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Wednesday, January 02, 2013

Milk Prices Are Set by Chicago Mercantile Exchange (CME)

This means that milk producers are "price takers."

Apparently "the price that farmers receive is based on a federal formula derived from the price of four globally traded dairy commodities -- butter, dry milk powder, whey powder (a byproduct of cheese-making) and cheddar cheese sold on the Chicago Mercantile Exchange (CME) and is administered by the USDA Federal Milk Marketing Order Office. "

The pressure to pass the "farm bill" regarding milk prices going up seems misleading. It seems like farmers continuing to get subsidies is a separate issue from the price of milk because that's set by a federal formula not by real costs.

Even more, the subsidy might actually have to do with keeping the grain prices low, which the cows need. But that would mean cow farmers would go out of business because the grain goes up but the price is still set based upon some global sales number....

If you know more about this process, please post in my comment section.

I just find this extremely frustrating that it's probably impossible to know why they must pass an extension of the "Farm Bill." It probably doesn't have anything to do with keeping milk "accessible."

1 comment:

Benjamin Evans said...

Heritage Action for America (the political arm of the Heritage Foundation) has taken up the fight against the Farm Bill (80% food stamps/20% farm subsidies). Every Republican in the STL Region (Missouri, southern Illinois) supports this monstrosity of a spending bill, short of outgoing Todd Akin. If anyone would like more info on this please contact me: