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American Cheese Surplus Reaches Record High
According to the U.S. Department of Agriculture, there's a 1.4 billion-pound cheese surplus. "The glut, which at 900,000 cubic yards is the largest in U.S. history, means that there is enough cheese sitting in cold storage to wrap around the U.S. Capitol," reports NPR. Americans managed to consume nearly 37 pounds per capita in 2017, but that wasn't enough to reduce the surplus. From the report: The stockpile started to build several years ago, in large part because the pace of milk production began to exceed the rates of consumption, says Andrew Novakovic, professor of agricultural economics at Cornell University. Over the past 10 years, milk production has increased by 13 percent because of high prices. But what dairy farmers failed to realize was that Americans are drinking less milk. According to data from the USDA, Americans drank just 149 pounds of milk per capita in 2017, down from 247 pounds in 1975.
Suppliers turn that extra milk into cheese because it is less perishable and stays fresh for longer periods. But Americans are turning their noses up at those processed cheese slices and string cheese -- varieties that are a main driver of the U.S. cheese market -- in favor of more refined options, Novakovic tells Here & Now's Jeremy Hobson. Despite this shift, sales of mozzarella cheese, the single largest type of cheese produced and consumed in the U.S., remain strong, he says. Novakovic also notes that imported cheeses tend to cost more, so when people choose those, they buy less cheese overall. The growing surplus of American-made cheese and milk means that prices are declining. The current average price of whole milk is $15.12 per 100 pounds, which is much lower than the price required for dairy farmers to break even.
Suppliers turn that extra milk into cheese because it is less perishable and stays fresh for longer periods. But Americans are turning their noses up at those processed cheese slices and string cheese -- varieties that are a main driver of the U.S. cheese market -- in favor of more refined options, Novakovic tells Here & Now's Jeremy Hobson. Despite this shift, sales of mozzarella cheese, the single largest type of cheese produced and consumed in the U.S., remain strong, he says. Novakovic also notes that imported cheeses tend to cost more, so when people choose those, they buy less cheese overall. The growing surplus of American-made cheese and milk means that prices are declining. The current average price of whole milk is $15.12 per 100 pounds, which is much lower than the price required for dairy farmers to break even.
The subsidies stem back to the Great Depression and the Dust Bowl. That's when Americans realized that OMG it's possible for the country not to produce enough food to feed everyone. Consequently, the government enacted a system of subsidies to assure there's always overproduction of food. An oversupply would normally crater the market price, so the government buys all that food at a fixed price (high enough to keep the farmers in business). Then resells the food to the public at a lower price.
That's why corn ethanol and high fructose corn syrup exist. Due to this system, the country grows more corn than it consumes. Consequently the government has to figure out things to do with the excess corn. It becomes foreign aid, feed for cattle, corn ethanol, and high fructose corn syrup. This is why those reports about beef costing us $x per pound in subsides doesn't really mean that we would save $x per pound if we ended the subsidies for cattle feed. The cost to grow that extra corn is a sunk cost. If we stopped using the excess corn for feed, that doesn't mean we get our money back. Its cost would just be distributed to other things we do with the excess corn - corn we send as foreign aid would cost us more, and ethanol and HFCS prices would go up. The way it's set up now, if farmers have a bad corn crop, all that happens is some cows go hungry instead of people going hungry (in fact those cows which can't be fed will probably be slaughtered to produce beef).
This is also why we we pay farmers not to grow anything - so their land is ready and available to be turned into cropland in case existing cropland should be decimated by disease, pestilence, or another dust bowl. If we didn't pay the farmers, they'd sell the land and it would be used to build condominiums and other things that you can't eat.
So the subsidies are basically insurance. We're paying extra to guarantee there's always an oversupply of food. We could kill the subsidies and the average price of food over time would be lower. But some years we wouldn't produce enough food to feed everyone and food prices would spike.
There's no good reason for the government to constantly exempt farmers from the normal law of supply and demand.
There is a reason, and it's a damn good one: To regulate supply and stabilize pricing.
Think about it: have you ever had to worry about food, really, really worry about it? A moderate price increase due to increasing oil prices at the turn of the century is the closest our country has ever come to a "food crisis". There has never been a serious food shortage or price inflation for food in the US for as long as I've been alive.
It used to not be that way. You can go back to the 70s, and read about how rapidly fluctuating food prices created quite a political stir, as evidenced by the April 1973 cover of Time Magazine. If you study the data on this page, you can see both how food prices (particularly beef) stabilized after 1980, and how the average worker has seen a steady increase over time in the amount of food that can be purchased with their wages.
That has been the primary purpose of the US Farm Bill: to encourage, subsidize, and regulate the food market, stabilizing pricing and providing ample food supply. Because when there's oversupply, people complain about food going to waste. When there's a lack of supply, people riot and governments collapse. Which would you really prefer?