Great news for the buyer, there is a glut of milk and milk product in the market, this means we will see the cost per gallon of things like milk, butter and cheese go down. This is not good news for the farmers because no one wants to buy the surplus so the farmers are stuck dumping the milk down the drain. Seems pretty sad don't it? All this is due to excess milk available on the international market. Farmers are then left with the dilemma, feed the herd or pay the bills, usually cows get sold off. Here is what I do not understand about things like this- why if there is such an abundance that we can dump it out- do we still have starving people in the world today?
Hunger exist because of poverty. Not due to a shortage of food. people for various reasons are unable to afford the food that is available to them and that leads to various states of food insecurity ranging from hunger to starvation in some parts of the world.
There was a time this happened in my region; it was so sad to see farmers pour milk because the processing plant could not buy the surplus. Milk can be treated so that it can last for a long time. It is up to the farmers and the government to find a lasting solution to these issues. When people unite together they find a solution.
Read Steinbeck's book "The Grapes of Wrath". During the Great Depression while millions of Americans where starving the American government was paying farmers to not grow food, or in some cases buying up food and destroying it. Most foreign aide is a way to get rid of surplus western agriculture products, it artificially raises the prices for Americans and it hurts the 3rd world farmer. This sort of thing is endemic of a centrally controlled economy. The Soviets did a 75+ year experiment that proved this does not work. The Chinese repeated the same experiment and millions of chinese starved to death. The first year that China liberalized agriculture, production doubled and within five years China was food self sufficent. The massive growth of the China is directly related to one thing, liberalization of the economy. Don't believe me, look up percentage of GDP which is government spending for USA and China. Then tell me which country economically speaking is a communist country ?
Lower prices are good for the consumer and the economy as a whole. Of course farmers will be hurt, but on the whole I think the reduction of prices for every day Americans will allow them to put their income to work in other parts of the economy that aren't related to the essentials like gas and food. It's interesting that there is a surplus of milk on the market. When is the last time that happened?
The farmers need to "roll with the punches." When milk prices go down, they should lower their prices too so they'll get to sell all their milk [as they used to in the past]. That's how you deal with competition. When the prices of milk in the international market go up, they too, should increase the prices.
It's disconcerting for me to see the excess of milk and other basic goods being thrown away and at the same time people starving in Africa for example. Can't these goods be redirected there?
Meh, it's as simple as supply and demand. If the supply increases and demand stays the same, then the price HAS to go down in order to increase the demand. If milk is being poured away, then it's simply because people aren't buying enough. Just yesterday I saw a graph of how the price of a liter of milk is formed. About 30% was the farmers share, 30% was the store selling them and the rest (so around 40%) was due to the industrial processes and transportation. I think the problem here is that none of these different parts of this chain want to be the ones taking the economical impact from lowering pricess.
I agree that it's a matter of supply and demand, but at the same time if there is milk available, why isn't it distributed to other parts where there is not? It's a matter of dislocated demand.
Economically, it's better to destroy the product to keep the price high rather than flood the market with product. Unless someone is going to pay to take the extra milk off farmers hands and move it to the poor, nothing is going to happen.
