Government drives milk prices up again

Hein Hettinga had a really bad day yesterday. He’s having a really bad day today. And if you live in Arizona or California and drink milk, you’re about to have a really bad day, too.

On Tuesday, President George W. Bush quietly signed into law S. 2120, the so-called Milk Regulatory Equity Act of 2005, a carefully crafted piece of legislation which was aimed squarely at preventing Hettinga’s dairy farm from offering milk at lower prices than Dean Foods and other large milk distributors such as the Dairy Farmers of America.

“Basically, I’m a pebble in the shoe of DFA and Dean Foods,” Hettinga said. “The only reason I’m a success is they are a milk monopoly and they have raised the price too high. The consumer is getting ripped off.”

So the days of buying two gallons of Hettinga’s Sarah Farms milk for $3.99 are over.

The bill, passed in both the House and Senate with almost no debate, amends the Agricultural Adjustment Act, part of the Agricultural Marketing Agreement Act of 1937, and will require Hettinga to participate in federal milk marketing order requirements, effective May 1.

The federal milk marketing program requires most milk producers and handlers to set minimum prices on their products and to pool their revenues. It also tries to balance the supply and demand of milk and milk products, which can vary widely from day to day.

Whether that’s actually true, or the milk marketing program is even needed, is debatable, as Hettinga’s success shows. The new law would, in effect, require Hettinga to pay his competitors to stay in business.

Hettinga has also sued the U.S. Department of Agriculture over a rule passed last month which would impose similar requirements on his farms.

So how did the dairy industry do it? They got the best politician money can buy.

In the very short debate before the bill passed the House, Rep. Devin Nunez (R-Calif.) argued in support of it, and if you think he is a Republican, or even a conservative, or even understands the free market, you should hear what he had to say about the situation:

“Their ability to operate under preferential treatment in a highly regulated industry, while taking government subsidies, is not free market capitalism,” he said on the House floor March 28. Oh, but it gets better.

“The hard working dairy farmers in Arizona have witnessed a steady decline in their pool since unregulated handlers began to flourish. They deserve to be treated fairly by their government and should never be placed in a situation where government regulations unintentionally disadvantage them in the marketplace. Regulated processors in Arizona are no less efficient or innovative than their unregulated competitors. They are simply unable to compete with businesses that don’t have to play by the rules. This situation is wrong and must be resolved by Congress.”

So the way to resolve the situation and restore “fairness” to the system is to end the milk regulations, which in this day and age do little but to protect the largest dairy farm operations and keep prices artificially high.

“Let me be clear: unregulated handlers are not promoting market competition. They are driving out competition. They owe their success to the dairy programs and to the advantage they have found in loopholes,” Nunez said. So he urged Congress to pass the legislation to “close these loopholes and restore free market principles and fair regulation to the dairy industry.”

Now it’s clear that Nunez doesn’t seem to understand much of anything about free market principles. There hasn’t been a free market in milk in this country since 1937. And it shows in the grossly overinflated prices we pay for milk, cheese, butter and other dairy products. This government regulation seems to have outlived its usefulness and should be scrapped entirely. That will restore free market principles and end the current system’s favor of large corporations which have steadily driven out the small family farmers ever since milk regulation began.

One thought on “Government drives milk prices up again

  • November 8, 2009 at 6:59 pm
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    Not everyone pays taxes..the less fortunate of people have fallen by the wayside for a reason..be it laziness or not. You can receive medical care, the hospital is required to give emergency care to you .. there will be no pity party for you, and obviously you have internet access and have time to read this worthless article, which shows you aren’t exactly poor, or are just financially irresponsible..

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