NCPA - National Center for Policy Analysis

Dairy Lobbyists Seek Higher Milk Prices

March 2, 1997

From Louisiana to New York, aggressive dairy industry lobbyists are descending on state lawmakers and pressuring them to form or enlarge new regional compacts that permit more manipulation of milk prices -- adding up to 15 or 20 cents a gallon to consumers' milk bills.

At the same time, the U.S. Department of Agriculture still maintains a Depression-era program which sets milk prices paid to farmers in 31 regions of the U.S. -- with prices increasing the further they are located from Eau Claire, Wis. But a federal judge in Minneapolis recently ruled the program invalid.

  • Critics say the "Eau Claire rule" -- which dates from a time of poor refrigeration and unreliable transportation -- has far outlived whatever rationale it may once have had.
  • Although the number of dairy cows in the U.S. plunged from 23.6 million in 1940 to 9.4 million in 1996, the amount of milk produced per cow has nearly quadrupled since then.
  • The federal marketing orders inflate milk prices by at least $1.5 billion a year.

The emerging regional cartels would only push prices up further. The Northeast Interstate Dairy Compact created a special cartel for price-fixing in New England -- which New York and other mid-Atlantic states may join.

Arkansas and North Carolina have approved a similar arrangement -- with interest growing in other states across the South.

Source: Editorial, "Dairy Programs Jack Up Prices, Hurt Consumers," USA Today, March 2, 1997.


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