What others say: Price controls on dairy products will do more harm than good

  • Sunday, December 27, 2015 9:49pm
  • Opinion

California dairy farmers have a big beef with the California Department of Food and Agriculture, which sets the minimum prices for milk in the state. Unhappy with a divergence in state and federal milk price controls in recent years, the dairy farmers have launched a campaign to be regulated under the federal government’s rules.

Their proposal would establish an all-milk price almost 7 percent higher than the current price, and the U.S. Department of Agriculture estimates that it would increase annual producer revenue by $700 million a year.

This does not bode well for milk processors, who buy the milk from the farmers to make cheese, butter, yogurt and other products. Nor would consumers appreciate paying higher prices for their dairy goods.

“Market conditions we can respond to,” Rachel Kaldor, executive director of the Dairy Institute of California, a trade group that represents milk processors, told us. “But if it’s just the government setting the price then that’s a problem for us in California.”

Moreover, she said, since prices are arbitrarily set, and not responsive to market forces, regulators “have to hit the bull’s-eye to ensure all milk produced is sold.”

Herein lies the problem with price controls, whether imposed by the state or the federal government: No central planner can ever hope to amass or quantify all the information and changing preferences of millions of consumers to determine the “correct price” for a good; this can only be determined through the decentralized forces of the market, as revealed and altered by consumers’ purchasing decisions. It is what Nobel Prize-winning economist Friedrich A. Hayek explained as the “knowledge problem.”

Exchanging a set of heavy-handed state regulations for even stricter federal regulations is no solution, particularly if the purpose is simply to benefit narrow special interests — in this case, the large dairy farmers — at the expense of consumers.

Not only should the federal government not agree to gouge consumers even more than they already are, these Depression-era “marketing order” regulations should be eliminated, and dairy farmers forced to be subject to the same market pressures that producers of other goods and services must navigate.

More in Opinion

U.S. Senate candidate Kelly Tshibaka and former President Donald Trump stand on stage during a July 2022 rally in Anchorage. (Mark Sabbatini / Juneau Empire File)
Opinion: Tshibaka’s insincere defense of democracy

There are a lot of possible explanations why fewer votes were cast last November

Capitol
Opinion: Humanism and the billionaire class

Compromise is the right thing to do and they should do it.

tt
Opinion: The challenged truths of 3 elected representatives

“Politicians lying is nothing new.”

This photo shows the Mendenhall Glacier Visitor Center. (Ben Hohenstatt / Juneau Empire File)
Opinion: The wrong way to define demand

And as glaciers go, the Mendenhall is only a minor attraction.

Zachary Hamilton (Courtesy photo)
Borough mayoral candidate: ‘The best is yet to come’

Zachary Hamilton is running for Kenai Peninsula Borough mayor in the special election

Love, INC in Soldotna, Alaska, provides homelessness prevention and housing services to people on the Kenai Peninsula. (Photo by Brian Mazurek/Peninsula Clarion)
Opinion: COVID relief funds help homeless children in Alaska

We need to sustain this kind of investment.

Gov. Mike Dunleavy holds a press conference at the Capitol on Tuesday, April 9, 2019. (Juneau Empire file photo)
Opinion: Alaska must act now to capitalize on carbon markets

Alaska has vast forests and coastlines that can provide natural carbon management

1
Opinion: MLK Day clinics offered in the ‘spirit of service and advocacy for equality and social justice’

Attorneys across the state will be spending their holiday as “A Day On, Not a Day Off”

The M/V Tustumena comes into Homer after spending the day in Seldovia in 2010. (Homer News File)
Opinion: New federal funding could aid Alaska Marine Highway System

The evidence is clear that the AMHS is in grave danger of failing and moving into Alaska’s history books

(Mark Sabbatini / Juneau Empire File)
Opinion: I’ve seen the union difference

As a community we can show solidarity…

(Peter Segall / Juneau Empire File)
Sullivan’s irrelevance in defense of democracy

Two years ago this week, supporters of then-President Donald Trump stormed the U.S. Capitol…

People vote in polling booths at the Soldotna Regional Sports Complex on Tuesday, Nov. 8, 2022, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Voices of the Peninsula: What’s on your 2023 schedule so far?

There is a Kenai Peninsula Borough Special Mayoral Election coming up in February