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Emergency Dairy Spending Causes Rift Among States

The Federal Government recently passed a bill that would provide one time, emergency payments to U.S. dairies. Since the Great Depression the Department of Agriculture has been providing aid to milk producers and farmers through price supports. This bill set aside $290 million to send each dairy a fixed amount to help cushion the falling price of milk over the last year.

Like all of these types of programs there are always complaints that it is not equitable and doesn't treat all farmers and dairymen across the United States alike. The biggest issue with this one is that after a certain level of production the payments flat lined. This meant that larger producers who are more common in California and the Western United States received less money per gallon produced then the smaller dairy farms in the Mid West.

The current Milk Price Support Program (MPSP) was established in 1949. This program does not send funds directly to farmers as the emergency one is doing but buys milk, cheese and other dairy products in order to make sure that farmers are receiving the price established by the Government. This cushions the farmers if prices fall and help keep them in business which is one of the major goals of the program. Of course California farmers by producing more receive more money from this program.

The contention over this bill was such that one of the U.S. Senator's from California, Barbara Boxer, put a hold on it. This led to discussions with the Agriculture Department after which Sen. Boxer released the bill. The smaller, Eastern dairies have the opposite fear then the ones in California which led to the cap. They worry that without it all of the money would go to the larger farms in the West.

The whole issue of agricultural subsidies like this has long been debated when it comes to Federal spending. They artificially keep the price high and many producers in business. Normally if there is an oversupply of a product the price falls and people move out of the business until some balance is reached. This program keeps dairies working and selling product to the Government even if there is no market demand. The price floor means that consumers may end up paying more for something the market feels should be priced lower.

All of this is done to keep the farmer happy and employed.

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