NCPA - National Center for Policy Analysis

Cartels Milk The Nation

June 20, 2001

The Northeast Dairy Compact is not a pretty sight in the eyes of critics. Not only is it a cartel that dictates the minimum prices farmers get for their milk and, accordingly extorts higher prices from milk consumers, but it threatens to spread far beyond the confines of the Northeast.

  • New England produces less than 3 percent of the nation's milk, but New York, New Jersey, Delaware, Pennsylvania and Maryland have all formally petitioned Congress to be allowed to join the compact.
  • Fourteen states have passed legislation to create a Southern Dairy Compact stretching from Virginia to Oklahoma.
  • A total of 25 states with almost half the nation's milk supply are on record as wanting to join a cartel that would add as much as $2 billion a year to the price of milk.
  • Studies show the Northeast Compact has overcharged New England milk consumers by $100 million a year -- and professors Ken Bailey and Jose Gamboa of the University of Missouri calculate that a combined Northeast and Southern dairy cartel would raise the price of milk by 15 cents a gallon.

Critics point out that the federal government spent $500 million last year to buy up the glut of excess milk being produced.

The House Agricultural Committee takes up the milk compact today -- after the full House earlier rejected including it in the $74 billion agriculture bill.

Source: Editorial, "The OPEC of Milk," Wall Street Journal, June 20, 2001.

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