By boosting prices, the dairy program encourages overproduction. It also penalizes more efficient farmers in the futile attempt to prop up smaller dairy farmers and stem the tide of decades of changes in the dairy market.
In order to preserve domestic prices above the world prices for dairy products, the U.S. government maintains prohibitively high tariffs on imported dairy products. That invites scorn and retaliation from our trade partners and is one more agricultural program that exposes the United States to charges of hypocrisy as it seeks to paint itself as a country in favor of free markets and opportunity for all.
A better policy would be one that allows farmers to make their living, like other entrepreneurs, from markets rather than a government check. As Congress prepares to draft a new farm bill, world dairy prices are unusually strong. Thus, this is the perfect time for the government to fundamentally reform dairy policy in the United States with minimal “disruption” to dairy farmers.