The Milk-Price Fence

On the premise of keeping dairy farmers gainfully employed and fresh milk mustaches on consumers, some members of Congress have perennially championed dairy "compacts" that boost milk prices within a region.

Such a compact has protected Northeastern milk producers for years. It's scheduled to expire this fall, but a bill titled "The Dairy Consumers and Producers Protection Act," sponsored by Senate Judiciary chair Patrick Leahy (D) of Vermont, would extend it.

It also would expand the compact concept, allowing dairy farmers to collectively set beverage milk prices in some 25 states that either already have, or are considering, such compacts. Supporters of the measure had hoped to attach it to an emergency farmers-aid appropriations bill just signed by President Bush. That didn't happen. But they aren't about to give up.

For reasons of sound economics, they should. Such compacts amount to additional government-sanctioned price-fixing on top of what already exists, since the feds have long set the price for raw, fluid milk.

Compacts distort the prices of milk products within a region. And they're not likely to stop the exodus of smaller dairy farmers, whose economic problems are many and deep. Indeed, dairy farmers have been leaving their cows behind at a rate of 5 percent a year, compact or no.

Manipulating prices to keep people on the farm, especially in New England, has strong appeal for reasons beyond economics - namely, to preserve rural culture and landscapes. Those goals, however, don't warrant an expansion of regional protectionist legislation.

States and localities should do what they can to help farmers make a go of it, including pointers on diversification of farm products and various means of property-tax relief. But building price fences around certain regions? No.

Milk price-fixing by dairy compacts is at best a short-sighted solution for farmers. It sets a precedent other industries might be tempted to follow. And it raises unsettling constitutional questions about possible interference with the flow of interstate commerce.

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