I just don't get this. Apparently, the Agricultural Act of 1949 is still in effect. But not really, since Congress passes a law every so often that basically says "Ignore the Agricultural Act of 1949".
However, Congress has been really busy not getting other things done, so they haven't had time to pass the Ignore the Old 1949 Law, and apparently, that means milk prices are going to double.
But the prospect of higher milk prices has prompted some action. Agriculture Secretary Tom Vilsack has said Americans face the prospect of paying $7 for a gallon of milk if the current dairy program lapsed and the government returned to a 1948 formula for calculating milk price supports.After some quick research here is my basic understanding of the situation. Back in 1948, we decided that we didn't want dairy farmers to go bust if the bottom fell out of the dairy market. So, to provide a safety net for dairy farmers, we passed a law that said the federal government would buy milk at a certain price (calculated by a mathematical formula) to guarantee the dairy farmers would at least break even.
Here's the problem: since 1949, we've become slightly more efficient at dairy farming. That means it costs less to produce milk now than it used to. Economies of scale, technology, and all that. However, the little math formula in the law never got adjusted to account for this, so it's calculates too high of a price for the feds.
If the federal government uses the formula to buy milk, they're going to pay almost double the current market rate of milk. Therefore, if you're a dairy farmer, you're not going to sell your milk to Publix for $3.50. You're going to sell your milk to Uncle Sam for $7.00. Accordingly, if Publix wants to have any milk to sell to their customers, they'll have to match the government's price, which is ultimately passed on to you.
We've had this problem for a long time, and Congress only fixes it on a temporary basis each time it comes up. I guess it would make too much sense to permanently solve a problem, though.
Congress. What the hell, y'all?