Dairy industry doesn’t deserve American taxpayer bailout

Lawmakers in the House of Representatives are preparing to take up the next farm bill, and so the halls of Congress will soon be filled with debate about the best policies to ensure America’s food system is safe, secure and efficient.

If we are going to pass a bill for the good of the country, we need to learn the lessons of history, rather than continuing to throw good money after bad. Like spoiled milk, market-distorting dairy industry handouts need to be thrown out.

{mosads}In 2016, the dairy industry asked the U.S. Department of Agriculture (USDA) for a staggering $150 million to buy their excess cheese. A spokesperson for the National Farmers Union said they were disappointed to receive “only” $20 million. Surely there are better ways for the government to spend “only” $20 million of taxpayer money than buying cheese Americans don’t want and won’t buy.

It’s no secret that Washington doles out enormous subsidies to the largest conventional animal agriculture industries through the farm bill. Individuals of all political stripes are increasingly outraged at these handouts. As the conservative Heritage Foundation notes, agricultural subsidies cost taxpayers about $20 billion a year: “This includes a massive transfer of wealth from taxpayers to mostly large agribusinesses that are (or should be) fully capable of managing their business operations without this special treatment. The end result is less choice for consumers, distorted prices, reduced innovation, and onerous government influence.”

Bailouts from the government are a divisive topic, but the argument could be made that the controversial Wall Street bailout of 2008 was necessary to protect the entire U.S. economy from collapse. Continuing the cheese bailout is something quite different. Like other products, the supply of food is meant to meet consumer demand in the free market. If the Coca-Cola Company manufactured tons of Coke they couldn’t sell, we’d be outraged if any federal agency offered to buy the surplus.

In the disputed 2009 auto industry bailout, GM, Ford and Chrysler didn’t simply get free money handed to them year after year. The auto industry had to change fundamentally, downsizing significantly (Mercury, Oldsmobile, Hummer and Pontiac no longer exist). They changed management and put in place new procedures that ultimately spurred innovation and met market demand.

Equally important, the car companies had to repay the loans. The dairy industry, on the other hand, seemingly receives their millions as a straight-up handout, with no strings (or string cheese) attached.

The USDA should not pick winners or losers. The government should not distort the market or continually prop up non-competitive businesses.

In recent years, demand for conventional dairy products has fallen. Plant-based milk alternatives (e.g., soy, almond, coconut, rice) now constitute roughly 10 percent of the dairy market. These plant-based producers are prospering despite the government rigging the system against them. There’s no $20 million bailout in store for them if they miscalculate product demand, nor should there be.

Safety nets are a great thing when you’re a trapeze artist or about to bungee jump off a building.  But maybe they’re not the best idea when they take the form of government subsidies shielding private industry from miscalculations, failures, or shifts in consumer demand.

American taxpayers don’t need to prop up a system of socialized cheese. American consumers deserve to make their choices in a fair and equitable marketplace. This next farm bill should remedy clear instances of government waste and distortion and move beyond funneling taxpayer handouts into conventional agribusiness.

Joanna Grossman, Ph.D., is the senior policy specialist for The Good Food Institute, a nonprofit that promotes better alternatives to animal agriculture.