Milking consumers -- and farmers, too Price-control bill: It aims to help state producers, but instead could cost them business.

March 13, 1997

WARNING TO state legislators: Non semper ea sunt quae videntur, as the Roman fables writer Phaedrus put it. Things are not always what they seem. For proof, look at bills advancing in the legislature to set milk price controls.

The goal is to help Maryland dairy farmers, who have been staggered by the public's declining taste for milk even as production per cow soars. The solution: Artificially inflate milk prices at the wholesale and retail levels.

In reality, these bills will almost certainly force retailers to reduce, not increase, their purchase of raw milk from Maryland farmers. Meanwhile, consumers will be paying far more for milk. Those who buy at Shoppers Food Warehouse, for instance, could face an increase of 65 cents per gallon of whole milk; statewide, the increase could be at least 9 cents per gallon.

Maryland's secretary of agriculture, whose prime purpose is to promote the well-being of farmers, will set these prices. His actions cannot be appealed.

But Maryland is powerless to impose state controls on milk bought by retailers out of state. A supermarket can evade Maryland controls by buying cheaper milk in Ohio, West Virginia, New Jersey or Pennsylvania, pocket the savings and then charge customers the state-mandated shelf price. It's the only way retailers can maximize profits under this distortion of the free-market system.

At a time when the federal government is phasing out milk price supports, why is the Maryland General Assembly creating a new government intrusion that will hit constituents in the pocketbook? These bills will not halt the trend toward fewer dairy farms, either. In the past 10 years, Pennsylvania, a state with milk price controls, lost 40 percent of its dairy farms; Maryland's loss of dairy farms -- without price supports -- was 45 percent. That's about at the national average. Other factors besides price controls are to blame for the dairyman's woes.

Legislators should not be fooled. Price controls won't work. They could actually boomerang on state dairy farmers. Processors may benefit from a state-guaranteed profit, and retailers may, too. But not the consumer.

How will lawmakers explain this at election time? Raising milk prices won't be popular. It certainly isn't necessary.

Pub Date: 3/13/97

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