Taxpayers are spending billions of dollars a year subsidizing growing over-produced agricultural products, which results in federal officials buying more and more in an endless cycle that defies basic economics and common sense.
So much federal money is being given out for dairy production that $250,000 of government funding is available to encourage development of dietary excesses like string cheese with a stick of meat in the center.
“Despite these unfavorable conditions, the Department of Agriculture (USDA) spent $1.8 billion to subsidize 16 new cheese-making ventures this year through the Value Added Producer Grant program,” said Sen. Jeff Flake in the 2017 edition of his Wastebook, published Tuesday. The funding for the “meat infused string cheese” was part of the $1.8 billion.
Another program, the Margin Protection Program for Dairy, pays farmers to keep producing when prices are too low to make it worthwhile because of high supply.
“Farmers are not encouraged to produce less and they feel the only way they can help make ends meet and get all of their bills taken care of at the end of the month is to produce more milk, which in turn ends up hurting them in the end,” Darin Von Ruden, a dairy farmer and president of the Wisconsin Farmers Union, told Wastebook.
The federal government also buys the surplus, and “at one point, the surplus of cheese and other dairy products held by the government had a market value of $3 billion and was so large it took 500 warehouses and five giant storage caves carved out of limestone to store it all,” according to Wastebook.
Much of such spending comes in response to lobbying by special interests.
“This year, approximately 11 million pounds of the surplus cheese valued at $20 million was acquired. USDA says the move is in response to ‘requests from Congress’ and advocacy groups for the industry. The department says the purchase is ‘assisting the stalled marketplace for dairy producers whose revenues have dropped 35 percent over the past two years,'” the Wastebook said.
The USDA is also paying $74 million a year for peanuts by giving farmers the option to pay back loans in nuts instead of dollars, and paying them above-market prices.
“The payouts provide ‘significant incentives’ to plant more peanuts, which drives up costs to taxpayers and government holdings of peanuts. The federal government had about 383 million pounds of surplus peanuts piled up in storage at the beginning of this year,” the Wastebook said.
It is unclear why the federal government wants all those peanuts. The food doesn’t need any boosting. Ninety-four percent of homes already stock peanut butter, leading the head of the National Peanut Board to ask, “how do you improve on that?”
Selling the 383 million pounds would depress the cost of peanuts, leading farmers to, in turn, sell more to the government.
The feds were going to donate the surplus peanuts to Haiti, but officials there rejected them, saying that would “do more harm than good by undercutting local farmers and pushing the hemisphere’s poorest nation farther from self-sufficiency.” Another federal agency, USAID, also opposed the donation.
Meanwhile, storage costs for all those peanuts could hit $1 billion a year, according to the USDA.
The USDA is also offering subsidies for whiskey, even though that market is growing on its own. For example, federal officials gave $38,000 to Marr Grange in New Jersey to “study the feasibility of establishing an on-farm distillery to process specialty grains, including rye, to create distilled craft whiskey.”
Wastebook notes that “a $100,000 ‘job creation’ Community Development Block Grant (CDBG) from the Department of Housing and Urban Development (HUD) is ‘financing’ the distilling equipment for a new distillery in Norristown, Pennsylvania.
Five Saints Distilling and International Spirits LLC, a “grain to glass” distillery in which all of the distilling process is performed on site, opened this summer. Five Saints serves white whiskey, savory gin, vodka, and a blood orange liqueur with plans to add rum, rye whiskey and bourbon to the menu,” according to Wastebook.
It also highlighted a $190,650 HUD grant under its “commercial rehabilitation category” to turn the former Dodge City, Kansas, city hall into a distillery. “Boot Hill Distillery, opened the summer of 2016, produces white whiskey, as well as vodka and gin with plans to eventually sell bourbon,” the Wastebook said.
Flake noted that a nation whose earliest protests were against taxes on tea and whiskey is now spending tax money to subsidize both.
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