N.D dairy laws guarantee milk prices for farmers, retailers

It only looks like a simple jug of milk.

In truth it is a regulated commodity, “vital to the public health and welfare,” in the language of the North Dakota Century Code.

It has been subject to “unfair, unjust, destructive and demoralizing trade practices” that “constitute a constant menace to the health and welfare of the inhabitants of this state.”

And in North Dakota, it costs no less than $1.73 for a half-gallon of 2 percent, $1.65 for skim or $1.80 for whole — though it usually sells for more than that.

The average consumer might not think about where the milk on the supermarket shelf comes from or how the price is set, but the product is regulated to support a market for producers, guarantee minimum “safety net” prices and prevent out-of-state producers from undercutting state dairy farmers.

But that is the role of the state Milk Marketing Board, a body whose power is to “supervise, investigate and regulate every segment of the state’s dairy industry,” including licensing producers, processors, distributors and setting floors for the prices paid to the producer, wholesaler and the retailer of milk products.

“The whole idea was to have dairy farmers in North Dakota, to have creameries in North Dakota,” said John Weisgerber Jr., the board’s director in Bismarck. “The idea is to keep it here in North Dakota.”

Keeping it local

According to Weisgerber, who has been with the board for more than 40 years, the regulation of milk and related products goes back to the 1930s, but gained momentum when supermarkets began to displace local milk distributors.

“They used to deliver milk house-to-house in horse-drawn wagons,” Weisgerber said.

The impetus of the board, according to Weisgerber, was to protect local producers and support distribution of milk to rural areas that might be ignored by larger, out-of-state dairies, which expanded in the 1940s.

“You’ve got miles and miles and miles and low population density,” he said. “Who’s going to go service Minot and Pisek and all of those places?”

While the federal government has been involved in regulating milk marketing for decades, the state Legislature in 1967 approved a state board as an option that would be more responsive to the interests of the industry in the state.

The board’s five members are appointed by the governor and include a producer, a processor, a retailer and two consumer representatives.

Weisgerber likened the milk board to the North Dakota Mill and Elevator and the Bank of North Dakota, two state entities created to improve farmers’ leverage with Minnesota grain buyers and provide favorable financing for growers.

But while those institutions are particular to North Dakota, there is nothing unique about North Dakota’s board.

“There’s about eight states that have laws very similar to this,” Weisgerber said.

Multiple minimums

The board’s interest was protecting the viability of the dairy farmers with a guaranteed price, but during the creation of the board, processors and retailers also asked for guaranteed minimum prices at their points in the trip from farm to fridge, creating floors for prices paid to processors and retailers.

The current price paid to producers is the $22.12 per hundredweight of raw milk.

The board also has the power to set a maximum price for milk but it does not now.

Weisgerber said the dairy industry is a good candidate for regulation because the perishable nature of its products. Milk has to be produced and cows need to be milked, and if farmers do not have a favorable market to sell to, they can fail and the state loses some of its dairy industry.

For the most part, the system works, he said. At times, there are complaints about the restrictions against retailers selling milk below the minimum price, but most stores set their prices above the current $1.73 for 2 percent, he said.

“For retailers, it keeps the playing field level for us,” said Kim Kessler, a milk board member and grocer in Beulah, N.D. The price minimums protect small grocers from competition from national retailers that can better afford to sell dairy products at a loss.

For consumers, the board supports local milk producers and helps serve small towns where grocers struggle to stay open, said Barbara Lang of Jamestown, N.D., who represents consumers.

“We make sure milk gets to where it needs to go,” she said.

Weisgerber said the board helps consumers get fresh local milk and only gives up the ability to buy milk under cost.

“We in North Dakota don’t sell milk as a loss leader,” a product stores sell at a loss that it recoups when the customer buys other goods, he said. “Everything pays its way.”

Tags: north dakota, news, milk, nation, dairy, food, agriculture, updates