Milk Supports And You

(MoneyWatch)  In most industries as prices fall for an item less is produced and marketed until demand is met. When it comes to milk the Federal government props up supply. This Associated Press article describes a meeting between Governor Doyle of Wisconsin and the Secretary of Agriculture, Mr. Visack. In it the two politicians discuss how the U.S. Government will soon be sending checks to dairy farmers to support their production even though the price is falling. This is the Milk Income Loss Contract. It makes up the difference to farmers who are losing income. This removes any and all motivation for farmers to get out of the business. The governments sets a price that when it is reached triggers these payments. Right now it is if the price is $17 per hundredweight which is 100 pounds of product. Prices have fallen below $10 recently. Most industries in America aren't as lucky as agriculture which receives billions of dollars in subsidies.