A Primer on Federal and State Milk Marketing Orders in New York
Kaiser, Harry M.
This paper presented a basic review of milk marketing orders in the state of New York. Marketing orders have their roots in the 1930's, a time of unprecedented chaos for both the agricultural and general economy. During this period dairy markets across the country were in tremendous disorder with farmers facing highly unstable prices and virtually no bargaining control in marketing their milk. From about 1880-1916 milk buyers dominated the price setting of milk with dairy farmers having virtually no control of prices. Several attempts to gain a degree of bargaining power over prices were successful by cooperatives from World War I to the Depression. However, most successes were short-lived because buyers could find alternative outlets for milk. Through a lengthy legislative process, the Federal and New York governments finally passed the Agricultural Marketing Agreement Act of 1937 and the New York Milk Control Law of 1937, respectively. These two pieces of legislation provide the legal basis for all Federal and State milk marketing orders in New York. In New York about 98 out of every 100 dairymen sell their milk to handlers regulated by milk marketing orders. Although the state's farmers are affected by three Federal and two State marketing orders, the New York-New Jersey Federal order is by far the most important in terms of number of producers and volume of milk regulated under its authority. Currently this order covers over 38 countries in the state. Two smaller State marketing orders operate in Western New York. These two orders, the Niagara Frontier and Rochester orders, are authorized by the New York Milk Control Law of 1933 and subsequent amendments. Both the State and Federal orders in New York were established in the late 1930's and have operated continuously since then. The major difference between the State and Federal orders is that under the two State orders farmers pay for the hauling cost of delivering milk to the plant and pay for administration costs of the orders. The dairy industry in New York, as well-as the rest of the nation, is an ever changing dynamic sector of our economy. The system of marketing orders have had to adjust to changes in the structure of dairy markets in the past and will face even farther-reaching challenges in the future. The success of orders in stabilizing the market and mitigating future problems will ultimately depend upon dairymen themselves since they have complete control over adoption, termination and changes in the orders. Therefore it is critical that farmers understand the nature and purposes of milk marketing orders and take an active role in shaping the direction of them to future structural changes in this sector of the economy.
A.E. Ext. 86-16
Charles H. Dyson School of Applied Economics and Management, Cornell University