May 25, 2010 12:18PM

Collin Peterson’s Cognitive Dissonance

House Agriculture Committee Chairman Collin Peterson (D, MN) is conducting a series of hearings in rural America to tout his support for big Ag listen to the people.

In the third paragraph of page 14 of an unofficial transcript of the recent hearings in Troy, Alabama, Mr. Peterson makes an excellent point about the fundamental inability of lawmakers or Washington bureaucrats to decide which farm size is best. "We are not going to get into the business of deciding how big a farm should be because that’s way beyond our expertise." Mr Peterson has made cutesy, self-deprecating remarks before about how Washington isn't smart enough to make farm management decisions. I guess even incredibly powerful incumbents feel some pressure from tea partiers to make cynical asides about Washington.

And yet. Here's Mr. Peterson, in an interview with a upstate New York newspaper, offering his two cents' on how to reform (and I use that term in the loosest possible sense) U.S. dairy policy:

When lawmakers map out a new safety net, it will have to include a supply management system to keep milk production in check, Mr. Peterson said...

Supply management could include measures to discourage farms from expanding, as well as a program to spur more dairy exports. In the past, the government has tried buying out farmers' dairy herds, but production eventually recovered and the beef industry suffered from the low prices resulting from so many cows suddenly entering the slaughter market.

"Production management will have to be in it," Mr. Peterson said...

As part of the changes, Mr. Peterson said, he also expects Congress will add California to the federal milk marketing system, which sets the minimum prices farmers receive.

So farm size is beyond the federal government's expertise, but "production management" for dairy farms is not? Make up your mind, Congressman.

I also have concerns with the substance of Mr Peterson's suggestions for dairy policy. Just last weekend I attended a workshop in Toronto where a graduate student from the University of Guelph gave an excellent presentation on the recent problems in the Ontario quota exchange, the market on which quota rights to produce dairy products in Ontario, Canada are traded.  (The paper on which his analysis was based is not yet available.) Quota rights to, essentially, one cow trebled over recent years to more than C$30, 000. That's just for the right to milk the cow, mind you. It doesn't buy you the cow, or even the land or equipment or feed for the cow. Just the right to produce. As the student described the system, it sounded to me like the Canadian version of tulip mania, backed up by soviet-style supply management systems. Do we really want to introduce this sort of insanity to U.S. dairy markets, as if the current system wasn't ludicrous enough?