Drafting a Connecticut Fair Milk Pricing Law: A Meeting the Competition Clause that Enhances the Competitive Position of Connecticut Processors and A Small Account Rule that Recognizes the Higher Cost of Supplying Such Accounts

There is substantial concern in the state about the economic health of our two remaining independent milk processors, Guida-Seibert Milk Company, New Britain; and Marcus Dairy, Danbury, Connecticut. Some Connecticut farmers are also exploring the possibility of constructing a new cooperative fluid milk processing plant. Farmers and consumers also prefer a milk channel that is effectively competitive-a milk channel with the services of several processors is desirable. Farmers seek continued access to fluid milk processing in southern New England for their milk. Shipping raw milk to New York for processing and then bringing processed product back to Connecticut puts Connecticut farmers and consumers at the far ends of the distribution channel rather than at its center. Both could lose in this arrangement. The dairy industry also generates jobs and economic activity in the state that would be lost if dairy farms and processing shift west. Recent retail pricing patterns in Connecticut effectively guarantee that even if wholesale milk prices were lower, and there is absolutely no guarantee that they would be if dairying and milk processing shifts west, retail milk prices would not be lower. For these reasons there is a critical need for the proposed milk pricing law and, as explained in this briefing paper, a need for a meeting the competition clause in the law. As we will show below, the law and this clause forms the core linkage in a vertical strategic alliance between farmers, Connecticut’s existing processors and any other processors located in the Northeast who would compete in Connecticut with the nation’s and northeast region’s dominant vertical strategic alliance Dairy Farmers of America/DMS, and the Dean/Garelick processing system.