the government, and I am here to help."

Ronald Reagan's famous quip has been repeated often, and it has never been more true.

Exhibit #1:  The Price of Milk

Got Milk?  If you buy your milk at the WalMart Supercenter in Shrewsbury, PA, and it's whole milk, you paid $4.09 for that gallon today.  Where is the outrage against "Big Dairy"?  Why isn't Bill O'Reilly shouting about Rutter's price gouging?

Because the price of milk is a direct result of stupid, short-sighted policies of hapless federal bureaucrats and politicians.  Why?  Two major events.

First, in the early 1990s, the Federal Government -- led by Senators in states like Vermont, New Hampshire, New York, and Connecticut, decided there were too many milk producers in the northeast.  So they did two things. First, they twisted the arms of a lot of dairy farmers and forced them to slaughter their herds.  It was great for schools, because dairy cows only really make ground beef, and the schools got a lot of it cheap.  It also created an artificial shortage.  A gallon of milk went from $1.75 to $2.25 between 1990 and 1993.  Next, they formed the Northeast Dairy Compact, which basically set a price floor for milk in the Northeast region.  Milk shot to $2.75/gallon by 1995.

Second, in the last few years, the corn farmers in Iowa, Nebraska, Kansas, and South Dakota finally won their silly argument that the future of gasoline lie in ethanol.  There is also a nifty little 50 cent per gallon tariff on imported ethanol.  So, as politicians jumped on the "alternative fuels" and "energy independence" bandwagons, the value of ethanol rose.  Now there is a government mandate of 10% ethanol per gallon by volume.  So everyone started planting corn.  We need more corn, for more ethanol.  Even if we farmed every single acre of tillable ground in the United States with corn, we could not meet the demand.  Corn going to ethanol means less going to feed.

What do dairy cows eat?  Grass, you say?  Hay?  Sometimes.  But mostly, feed.  Feed that is based on corn (mostly) with some oats, barley, and sorghum thrown in for good measure.  Less corn for feed means higher feed prices.  Higher feed prices == higher milk price.

$4.09 for a gallon of whole milk.  Oh, and don't give me the song and dance about higher transportation costs. Rutter's main dairy is less than 15 miles away from the Shrewsbury, PA WalMart.