Got Price-Fixed Milk?by
Vin Suprynowicz If Republicans passed a new, 20-cent-a-gallon tax on milk, what do you suppose the leadership of the Democratic Party – the party of the working man – would say? Wait: Take that a step further. Let’s pretend Republicans wanted to charge poor people an extra 20 cents for each gallon for milk ... and hand all the proceeds directly to rich businessmen! What do you suppose incoming Senate Majority Leader Harry Reid, D-Nev., would say about that? Schoolchildren may still be taught that our government has "anti-trust" laws to protect consumers from price-fixing. But Washington actually spends far more money setting up and protecting monopoly trusts than "busting" them. Under a 1937 law, for example, most American dairy farmers participate in a complex system of interlocking subsidies and protection measures that have the effect of keeping the free market from forcing the price of milk ... down. That’s right. A recent study by the U.S. Department of Agriculture acknowledges federal "dairy programs raise the retail price" of milk. The watchdog group Citizens Against Government Waste estimates these government-enforced price-rigging programs cost U.S. consumers at least $1.5 billion per year. Now, an added 20 cents a gallon is chickenfeed to the rich person. But the grocery budget forms a much higher percentage of the spending of a poor family with kids. So here’s a government program that has it all – it subsidizes rich dairy farmers, while placing the bulk of the burden squarely on the shoulders of poor people trying to feed their kids! Last week, The Washington Post examined the case of Hein Hettinga, an immigrant who started out as a hired hand in the Dutch American dairies of Southern California. He soon figured out he could build his own herd by buying cows with injured hooves, healing them, and selling them at a profit. By the early 1990s, Hettinga had half a dozen dairies in Arizona and Southern California. His first customers were in Mexico. Then he started selling milk to a chain of Arizona stores that catered to the Hispanic population. By 2002, he and his son were building a second processing plant in Yuma to supply Costco stores in Southern California. But Hettinga, now 64, never joined the government’s price-fixing program. Because he processed his own milk, a "loophole" in the 1937 law said he didn’t have to. His competitors admit there was nothing particularly cost-efficient about Hettinga’s operation. He just felt free to sell his milk at what he considered a reasonable profit – with the result that the Costcos in California found they could sell Hettinga’s milk for 20 cents less per gallon than their competitors’ milk. This did not please the United Dairymen of Arizona, who complained to their congressmen that Hettinga was forcing other dairies to lower their prices in order to compete. California’s biggest milk provider, Dean Foods, similarly complained to their own congressmen that Hettinga was "unfairly" lowering California milk prices by using a "regulatory loophole." Hettinga’s operation was "damaging to the marketplace," explains Elvin Hollon of the Dairy Farmers of America. "So the regulations had to change." Republican Sen. Jon Kyl of Arizona, who has received thousands of dollars in campaign contributions from Hettinga’s competitors, went to work ginning up a bill that would require Hettinga to pay all the "extra" money he saved by operating outside the federal pool, right back into the "pool" that regulated his main Arizona competitor, Shamrock Foods Co. – removing any incentive or ability for him to sell his milk at a lower price. (Fans of "Atlas Shrugged" will be disappointed to learn they don’t actually call this the "Milk Equalization Board." But they could.) Hettinga fought back, printing 50,000 milk labels that warned Sen. Kyl was trying to "limit competition and raise the cost of milk to the Arizona consumer." At first, Sen. Kyl’s anti-competitive measure went nowhere. But then, in 2003, Nevada’s own Sen. Harry Reid got involved, co-sponsoring with Sen. Kyl an amendment that would free Nevada from federal milk price-fixing (don’t get too excited – Nevada has its own milk price-fixing board), in exchange for Sen. Reid’s support for cracking down on Hettinga in California and Arizona. In 2005 and 2006, Dean Foods, with nearly 100 plants around the country, spent more than $600,000 on political contributions, including $5,000 to Sen. Kyl and $5,000 to Sen. Reid, the Washington Post reports. Overall, eight groups with an interest in the legislation reported overall lobbying spending of more than $5 million in 2005 and the first half of 2006. On Dec. 16, 2005, with the Senate chamber nearly empty, Sen. Reid introduced the proposal that would prevent Hein Hettinga from continuing to hold down the price of milk down by 20 cents a gallon in Arizona and Southern California. It passed by "unanimous consent." The House followed suit in March. In October, Hein Hettinga filed a federal lawsuit. But he admits he was no match for the dairy lobby. "I had an awakening," he told the Post recently. "It’s not totally free enterprise in the United States." But hey, is that such a big price to pay – back-stabbing some abstract, theoretical notion like "free enterprise" – when in exchange Sen. Reid and his cohorts managed to achieve the vital goal of seeing to it that struggling families in California and Arizona will now pay an extra 20 cents a gallon to feed their kids milk?
December 16, 2006 Vin Suprynowicz [send him mail] is assistant editorial page editor of the daily Las Vegas Review-Journal and author of The Black Arrow. Copyright © 2006 Vin Suprynowicz |
