Hilarity ensues when not all states stay in lockstep with the federal price protections. California, for instance, allows milk to be sold at 2.5 cents per pound lower than the average minimum price in other states, a policy that pits California cheesemakers against California dairy farmers:
With feedstock costs skyrocketing due to the diversion of corn to make subsidized ethanol -- another brilliantly managed business -- California dairy farmers are on the ropes. Meanwhile, California cheese makers enjoy a competitive advantage because it is illegal for out-of-state cheese makers to buy cheaper California milk.
In desperation, instead of shipping the excess milk out of state, California dairy farms are shutting down and shipping their cows to states with higher minimum prices, allowing them to contribute to the glut there. This has caused California milk lobbyists to scream bloody murder, demanding that California bring its minimum prices in line with other states. Cheese lobbyists just smile, knowing that they have more legislators in their pockets and can afford to sit tight. That's just how central planning works.Stand by for one of California's patented Cuban-style solutions to problems of this type: a move to tax outgoing cattle wealth.