The perils of price fixing and the cost of corn

California is in the news (yet) again -- this time its dairies. From Breitbart:

Calif Dairies Going Broke Due to Feed, Milk Prices
In nearly six decades of running a dairy in central California, Mary Cameron made a name for herself in a male-dominated industry: She led several dairy organizations and was honored as Outstanding Dairy Producer of the Year.

But the 82-year-old Cameron -- who still drives a tractor and supervises her Hanford dairy -- is on the brink of losing her life's work. She can no longer pay the bills. Her bank has classified her loan as distressed. And she can't afford enough feed for her 900 milking cows and 1,000 heifers.

"I have been in this business for 57 years and I have never been in financial trouble like I am right now," said Cameron, who runs the Atsma-Cameron Dairy with her two sons. "I'm on the verge of bankruptcy. It's horrible and inexcusable."

Cameron is not alone. Across California, the nation's largest dairy state, dozens of dairy operators large and small have filed for bankruptcy in recent months and many teeter on the edge of insolvency. Others have sold their herds or sent them to slaughter and given up on the business.

Experts say California dairymen face a double whammy: exorbitant feed costs and lower milk prices. The Midwest drought has led to corn and soybean costs increasing by more than 50 percent this summer, stressing dairymen from Wisconsin and Minnesota to Missouri. But in California, milk prices have also lagged behind those in the rest of the nation, exacerbating the crisis.

Price fixing?

California has had its own milk pricing system for dairy since the 1930's, separate from that operated by the federal government in other states. The California Department of Food and Agriculture sets minimum prices that must be paid to farmers in the state for five classes of milk.

In recent years, California's prices tended to be lower than in other states. In 2011 and 2012, California's price for milk used to make cheese was frequently $2 or more lower per hundredweight of milk than in the rest of the nation.

What we are seeing is that the cheese-makers have better lobbyists in Sacramento than the Dairymen. Price fixing destroys markets -- we saw this with Jimmy Carter's gas lines and we are seeing it here with the milk. WA State doesn't do this crap and sure, our milk prices may be higher than California but we have open competition so the price is not exorbitant and the milk I buy comes from a five-generation dairy farm that I have visited and met with the owners. Jersey cattle too so it tastes really really good.