Milk Money

California is the number-one dairy state in the nation, having wrested that title from Wisconsin in 1996. Its annual 26 billion pounds of milk constitutes 16 percent of the nation's supply. California also has the largest surplus of milk and dairy products of any state.

With such bountiful supply, you might think Californians enjoy relatively low milk prices. Wrong. California boasts the highest milk prices in the continental United States. Milk drinkers in neighboring Oregon, Arizona, and Nevada typically pay $1.00 less per gallon than do Californians.

California consumers pay $632 million more per year for their milk then residents of nearby states, reports Mad About Milk (www.madaboutmilk.org), a coalition of milk producers, senior citizens, taxpayer advocates, and consumer groups fighting the powerful state dairy lobby. MAM blames old-fashioned trade protectionism for inflating milk prices. Since July 1997, for instance, Golden State milk processors have been required to pay a tariff (called a "pool obligation") on milk they buy from out-of-state dairy farms, effectively discouraging milk imports. California consumers also suffer from the state's "mandatory mark-up" law, which bars retailers from selling milk at a discount or as a "loss leader."

To justify the higher prices, the California Department of Food and Agriculture asserts that its regulations--which require producers to replace the fat removed from 1 percent and 2 percent fat milk with calcium and protein--make milk sold in the state healthier than the U.S. Department of Agriculture requires. But these standards serve as an effective ban on "natural" milk (nonfat milk that doesn't contain artificial additives) brought in from the other 49 states. And largely as a result of higher prices, MAM argues, Californians consume 25 percent less milk per capita than residents of neighboring states, negating the intended effects of requiring additional nutrients.

This conflict is less about nutrition than choice. Says John Vetne, a Massachusetts-based attorney who represents MAM-member milk processors in Arizona and California, "The government of California has decided its consumers are too stupid to choose their own milk."