Oh, what a tangled web we weave when first we practice government intervention in the agricultural commodities markets. The following statement should surprise no one: if production of a given product increases, then product costs should decrease within the market (assuming a relatively steady demand from the market). Then we have this:
South Dakota dairy farmers are producing more milk, but they’re getting paid about half of what they earned last year.
The story goes on to say that production is up 8% over last year, but prices have dropped from $18 to $10 per hundredweight. Now, while the drop in prices is due to a number of things, the fact that increased production is resulting in lower prices is presented as a surprising thing. This strange market correlation is only surprising to those who have never not known milk prices to be based on the USDA’s direct and indirect meddling.