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Stossel on Dairy Policy: "Milk Isn't Special"


Nan Swift
September 10, 2013

NTU has repeatedly advocated for an end to the dairy price-fixing scheme – most notably with our friends at Council for Citizens Against Government Waste via our joint “Save Your Milk Money” website.

At Reason.com, pundit extraordinaire John Stossel writes a compelling argument for getting government out of the dairy business altogether. He explains what many have been arguing all along -- that there’s nothing intrinsically different about farming or dairy production that requires government price-fixing, subsidies, or heavy-handed regulations:

Prices should be decided by buyers and sellers.

Prices are not just money. They're information. Rising prices tell farmers to produce more; that increases supply and prices go back down. Falling prices tell producers to invest in other products. This system works well for plums, peaches, cars and most everything we buy.

But bureaucrats and lobbyists say milk is "special."

[Rob] Vandenheuvel [of California’s Milk Producers Council] says cows can't be subject to market demand because "there are several years of lead time between when you decide to buy a cow and when that cow produces milk."

The [California Department of Food and Agriculture] agrees because: "Milk is a perishable product and must be harvested daily," and "Milk continues to be viewed as a necessary food item, particularly for children."

I say, so what? It's not "lead time" or being "perishable" or even being "necessary" that makes milk unique. Plums and newspapers are perishable and harvested daily. It takes long lead times to build assembly lines to make cars. No entrepreneur has a guarantee of market demand once the factory is complete. All business is risky.

Read the whole thing here.

The current milk price-fixing scheme is born out of the same New Deal-era laws that gave rise to the raisin and other marketing orders NTU highlighted only a few weeks ago. In sum, the dairy marketing order restricts supply and hikes prices for consumers.

Even worse, a new Dairy Market Stabilization Program (DMSP) enshrined in the farm bill working its way slowly through Congress would impose a new set of top-down Soviet-style supply controls on top of already onerous dairy regulations. DMSP’s manipulative provisions are designed to increase prices for consumers on everything from a half gallon of two-percent to yogurt and ice cream. Similar plans have undermined the dairy market in other countries and hurt consumers, especially those with low incomes. However, Congress rarely lets that kind of reasoning get in the way of bad policy.

Technologies such as milk reconstitution and shelf-stable “boxed” milk make calls for supply controls and other government regulation, on the basis that dairy is uniquely “perishable,” sound more and more dated.  Today, asceptic packaging keeps milk fresh at room temperature for months at a time without extra preservatives, providing an affordable way to transport and preserve dairy products in greater and greater quantities. Widely available and consumed in Europe for decades, boxed milk is gaining traction in the U.S. as well as other countries in the Western hemisphere.  

Now that science has trumped these industry challenges, it’s difficult to see why the federal government should continue interfering in the milk market to the detriment of consumers and farmers alike. Even worse, Congress shouldn’t be pursuing a plan that could inflict an even higher cost.

Stossel says it best when he concludes, “Milk isn’t ‘special.’ Almost no product is. Let competition set the price.”

Click here to tell your Congressman to oppose new dairy regulations.


 

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