When a drought left pastures in a handful of Plains states parched in 2003, ranchers turned to the federal government for help. The Department of Agriculture decided to dip into massive stockpiles of powdered milk that the agency had stored in warehouses nationwide as part of its milk price-support program. Livestock owners could get the protein-rich commodity free and feed it to their cattle and calves. The milk would help ranchers weather the drought while the government reduced its growing stockpile.
But within months, the program spawned a lucrative secondary market in which ranchers, feed dealers and brokers began trading the powdered milk, generating millions of dollars in profits. Millions of pounds of powdered milk intended for drought-stricken livestock owners went to states with no drought or were sold to middlemen in Mexico and other countries. Even when agriculture officials learned that the product was being diverted, there was little they could do. The Washington Post reports on the scam as part of its probe of federal agriculture subsidies, which grew to more than $25 billion last year, despite near-record farm revenue.