Behold the Power of Cheese

American cheese policy is full of contradictions. (If it were full of holes, it would be Swiss cheese policy.)

What, you didn’t know America has a cheese policy? Well, we do, as part of our larger dairy policy. And over the years the dairy policy’s failures have led to caves full of uneaten cheese, subsidized cow euthanasia, and, as Michael Moss documents in the New York Times this morning, the creation of a marketing board whose goal in life is to encourage Dominos and Taco Bell to use even more cheese on their pizzas and quesadillas:

Every day, the nation’s cows produce an average of about 60 million gallons of raw milk, yet less than a third goes toward making milk that people drink. And the majority of that milk has fat removed to make the low-fat or nonfat milk that Americans prefer. A vast amount of leftover whole milk and extracted milk fat results.

For years, the federal government bought the industry’s excess cheese and butter, an outgrowth of a Depression-era commitment to use price supports and other tools to maintain the dairy industry as a vital national resource. This stockpile, packed away in cool caves in Missouri, grew to a value of more than $4 billion by 1983, when Washington switched gears.

The government started buying only what it needed for food assistance programs. It also began paying farmers to slaughter some dairy cows. But at the time, the industry was moving toward larger, more sophisticated operations that increased productivity through artificial insemination, hormones and lighting that kept cows more active.

In 1995, the government created Dairy Management Inc., a nonprofit corporation that has defined its mission as increasing dairy consumption by “offering the products consumers want, where and when they want them.”

Dairy Management, through the “Got Milk?” campaign, has been successful at slowing the decline in milk consumption, particularly focusing on schoolchildren. It has also relentlessly marketed cheese and pushed back against the Agriculture Department’s suggestion that people eat only low-fat or fat-free varieties.

The pro-cheese policy thus runs exactly counter to the anti-cheese policy of the Agriculture Department’s nutrition efforts.

The whole article is worth a read for its glimpse into how Dairy Management operates. The organization is private in many regards, most notably the $633,475 in CEO compensation. But it is ultimately financed by the power of the government, which imposes a levy on dairy farmers. The standard argument in favor of this structure is that dairy marketing is a public good, from the perspective of the individual farmers, and that the government role is necessary to coordinate that activity. On the other hand, many industries manage to create trade associations without any government role.

With rising concern about obesity, perhaps now is the time to get the government out of the cheese marketing business? Dairy Management could still exist as a fully private entity, but the government would no longer face a conflict between encouraging healthy eating and pushing quesadillas.