The Public Role In The Dairy Economy: Why And How Governments Intervene In The Milk Business

344 Pages·1983·6.597 MB·\344

by  Alden C Manchester (Author)

The Public Role in
the Dairy Economy
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Westview Special Studies in
Agriculture Science and Policy
The Public Role in the Dairy Economy:
Why and How Governments Intervene
in the Milk Business
Alden C. Manchester
All over the world, governments play a part in the milk business
for compelling economic reasons and not, as many assert, just because
dairy farmers are numerous and organized. This book examines the role
of federal, state, and local governments in the dairy economy of the
United States, where major public involvement in industry began during
the Great Depression. Dr. Manchester considers the conditions in the
1930s that led to government involvement, the changes that have oc-
curred in the industry and the public role since then, and the pros-
pects for the 1980s and beyond. He also analyzes possible alternative
public dairy policies for the present and the rest of the decade.
Many things have changed, points out Dr. Manchester, but the funda-
mental conditions that led to public involvement in the dairy industry
still exist.
Dr. Manchester is senior economist, National Economics Division,
Economic Research Service of the U.S. Department of Agriculture. He
was in charge of dairy marketing research in the USDA from 1961
through 1973. His other publications include Organization and Com-
petition in the Midwest Dairy Industries (1970), Dairy Price Policy:
Setting, Problems, Alternatives (1978), and Market Structure, Institu-
tions, and Performance in the Fluid Milk Industry (1974).

The Public Role in
the Dairy Economy
Why and How
Governments Intervene
in the Milk Business
Alden C. Manchester
First published 1983 by Westview Press
Published 2019 by Routledge
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Copyright © 1983 Taylor & Francis
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Product or corporate names may be trademarks or registered trademarks, and are used only
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Library of Congress Cataloging in Publication Data
Manchester, Alden Coe, 1922-
The public role in the dairy economy.
(Westview special studies in agriculture science and policy)
Bibliography: p.
Includes index.
1. Milk trade--Government policy--United States. 2. Milk trade--
United States--Price policy. 3. Dairy products--United States--Price
policy. 4. Agricultural price supports--United States. I. Title. II. Series.
HD9282.U4M324 1983 338.1'873 83-6957
ISBN 13: 978-0-367-29540-0 (hbk)
Contents
List of Tables and Figures xi
Foreword xvi
Acknowledgments • xviii
Part 1. PROLOGUE
1 INTRODUCTION • • • 1
2 CHARACTERISTICS OF THE DAIRY INDUSTRY 3
Production 3
Harvesting 4
Marketing 4
Inherent Instability 5
Implications • • 8
3 THE DAIRY INDUSTRY AND PUBLIC POLICY BEFORE 1933 9
Developing a Pricing System 12
Public Policy Concerns • • • • 15
Part 2. INDUSTRY STRUCTURE
4 DAIRY PRODUCTION AND MARKETING IN THE EARLY THIRTIES • 21
Milk Production and Farm Sale 22
Marketing Bulk Milk 26
Receiving Stations ••• 27
Role of Cooperatives • • 28
Processing Manufactured Products • 30
Butter • • • • • • • 30
Cheese • • • • • • • 31
Evaporated and Condensed Milk 31
vii
viii
Ice Creaill ••••.•••••• 32
Cottage Cheese and Soft Cheeses 32
Fluid Milk Processing 32
Marketing Packaged Milk 37
Marketing and Pricing Butter and Cheese 40
Market Organization and Power 40
In Summary • • • • • • • • • • • • 43
5 CHANGES IN PRODUCTION AND ASSEMBLY 45
Production • • • • • • 45
Marketing Bulk Milk 51
Cooperative Role • 56
Intermarket Shipments 58
Size of Bulk Milk Markets 60
In Summary • • • • • 60
6 CHANGES IN PROCESSING 61
Fluid Milk Products 61
Commercial Processors 62
Type of Firm 65
National Market Shares of Large Companies 68
Cooperatives • • • • • • • 71
Integration by Retailers • • • • • • 71
Market Shares in Local Milk Markets 73
Plants Hanufacturing Dairy Products 76
Concentration 81
Cooperative Role 81
In Summary ••••• 85
7 CHANGES IN MARKETING AND CONSUMPTION 87
l1arketing Packaged Milk 87
Changing Outlets 90
Innovations 92
Growing Size of Packaged Milk Markets 97
Competition in Packaged Milk Markets 101
Price Structures •• 105
Wholesale Pricing •••••• 108
Marketing Manufactured Products •••••• 109
Ice Cream 109
Cheese 109
Butter 111
Nonfat Dry Milk 111
Pricing Manufactured Dairy Products at Retail 111
Wholesale Pricing 112
Butter • • • 112
Cheese • • • 113
Consumer Markets 114
Consumption of Dairy Products • • • • • 118
In Summary • • • 121
ix
Part 3. INSTITUTIONS AFFECTING PRICE FORMATION
8 THE CONCEPT OF ORDERLY MARKETING 125
Development of the Idea • • • • • • 125
Orderly Marketing of Milk • 126
Geographic Price Structure 128
In Summary •••••••• 133
9 PUBLIC PROGRAMS DURING THE DEPRESSION 135
Sanitary Regulation •••• 136
Federal Regulation of Fluid Milk Markets 137
Marketing Agreements 138
. Licenses 140
Market Orders • • • 142
State Milk Control 145
Effects of Regulation • 146
Programs for Manufacturing Milk and Butterfat • 147
Food Distribution Programs ••••• 152
Marketing Agreements for Manufactured Products 155
In Summary • • • • • • • ••••• 156
10 CHANGES IN THE PUBLIC ROLE--WORLD WAR II AND BEYOND 157
Sanitary Regulation 157
Public Regulation of Milk Prices 158
Federal Orders 158
Pooling Producer Returns 161
Price Formulas 162
Changing Objectives 165
From Local Markets to a National Price Structure 166
Defining Class 1 Products •••••• 167
Regulation of Nonpool Milk 168
Cooperative Role in Federal Orders 169
State Milk Control 169
Resale Price Control 174
Restricting Competition • 176
Price Supports 177
Consumption Programs 184
Import Regulation 184
Antitrust Policy 186
Cooperatives 187
In Summary 188
Part 4. EVALUATION AND PROSPECT
11 CHANGES IN MARKET ORGANIZATION AND POWER 193
Cooperative Functions and Power • 195
In Summary ••••• 198