U.S. dairy program at odds with free enterpriser

A front-page article in Sunday’s Washington Post, titled “Dairy Industry Crushed Innovator Who Bested Price-Control System,” recounts how Arizona dairy farmer Hein Hettinga thought he could operate in the free market outside the bounds of the U.S. dairy program.

Hettinga was bottling milk and selling it to an increasingly large number of outlets — and at a price about 20 cents below that of his competitors. The diary farmer figured he could operate competitively without being dependent on the federal and state programs that guaranteed the market and guaranteed prices for milk.

The convoluted diary program is indeed Byzantine. According to the U.S. Department of Agriculture, it consists of federal milk marketing orders, the federal milk price support program, state pricing programs and state-mandated over-order premiums, interstate dairy compacts, direct payments to milk producers, and export programs such as the dairy export incentive program.

So here was a farmer willing to compete without government handouts and able to offer lower prices. Sounds good. But that was before the dairy industry exercised its considerable clout and got a law passed not allowing dairy farmers to operate outside the system. They said such actions were “damaging to the marketplace.”

The Post reported Hettinga’s reaction: “”I had an awakening. It’s not totally free enterprise in the United States.”

And the U.S. farm programs are a clear example of that. (See, for example, CEI’s paper on the U.S. sugar program.)