Cartel 1, Fairness 0

The San Diego Union-Tribune
Daily Editorials
December 15, 2006

Ready for a government horror story? Here’s a doozy. A massive milk cartel now holds sway over American supermarkets, thanks to a maze of regulations enacted during the Depression to keep struggling dairy farmers in business. These anachronistic, anti-competitive rules cost U.S. consumers at least $1.5 billion a year.

But instead of accepting a tidy guaranteed profit by staying within the system, a Riverside County, Calif., dairyman, Hein Hettinga, saw a better way – one that would give consumers a much fairer deal.

Almost all dairy farmers ship their raw milk to plants for conversion into jugs of milk, ice cream, cheese and other dairy products, accepting a fixed, government-set payment in return. Hettinga realized that if he cut out the middleman and owned both dairies and production facilities, he could provide much cheaper milk operating outside the federal system. “Producer-handlers” willing to risk free-market competition were specifically exempted from the 1937 federal milk -price support law.

And so beginning in the early 1990s, Hettinga built a network of dairies from California to Texas and set up two processing plants in Yuma , Ariz. By 2002, his Sarah Farms milk – at least 30 cents cheaper per gallon than price-support milk – was a hugely popular fixture at Costco, Sam’s Club and other grocers in Southern California and Arizona .

So what did Hettinga’s rivals do: Upgrade and streamline their own operations? Pursue new efficiencies and innovations? Go the “producer-handler” route so their milk also would be cheaper? Nope. They asked Congress to punish Hettinga for the sin of not joining in their rigged game – and, according to a recent Washington Post report, got their way without a single hearing in the House or Senate.

The article detailed a three-year, multimillion-dollar lobbying and campaign contribution blitz by the dairy cartel. With key assists from Senate Minority Leader Harry Reid, D-Nev., Sen. Jon Kyl, R-Ariz., and Rep. Devin Nunes, R-Calif., the blitz paid off this spring with the passage of a bill that forced Hettinga to give much or most of his profits to one of the cartel’s regional pools – in other words, to his competitors. A dairy industry lobbyist openly bragged to the Post that he helped write the measure.

Even by the debased standards of Washington politics, this stinks. A cartel that’s been ripping off people for decades finally faces a little competition and squashes it by buying off Congress. Talk about banana republic politics.

The sliver of hope for justice in this matter resides in Article 1 of the U.S. Constitution. It forbids “bills of attainder” – legislative acts that single out individuals or groups for punishment without benefit of trial. Hettinga is suing the federal government on these constitutional grounds. Given that none of the arrogant milk industry lobbyists or their hired lawmakers bothered to pretend that the milk Regulatory Equity Act of 2006 had any goal besides harming the maverick dairyman, he appears to have a case.

Reprinted from The San Diego Union-Tribune.

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