US Government Saves Cheese From Imminent Drop In Value

Economy, Featured Jamie Simon
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There is way too much cheese in circulation in America. To enable cheese farmers and producers recoup their money and to prevent a drastic drop in the price of the cheese, United States Department of Agriculture (USDA) has decided to buy off excess cheese off the market. The quantity is worth about $20 million.

They intend to send the cheese to food banks all over the country to push it to the tables of the people that are in dire need of it. Obviously, cheese suppliers have miscalculated. They obviously expected demand to shoot up drastically. And they tuned up their production to cater for the expected increase in the demand.

Somehow, the idea backfired. All international buyers shunned the cheese from America and ordered their cheese elsewhere. The value of the American dollars increased globally and that affected the price of cheese. It became a little high for international buyers and as such, some of them reduced their demand while most of them shunned it.

This intended move by USDA will help remove the excess cheese from the market. The quantity of cheese in American market is said to be about 30 year high now. The problem is not the surplus but the inevitable drop in price that will follow.

USDA’s move helps to solve two problems at a time. It helps to prevent massive price drop on cheese and at the same time it helps to put it on the table of those that need it most. While buying off $20 million worth of cheese will go a long way in mitigating the effect of over-supply, it is still not enough when compared to the quantity in circulation as it is only one percent of the inventory built up.

Contrary to the general belief that this massive purchase of cheese is unprecedented, it has happened several times before.