Milking the consumer Price-fixing: Bill would let state dairy farmers rig the market for milk in Maryland.

March 04, 1998

IN AN ERA of deregulation that has helped spark this nation's long economic boom, Maryland legislators are thinking of heading in the opposite direction: giving the state permission to join a regional cartel, dominated by New England dairy farmers, with the intent of inflating the price of milk. The result could be a roughly 20-cent rise in what Maryland consumers pay, with the prospect for even bigger rises in the years ahead.

It is price-fixing, plain and simple. A multistate commission would have the same power to set milk prices that OPEC nations enjoy in rigging the price of oil.

Who would be harmed? The consumer. When prices paid by processors are set at artificially high rates to make sure dairy farmers turn a profit, the price increases likely will be passed along. In July, when the milk-pricing scheme took effect in New England, the average price in Hartford, Conn., jumped 7.6 percent, or 19 cents a gallon. In Boston, the increase was 8.2 percent, or 20 cents a gallon.

Not just store customers get hurt. State hospitals, prisons and juvenile facilities buy 1 million gallons of milk a year. Soup kitchens, homeless shelters and groups that provide food for the poor would pay more, too.

Dairy farmers in Maryland are going through difficult times. More efficient techniques mean that fewer cows produce more milk. That, in turn, makes small dairy farms vulnerable.

This is a concern in Maryland's milk belt -- Frederick, Washington and Carroll counties. Increasingly, dairy farms there are under development pressures. Frederick County expects 50 percent population growth in the next quarter-century. Carroll County is growing rapidly, too. An interstate milk cartel wouldn't stem that demographic trend. Nor would price-fixing do enough to help marginal farmers.

The state could do more to help small dairy farmers through targeted aid programs. Tax credits for all dairy farmers would achieve the same purpose. This could be done without penalizing the consumers by rigging prices.

Pub Date: 3/04/98

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