State Milk Regulation: Extent, Economic Effects, And Legal Status

State resale price regulation, the dominant form of State milk regulation over the years, may raise marketing costs and margins, but does not appear to stabilize retail milk prices. The effectiveness and impact of all types of State milk regulation are highly variable among States and depend largely on the degree of enforcement involved, an aspect of regulation difficult to document and quantify. Several once-common abuses in State regulation have now been proscribed by the courts or otherwise dropped. While the stated legislative objectives of much State regulation have been to ensure an adequate supply of wholesome milk at reasonable prices and to promote stability, the practical result appears to have been to raise income of in-State dairy interests at the expense of milk consumers and out-of-State milk producers and processors. State regulation of retail prices is now found in only five States following a long history of court and administrative actions either terminating State regulation or removing or modifying the unacceptable aspects of the remaining regulation. California (which until 1977 had regulated all prices) now regulates only producer prices. New York is the only State now requiring milk dealers to have territorial licenses. This county-basis licensing restricts both intra- and interstate milk distribution and is clearly an anomaly in 1986. Maine, Montana, Nevada, North Dakota, and Pennsylvania still regulate resale prices. About half of the States have lesser forms of regulation, such as price filing requirements, below-cost pricing limits, and trade practice regulations.