Milk Marketing Orders: Who Wins and Who Loses?

Abstract

Milk Marketing Orders: Who Wins and Who Loses? Hayley Chouinard, David E. Davis, Jeffrey LaFrance, and Jeffrey M. Perloff JEL Classifications: Q13, Q18 Federal milk marketing orders (FMMO) raise prices of fluid milk products and lower the prices of manufactured dairy products such as cheese and ice cream. What effect do these prices changes have on the well-being of various groups of consumers? Do the federal milk marketing orders favor the rich over the poor? We use data from retail sales to answer these questions. The milk market is not a textbook competitive industry. Over the years, it has been affected by dairy price support programs, import quotas on dairy products, and the FMMO. For several decades, the supports, quotas, and marketing orders jointly determined farm, wholesale, and retail prices for processed fluid milk and manufactured products. We look at a period, 19971999, when milk marketing orders were the main policy affecting dairy markets.