When a drought left pastures in a handful of Plains states parched in 2003, ranchers turned to the federal government for help. Officials at the U.S. Department of Agriculture quickly responded with what they considered an innovative plan. They decided to dip into massive stockpiles of powdered milk that the agency had stored in warehouses nationwide as part of its milk price-support program. Livestock owners could get the protein-rich commodity free and feed it to their cattle and calves. The milk would help ranchers weather the drought while the government reduced its growing stockpile. But within months, the program spawned a lucrative secondary market in which ranchers, feed dealers and brokers began trading the powdered milk in a daisy chain of transactions, generating millions of dollars in profits. . . . Taxpayers paid at least $400 million for the emergency milk program, one of an array of costly relief plans crafted by Congress and the USDA to insulate farmers and ranchers from risk. (Washington Post, Wednesday)
Not to mention artificially high prices for milk.
FEE Timely Classic
Water Markets Are the Answer (pdf) by Charles Oliver