Governments' Role in Pricing Fluid Milk in the United States

Excerpts from the report: Government participation in pricing fluid milk was widely inaugurated in the early 1930's. A number of States enacted legislation to stabilize milk markets in an attempt to raise milk prices. The Federal Government entered fluid milk pricing following passage of the Agricultural Adjustment Act of 1933. The system of Federal milk orders has been steadily expanding for more than a quarter century. There were 17 milk orders in 1940, and in 1950, there were 39. By 1962, the number had increased to 83. Consolidation of several orders and termination of 2 orders reduced the number to 76 on March 1, 1965. As of this date, 20 States had laws authorizing the establishment of milk prices. In addition, a number of States without milk control laws are indirectly affecting milk prices through regulation of such trade practices as those relating to selling products below cost, price discrimination, granting discounts, or rebates. Most States with milk pricing regulations regulate trade practices to obtain compliance with resale prices. The influence of Federal and State milk pricing activities goes well beyond the areas actually controlled. About 90 percent of the milk meeting the sanitary eligibility standards for fluid use is priced under either Federal milk orders or State milk control laws. However, fluid milk prices in many markets not covered by Federal or State measures are influenced by prices established in areas under government control.