Obviously, regional milk marketing orders do not work. Obviously, too, “producer-owned cooperatives” do not work when they become so massive and controlled by staff that they are simply another big corporation.
But, the milk market can work. It requires some regulation. The needed regulation is not antithetical to capitalism and does not entrench governing in the market unduly. On two levels, here are suggestions.
The Federal Program
- Eliminate milk price supports as such, and replace the price supports with quantity controls.
- As a part of a national licensing scheme, a system of uniform state laws, or as a part of a signup program to qualify for dairy assistance programs with the USDA, require producers to limit production to defined quantities. Let them grow only by purchasing production rights from others.
- Relate the allowable quantities of milk production units available to be owned to a ratio based on the total US population. (For example, one cow for 30 people works better than one cow for 25 people.)
- Allow producers who overproduce to retain, and reuse, excess milk in their operations. For example, permit the milk to be fed back to livestock on the dairy.
- Control compliance by requiring that shipment quantities be monitored.
- Reduce the definition of milk fit for human consumption as Grade A by lowering the allowable somatic cell count. This alone will promote quality, efficiency, and sanitation, and reduce available supply.
The Milk Marketing Order
Call an election, and vote the existing federal milk marketing order out of existence. Recognize that many of the milk marketing orders that grew up after WWII have outlived their utility, and are no longer useful.
Make the Market Work Once the Milk Reaches It
Break up large cooperative control. Impose these restrictions.
- Require every producer cooperative to limit the term of employment for senior staff members to eight years, and do not permit exceptions or deviations.
- Do not pay bonuses based on profit. Instead, pay based on a formula that combines volume handled with quality, employee payroll size, and producer rebates.
- Limit Board of Directors service to more than 12 consecutive years, and do not permit a board member to be re-elected within fewer than eight years after retiring from service.
- Require that Boards of Directors include nonproducer, nonindustry personnel to assure different perspectives on business.
Conclusion
The existing milk marketing system must be entirely jettisoned. Repairing an old system will leave too much of the old methodologies in place, and yield no sufficient outcome.
Volume entering into the stream of commerce should be constricted. This approach is used for many products, particularly specialty crops. While milk is a huge crop, it is a specialty. Fix the role of co-ops by reducing their size, and assuring their responsiveness through limits on the service of the personnel and consultants.