In the United States, milk is back on the menu.
The Whole Milk for Healthy Kids Act, signed into law in January, restored whole milk’s eligibility for the National School Lunch Program that feeds tens of millions of American kids. New dietary guidelines released by the U.S. Department of Agriculture and the U.S. Department of Health and Human Services recommend three servings of dairy a day, with an emphasis on full-fat products.
The updated policies are a huge win for the American dairy industry, routing more federal dollars to the farms—and large corporations—that produce milk, cheese, and other traditional dietary staples. But these dairy subsidies come with significant costs to the environment, says Matthew Roling, a clinical assistant professor at Kellogg and the executive director of the Abrams Climate Academy.
“Plant-based milk usually has one-third of the carbon footprint of dairy milk and uses generally much less water,” Roling says. “You’re throwing taxpayer dollars at the incumbent, even though there’s a superior alternative that is better for our environment, because of the political economy that we exist in.”
Government subsidies are a powerful lever to support or protect domestic industries. In the U.S., subsidies have supported farmers since the New Deal, via legislation regularly renewed with bipartisan votes. Yet the renewed push for cow-based dairy may be pushing futilely against longer-term market trends.
“You’re seeing this massive shift in consumer behavior when it comes to things like milk,” Roling says. “So you could make an argument that dairy specifically could be seen as a contracting industry.”
That tension over the role of subsidies exists not only in agriculture, but in energy, technology, and other sectors. And it has consequences for the environment, healthcare, and companies caught in the crosswinds of shifting political priorities.
Here are four ways that subsidies can do more harm than good and policymakers and companies can avoid the most common pitfalls.
Subsidies have downstream effects
The indirect cost of dairy subsidies can be felt every time you visit a coffee shop, where ordering a latte with almond, soy, or oat milk will often cost you more than one with traditional dairy.
That “premium” status of alternative milks isn’t solely the result of free-market forces and consumer preferences, Roling says. The price of cow milk is kept artificially low by farm subsidies, while plant-based milks haven’t received the same government assistance.
“It’s a direct transfer of wealth from the taxpayer to the dairy farmer when you have to pay an extra 50 cents for plant-based milk versus dairy milk,” Roling says. “When you think about it, we as taxpayers are paying for these things.”
And there’s another hidden cost—for the environment. Dairy, beef, and other outputs of animal agriculture are underappreciated contributors to climate change; some estimate livestock accounts for 15 percent of global greenhouse gas emissions. By contrast, plant-based milks generate far less carbon and use much less water.
There are also downstream health effects of subsidizing traditional dairy—which many adults cannot drink due to lactose intolerance—and other high-fat foods. America’s obesity epidemic can be partly attributed to the subsidy-suppressed prices of less-healthy options, Roling says.
“The key question is, what are we as taxpayers paying farmers to grow?” Roling says. “We are incentivizing them to make whole-fat milk and high fructose corn syrup, but should we be incentivizing them to grow broccoli and almonds and brussels sprouts and lentils?”
Subsidies incentivize mission drift
Another issue with subsidies is that they can make it more profitable for companies to engage in activities that are outside of the scope of the original intentions of the legislation that authorized them.
For example, subsidized farm products often don’t end up in grocery stores and restaurants at all. Today, only a small percentage of corn grown in the United States is used to feed humans; the vast majority goes into animal feed and fuel.
That wasn’t the intent of the original U.S. farm bill, the 1933 Agricultural Adjustment Act, which provided loans to farmers and supported crop prices during the Great Depression. Starting in the 90s, newer versions of the legislation shifted towards direct payments to farmers and subsidies for specific outputs such as biofuels.
“I think the original subsidy was born out of noble intentions,” Roling says. “It’s pretty easy to look back in time and say, we didn’t want to be dependent upon foreign interests to feed people, so we created these farm bills. But over time, we’ve started to see the rise of large agricultural interests, and farmers and the agricultural industry saw it as easy pickings to take that legislation and use it to maximize profits and start to shift the use of that land away from feeding people.”
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The agricultural industry of 2026 also looks far different than that of the early 20th century. While the sector is still dominated by family farms, many have consolidated into larger operations, often focused on a limited roster of subsidized crops.
“Most of that corn from Indiana to Nebraska ends up in a gas tank, in a cow’s stomach, or as high-fructose corn syrup, and none of those outcomes are good for human health or our planet,” Roling says. “But the political power of the incumbents is such that it’s really hard to put the genie back in the bottle or change how that land is being used.”
Subsidies can stifle innovation
Because subsidies are often designed to protect mature industries and their workers—or more cynically, are designed to appease influential power players in those industries—they tend to favor already-established products. This has the potential to create markets tilted against up-and-coming ideas and companies.
That’s true for both plant-based milk and meat alternatives, Roling says. The beef industry is among the leading contributors to climate change, and it receives billions of dollars in subsidies each year, primarily through livestock-feeding assistance. The resulting lower meat prices have made it hard for newer, more-expensive meat alternatives, such as Beyond Meat and Impossible Foods, to compete on grocery shelves.
If policymakers wanted to encourage the growth of this new market, the subsidies should be applied to the underdog instead, Roling suggests.
“How do you bring the cost down for new market entrants? That’s where the government can step in if you want to change behavior,” Roling says. “Governments can lean in and say, we are going to subsidize this because the market hasn’t gotten traditional financing and you’re not going to pay a thousand dollars for a hamburger grown in a lab.”
That said, either eliminating existing subsidies or taxing companies for their negative environmental or health impacts may be more effective.
“If you really want people to change behavior, you need sticks,” Roling says.
Subsidies may give companies whiplash
Recent events point to another one of the limitations of government subsidies: they’re only guaranteed until the next election. Over the last year, the Trump administration and Republican Congress have dismantled many of the signature programs of the Inflation Reduction and CHIPS Acts passed during the Biden administration, leaving many companies adrift.
That whiplash underscores the impermanence of subsidies, particularly in times of deep political polarization.
“If it directly impacts your business, you have to tread carefully, especially if you have a really long-term planning horizon,” Roling says. “If you talk to the private sector, they crave stability and predictability. I think you can’t look at this political moment and say to yourself, ‘well, this is how it’s always going to be.’ Because I don’t think anybody knows what it’s going to be two years from now.”
Still, the farm bill shows how subsidies can stick around for decades if the beneficiary is viewed as crucial to the American economy. For new companies and industries, learning from the public-relations and lobbying success of the agriculture industry may help them come out on the winning side of future subsidies.
“I think that historically, the companies behind these novel, better-for-the-planet, lower-impact products and solutions would say, ‘well, we’re warm and fuzzy and everyone loves us and that should carry the day,’” Roling says. “For those companies, you have to fight fire with fire, and you have to really engage with your community and politicians and get them to see the writing on the wall: that you’re the future—not the coal plant or the dairy farm.”