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

Logo courtesy of League of Women Voters.
Point of View: Tell your representatives SAVE Act is not needed

The SAVE Act will disenfranchise Alaska voters and make the process of voting much more restrictive.

Sen. Jesse Bjorkman, a Nikiski Republican, speaks in favor of overriding a veto of Senate Bill 140 during floor debate of a joint session of the Alaska State Legislature on Monday, March 18, 2024 (Mark Sabbatini / Juneau Empire)
Capitol Corner: Taking steps toward a balanced budget

Sen. Jesse Bjorkman reports back from Juneau.

Rep. Justin Ruffridge, R-Soldotna, speaks in support of debating an omnibus education bill in the Alaska House Chambers on Monday, Feb. 19, 2024, in Juneau, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Capitol Corner: Dedicated to doing the work on education

Rep. Justin Ruffridge reports back from Juneau.

Sen. Jesse Bjorkman, R-Nikiski, speaks at a town hall meeting in the Moose Pass Sportsman’s Club in Moose Pass, Alaska, on Friday, Feb. 28, 2025. (Jake Dye/Peninsula Clarion)
Rep. Justin Ruffridge speaks during a town hall meeting hosted by three Kenai Peninsula legislators in the Kenai Peninsula Borough Assembly Chambers in Soldotna, Alaska, on Saturday, March 29, 2025. (Jake Dye/Peninsula Clarion)
Capitol Corner: HB 161 — Supporting small businesses

Rep. Justin Ruffridge reports back from Juneau.

The Swan Lake Fire can be seen from above on Monday, Aug. 26, 2019, on the Kenai Peninsula, Alaska. (Photo courtesy Alaska Wildland Fire Information)
Point of View: Fire season starts before Iditarod ends

It is critical that Alaskans exercise caution with anything that could ignite a fire.

The U.S. Capitol in Washington, March 25, 2025. (Eric Lee/The New York Times)
Point of View: Wake up America

The number one problem in America is our national debt resulting from the inability to control federal spending.

Rep. Justin Ruffridge, R-Soldotna, speaks during a town hall meeting hosted by three Kenai Peninsula legislators in the Kenai Peninsula Borough Assembly Chambers in Soldotna, Alaska, on Saturday, March 29, 2025. (Jake Dye/Peninsula Clarion)
Capitol Corner: Preparing for wildfire season

Rep. Justin Ruffridge reports back from Juneau.

Snow collects near the entrance to the Kenai Community Library on Thursday, March 10, 2022, in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Libraries defend every American’s freedom to read

Authors Against Book Bans invites you to celebrate National Library Week.

Alaska State House District 7 Rep. Justin Ruffridge participates in the Peninsula Clarion and KDLL 91.9 FM candidate forum at the Soldotna Public Library on Monday, Oct. 14, 2024, in Soldotna, Alaska. (Photo by Erin Thompson/Peninsula Clarion)
Capitol Corner: Putting patients first

Rep. Justin Ruffridge reports back from Juneau.

Sen. Jesse Bjorkman, R-Nikiski, speaks at a town hall meeting in the Kenai Peninsula Borough Assembly Chambers in Soldotna, Alaska, on Saturday, March 1, 2025. (Jake Dye/Peninsula Clarion)
Capitol Corner: Building better lives for Alaskans

Sen. Jesse Bjorkman reports back from Juneau.