Tuesday, February 14, 2006

Beating the System in the Dairy Industry

I originally saw this in the Wall Street Journal a few day ago but also found it elsewhere. It is basically about an immigrant farmer from Holland that started working in the farm business and now has found an innovative way to actually be an owner-farmer that makes a decent living.

Here's the story. Back in the depression era the supply of milk was unpredictable due to machinations by those that could control it. Laws were passed to minimize that abuse of milk supply power. Over time, that regulation grew into a system whereby only large corporations have that exclusive membership to distribute milk through large regions of the United States. This is not unlike the concentration power that beef processing plants had in this country. The net effect of this concentration is that the small farmer/owner/rancher is squeezed pricewise by the middleman since the middleman controls the gate to the market.

Well, it appears that Mr. Hettinga actually found a way around that gate and is selling directly to retailers and so the retailers get it cheaper. Remember, these middlemen are relying on the laws that passed during the 1930s. There is no longer a need for such laws as the markets are far more efficient now and the economy is definitely not like the 1930s. So now the middlemen and those that are forced to supply to the middlemen are asking that states pass laws against Mr Hettinga who was innovative enough and more efficient than they are.

I say it is time to scrap outdated laws and to outlaw cartels of this sort.

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