You may be right. On the other hand:A) they didn't keep their friggin noses out of it (presuming you're talking about government, here).andB) Dairy (any farming, but dairy particularly) is in a difficult situation when it comes to meeting demand. It takes 3-4 years to breed a cow, raise the calf, and bring her into the milking herd, and in that time there is a good likelihood that her mother will be gone. There is a lot of capital investment other than the cows that has to be paid for as well, and that capital (and the capital tied up in the cows) can also be a pretty effective buffer against outside economic forces, in addition to demanding continued cash flow. The point is that milk prices and overall supply/demand can change month-to-month, but from a farmer's perspective milk production can really only adjust on a year-to-year basis, and really only effectively adjust on more like a decade-to-decade basis.
If they would have kept their friggin noses out of it in the first place, the market would have corrected itself eventually. Those that decided that what they were earning, wasn't enough, would have quit the game, or moved elsewhere. One cannot buy their way out of stupidity, even if they are the governmnet.
By the Numbers: A Look at Consolidation in U.S. Agriculture