RALEIGH — Some lawmakers want to bring back the state’s Milk Commission to protect local dairy farmers, but critics of the measure contend it will only lead to higher milk prices.
During the July 31 House Agriculture Committee meeting, Reps. Jeff McNeely, R-Iredell, and Pat Hurley, R-Randolph, introduced a PCS to Senate Bill 380 that would bring back the Milk Commission in an effort to aid the shrinking state dairy industry.
McNeely has been pushing to reinstate the Milk Commission since his time as a county commissioner in Iredell County. He has repeatedly raised the alarm that dairy farms are disappearing in North Carolina, particularly in his county.
McNeely said the price-setting power was necessary because the state’s dairy industry is struggling to compete with states like Wisconsin and Pennsylvania. The Tar Heel State’s hot summers put North Carolina at a disadvantage compared to northern states with cooler weather better suited for dairy cows.
During the committee hearing, McNeely said North Carolina’s cows have to wear the equivalent of leather jackets during the summer heat.
Under the reworked S.B. 380, a 10-member board would be established to oversee the milk business. The commission could mediate disputes between producers and distributors, and issue licenses for distributors. But the aspect of the bill that drew the most pushback was a provision granting the Milk Commission the ability to set prices for the dairy beverage.
The commission can determine maximum and minimum wholesale and maximum retail prices for milk, so long as it finds price-setting is in the public interest.
The bill has sparked some criticism, both inside the legislature and outside it.
Rep. Chuck McGrady, R-Henderson, who is a member of the House Agriculture Committee, said the bill seems half baked.
“Philosophically I’m not excited about the idea of some governmental entity setting prices. I think the market does that better than the government does,” McGrady said. “The bill has come pretty late in the session and it doesn’t seem fully developed.”
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McGrady said he understands McNeely’s desire to protect local producers but lawmakers should consider how this will impact the consumer.
“If there are places better suited for dairy farming in this age, then so be it,” McGrady said. “We may be better at doing other things.”
Jon Sanders, director of regulatory studies at the John Locke Foundation, said the bill might not accomplish what the sponsors hope it will.
“Reinstating the Milk Commission for the purpose of instituting price supports may or may not help the dairy farms, but it won’t help consumers,” Sanders said. “It would also create another protected special interest and further cronyism.”
Andy Ellen, the president of the North Carolina Retail Merchant Association, agreed that consumers would likely see higher prices at the store. Ellen added that under the legislation, retailers would lose control over pricing milk and probably wouldn’t be able to hold one-day specials for the dairy beverage.
The Milk Commission, created in 1947, was dissolved in 2004. Ellen said in part the state got rid of the commission because it was frequently entangled in litigation. The Commerce Clause of the U.S. Constitution bans states from erecting trade barriers within the U.S. unless the Constitution explicitly allows them.
The 21st Amendment, for instance, gives states some leeway to set their own policies regarding alcohol sales and distribution. Interstate transactions involving most other products and services can’t be regulated unless the rules are designed to protect public safety or some other legitimate public interest.
Bringing back the Milk Commission could also resurrect the same issues that led to its demise in the first place, Ellen said.
“Ninety percent of this bill mirrors the law that was repealed, so the question is are we getting right back into a scenario where you’re creating a very litigious situation?” Ellen questioned.
While the House Agriculture Committee didn’t vote on S.B. 380, it’s likely to come up again in a future meeting.
