What about the argument that they are provided "free to them" food, shelter and clothing? And therefore them working for very small amounts of money, is really them paying for those things.

If the people don't want to provide things to folks imprisoned, the state should look into ways to keep folks from being imprisoned. It won't stop all of it - but at that point, prison is more of a public service.

Change laws and punishments so that fewer crimes result in jail time or removal from the workforce, for example. Especially for non-violent crimes. Improve conditions for poor folks, the mentally ill, and so on.

Who is profiting here?

Haystack Mountain, every business in its sales channels and whoever else buys goat milk made by people earning $1/day.

No, the prison uses the money they make from the sales for the prison, that was in the article. Haystack would still have bought the milk for standard price, and sell their cheese at standard price. The extra money from the cheap labor when into the prison itself.

No, I think crispyambulance is right. The article said every other local supplier closed doors, so Haystack couldn't have bought the milk at that price.