have some form of regulation of milk marketing, either at the federal or state level. A. Federal Order Regulation of Milk Marketing At the end of 1975 there were 56 federal milk marketing orders under which were marketed over 69 billion pounds of producer milk, representing about 80% of all fluid grade milk produced. See Figure 2.2. The number of separate federal milk order markets peaked in 1962 at 83. Since that time the number of markets has been steadily declining while the volume of milk regulated has been steadily increasing. 43/ Table 2.4a -- Milk Regulated by Federal Market Orders, 1950-1975 Source: Agricultural Marketing Service, U.S.D.A., 43/ FMOMS, December 1975 Summary, p. 9. Figure 2.2- Source: USDA, "Summary of Major Provisions in Federal Milk Marketing Orders", January 1, 1976, p.21. The recent trend has clearly been toward fewer, larger milk market order regions. This reflects the fact that the technology of milk has advanced to the point where raw milk markets need not necessarily be local as milk can be shipped great distances without spoiling. Despite technological advances, most milk markets are still in fact fairly local, largely because federal regulations have operated to "freeze in" the local character of the market system of the thirties. (The local area has expanded, but has been based on shipments of fluid product, not on availability of adequate potential supplies of raw milk.) In 1974, 43 federal orders received more than 95 percent of their milk from either the state in which the order existed or an adjacent state. 44/ This represented 73 percent of the producers' milk delivered to regulated handlers in federal order markets. Only seven orders received more than 10% of their milk from farther away than an adjacent state; in three of these, the supplying state was Minnesota. 45/ A study of milk marketing done in 1967 revealed that between 85 and 90 percent of inter-market bulk milk shipments originated in 44/ Compiled from data appearing in FMOMS, July 1975 Summary, pp. 38-40. See also Figure 2.3. 45/ Id. Additional shipments that come from more distant sources as interorder handler shipments carry a consequent price disadvantage to be discussed later. Figure 2.3- Percent of Producer Milk Pooled on Federal Orders Coming from Producers Located in the Same States in which the Federal Order Market Is Located, 1973. USDA, May, 1975. "Sources of Milk for Federal Order Markets by State and County", Agricultural Marketing Service, cooperative supply plants and 90 percent of intermarket shipments originated in only 12 market areas. 46/ In 1974, 78 percent of all fluid grade milk marketed was sold in federal orders. In 1965 this figure was 70 percent; in 1957, 53 percent. As a percentage of all milk sold (grade B milk included) these figures were 63, 48 and 34 percent respectively. 47/ No grade B milk is sold under federal market orders. B. The Price Support Program The price support program is separate from, but related to the federal market order program. The Commodity Credit Corporation is authorized to purchase manufactured dairy products in order to keep the M-W price 48/ at a predetermined support level. The support level is announced as a certain percentage of the parity price, which is defined by statute. 49/ This support price has risen from $3.15 per hundredweight in 1964 to $4.93 in 46/ W. D. Dobson and E. M. Babb, An Analysis of Alternative Price Structures and Intermarket Competition in Federal Order Milk Markets, Research Bull. No. 870, Purdue University Agricultural Experiment Station, Lafayette, Indiana (December 1970), p. 5. 47/ FMOMS, Annual Summary, 1975 p. 9. 48/ The Minnesota-Wisconsin manufacturing grade price. This is the base price upon which the federal order price structure rests. 49/ 7 U.S.c. § 1301(a)(1). |