National Center for Policy Analysis

MONTH IN REVIEW

Agriculture

February, 1996

MILK SUBSIDIES NO DROP IN THE BUCKET

Thanks to Washington politics, consumers will likely continue to be overcharged 18 cents for every gallon of milk purchased -- with another 40 cents tacked on this year.

The House may vote as early as Thursday on legislation to raise consumers' grocery bills by freezing minimum milk prices, increasing price supports, saying who could sell it and where, and limiting imports. The government would then buy the overpriced leftovers.

• Poor people, who spend a disproportionate percentage of their income for food, would be hardest hit.
• About 13 percent of the average grocery bill is for dairy products.
• Federal, state and local governments and schools also pay food prices artificially inflated by the subsidies.
• Passage of the House bill would mean a $1 billion increase in the seven-year cost of child nutrition and food stamp programs.

Source: Editorial, "Price supports Continue to Milk Consumers," USA Today, February 28, 1996.