How Government Cheese Came To Be
Recently, USDA announced the purchase of $50 million of milk to be distributed to local food banks and public schools. The United States government has a long history with purchasing dairy products to increase milk prices. This week, NPR’s Planet Money dug into the details of how the tradition began.
When former president Jimmy Carter was running for office in 1977 he promised to increase milk prices 6 cents per gallon to help dairy farmers.
“It was a big enough number that it sounded like one of these campaign promises that would never actually be fulfilled,” Andy Novaković an economist from Cornell told NPR’s Planet Money.
Turned out Congress also wanted to help dairy farmers at the time and passed a law that would cause milk prices to go up every six months. For that to happen, there needed to be a mechanism to trigger a price increase.
“It’s fundamental economics. You’ve got two levers you can pull on. You can do something to make demand greater, or you can do something to lower the supply,” Novaković said.
The government opted to purchase cheese to stimulate milk prices.
To learn more, listen to this episode of Planet Money.