NCPA - National Center for Policy Analysis

Effects Of Milk Price Controls

February 20, 1998

The convoluted program by which the federal government sets milk prices should be an acute embarrassment even to modern day regulators, critics contend. Hundreds of Department of Agriculture bureaucrats put their heads together and come up with this month's prices.

The whole plan dates from a "temporary" 1933 federal program to combat the effect of the Great Depression on dairy farmers. The latest plan to set a floor under the price of milk could boost its cost to consumers by 10 cents a gallon. This would carry over into prices for cheese, ice cream, chocolate -- or any other product made with milk.

  • A 1993 report by the General Accounting Office found that cutting milk price supports would save consumers $10.4 billion over 15 years.
  • The GAO says taxpayers would save another $3 billion over 15 years if dairy programs were abolished.
  • Milk marketing orders from the Department of Agriculture cost consumers $1.5 billion a year, estimates Citizens Against Government Waste.
  • The orders also add $40 million each year to the cost of the school lunch program.

The 1996 Farm Bill started to phase out the price support program. But the program will resume in 2002 unless Congress acts.

Which economic group do these higher prices hit the hardest? The poor.

Source: Perspective, "Milking Consumers," Investor's Business Daily, February 20, 1998.


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