Much of the excess dairy is shipped to underground mines and cave systems outside of Kansas City, Missouri. The mines and caves are filled with the dairy products, according to John Heywood, professor of economics at UWM.

Living in a state with 1,249,000 dairy cows, one would assume dairy products would be relatively inexpensive. This, of course, isn’t the case. A gallon of milk costs more than a gallon of gas, and a pound of cheese on sale will still set you back about $5.

The U.S. Government Accountability Office says the price of butter and cheese in the US is 50 percent higher than the typical world price despite our agricultural success.

The reason for high dairy costs is because regulations have been put into place to keep the prices high in the U.S. According to The Organization for Economic Co-operation and Development, the U.S. pays an implicit 27 percent tax on milk because of these regulations.

It all started when refrigerated trucks began being used to ship goods around 1940. Dairy farmers in less efficient areas, in southern states, for example, were losing profits to more efficient areas, like Wisconsin. It was cheaper for southerners to get their dairy products shipped from the Midwest since production was higher there.

This is where the government stepped in. In order to keep smaller farmers in business, congress raised the price of shipping, making it uneconomical to buy dairy from elsewhere in the country.

The government currently controls the price of dairy by purchasing large amounts of it, mostly in the form of dried milk. By purchasing the dairy the government aims to increase the demand.

The increased demand keeps the price high. They set a price ahead of time, and then buy whatever amount is needed to ensure that price is achieved. So basically, if the government didn't buy the dairy, suppliers would have a surplus and would start lowering the price to get rid of the extra product.

Currently, the dried milk stockpile the government owns is at 1.3 billion pounds. With the U.S. population at about 300 million, that would potentially equal about five pounds of product per person in the country.

Much of the excess dairy is shipped to underground mines and cave systems outside of Kansas City, Missouri. The mines and caves are filled with the dairy products, said John Heywood, professor of economics at the University of Wisconsin-Milwaukee.

Heywood thinks the dairy regulations are “messed up.” Heywood first learned about the regulations while working for the Office of Management and Budget, the largest office within the executive office of the president.

Heywood pointed out that small farmers out there aren’t really seeing the benefits of these price regulations.

“The often hidden part of all the dairy subsidies is that a small number of large corporate farms are the biggest beneficiaries. This is not to say that family farmers don't benefit but rather that something like four percent of all farms (the very largest) receive 50 percent of the benefits,” said Heywood.

Some might think there is a more efficient way of keeping dairy prices at a manageable level. However, it does not seem like changes will be happening any time soon.

“You could appreciate the goals of these regulations, they keep farms going. But the real issue here is the enormous waste,” said Heywood.

“I would like to think that smart minds would recognize this waste of money and change this practice of throwing away dairy, but all these government programs create beneficiaries. I think this process will continue for some time to come.”

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