“We are extremely disappointed that the Clinton Administration’s new milk-pricing scheme fails to remove the regulatory morass that encumbers this nation’s $70 billion dairy foods industry.  The federal milk marketing orders need a massive overhaul, but the new regulations will do nothing to enhance industry competitiveness.

“The federal government’s milk marketing order system artificially distorts milk-pricing at the expense of taxpayers and consumers, and hurts more dairy farmers than it helps.  This archaic program provides an intrusive federal meddling in milk-pricing, increasing the cost of each and every product containing milk.  In fact, consumers pay a “milk tax” of more than $1.5 billion annually.  It is a very unfairly applied tax: those who can least afford the added cost — low-income families with young children — are hit the hardest.  The federal milk marketing orders also add at least $80 million annually to the cost of the school meals program.

“Within the milk marketing orders’ logic-free zone, the most illogical regulation of all is the ‘differential’ pricing.  These additional premiums are charged to the manufacturers of fluid milk based, in part, on how far the manufacturing plants are from Eau Claire, Wisconsin.  This system penalizes both consumers who live in the wrong region of the country and dairy farmers in the regions best-suited to dairy farming.  The benefits go to dairy farmers operating in high cost, inefficient areas far from Eau Claire.

“The Administration’s proposal will artificially inflate milk prices, make dairy products less competitive, and result in more government regulation.  On the other hand, real reform — elimination of the milk market order system — would free the industry to pay greater attention to the marketplace, becoming more responsive to consumer demand.  Milk would be produced where it can be done most efficiently and competitively and manufactured into the products that are wanted by consumers.

“The Clinton Administration must be relieved to now have this issue off its plate.  However, its failure to provide real reform of the milk marketing orders calls for action by Congress to get rid of the outdated program.”