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Published January 18, 2013, 02:55 PM

Setting a minimum

North Dakota dairy laws guarantee milk prices for farmers and retailers.

By: Christopher Bjorke, Forum News Service

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,” says John Weisgerber Jr., the board’s director in Bismarck. “The idea is to keep it here in North Dakota.”

Keeping it local

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 says.

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.

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

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, creating floors for prices paid to processors and retailers.

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

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

Weisgerber says the dairy industry is a good candidate for regulation because of 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.