Original links are included though some may have expired.

The Numbers:

2004 average world price of butter: $0.79 per pound
2004 average wholesale U.S. price of butter: $1.80 per pound

What They Mean:

Each year the Organization for Economic Cooperation and Development publishes an estimate of farm subsidies, by product and by country. The most recent statistics in the OECD's subsidy database are for 2003, and find global "producer support" totaling $257 billion. (This includes domestic spending, export subsidies, and price-setting plus transfers of money through tariffs and quotas.) The largest single chunk of money, $48 billion, went to the dairy industry. The EU accounted for $22.5 billion through domestic supports, export subsidies, other pricing policies, import quotas, and tariffs of 200 percent or more on butter and 50 percent on cheese. Next came $10.9 billion in American producer supports -- the equivalent of $3.32 for each of America's 9 million dairy cows. Japan's dairy program came third at $4.8 billion, followed by Switzerland at $2.1 billion, Canada at $2 billion, and Norway at $1.1 billion; Korea and Mexico chipped in $800 million apiece, and Iceland adds $90 million. The more limited national "notifications" of subsidies to the WTO exclude not only tariffs and quotas but also several types of actual payments to farmers, but are only slightly less impressive than the OECD figures. The most recent notifications place U.S. dairy subsidies at $4.9 billion and the EU's 6 billion euros in domestic support plus 1.6 billion euros in export subsidies. At current exchange rates this comes to about $10 billion

What is the effect? For the United States, in 2004 the web of subsidies, price-setting, tariff and quota policies meant Americans paid about twice the world price for butter in supermarkets, and 45 percent above the world price for cheese. In practical terms, using July 2005 prices, this meant U.S. consumers paid 19 cents extra for each stick of butter. Dairy subsidies seem to cost America's Hispanic families most, since much of the U.S. dairy support comes through price-management and import limits rather than direct subsidies, and Hispanics spend more money on milk, cheese, and butter (as well as fruits and vegetables, which are not subsidized) than other ethnicities. Low-income families also spend relatively more on dairy products; wealthy families along with Asian and African-American families spend relatively less.

Two big producers don't use dairy subsidies. New Zealand is the world's third-largest butter producer, and ended its dairy subsidy program in 1984. Australia, fifth in butter and cheese, did the same in 2000. Neither country seems to miss them much. New Zealand now produces about as much butter as the United States. (The United States churned 563,000 tons in 2003, while the kiwis hit 462,000 tons.) New Zealand, however, exported 364,000 tons of butter and the United States only six thousand. In total, New Zealand earned $3.9 billion on dairy exports, and the United States about $1 billion.

Further Reading:

Track world butter prices:
http://www.fas.usda.gov/dlp/deip/
pricepage.html#World%20Dairy%20Price%20Charts

OECD's 2005 Agriculture Subsidies Report:
http://www.oecd.org/dataoecd/33/27/35016763.pdf

And OECD's farm support database, covering the years from 1986 to 2003:
http://www.oecd.org/document/58/
0,2340,en_2649_33775_32264698_1_1_1_1,00.html

The president of the Federated Farms of New Zealand speaks on dairy deregulation:
http://www.freetrade.org/pubs/FTBs/FTB-016.pdf

The Australian dairy industry's annual report for 2004:
http://www.dairyaustralia.com.au/template_default.asp?
Page=Publications%2FdisplaySelectedPublication.asp
&name=Aust_Dairy_Industry_In_Focus

A view from Africa -- Ugandan President Yoweri Museveni tells the 2002 World Food Summit that "by blocking value-added products, our partners in the world kill the following opportunities: ability to earn more foreign currency, employment, enhancing the purchasing power of the population, expanding the tax base for the governments of Africa and the chance to transform African societies from the backward, pre-industrial states -- in which they are now -- to modern ones by building a middle class and a skilled working class."
http://www.fao.org/worldfoodsummit/
top/detail.asp?event_id=12702

The WTO's agricultural negotiation page:
http://www.wto.org/english/tratop_e/agric_e/negoti_e.htm

American spending habits -- go to pages 16-17 for an ethnic breakdown, or to 9-10 for incomes:
http://stats.bls.gov/cex/csxann03.pdf