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Dairy Industry Defeats Measures to Cut Milk Prices

Legislature: Blitz of opposition sets back deregulation effort, but one bill may be heard again.


SACRAMENTO — Legislation taking on the dairy industry hit a wall of well-coordinated opposition Tuesday, leaving one bill defeated and the other barely hanging on.

Both bills were aimed at reducing the high price of California milk, which is among the highest in the nation.

One bill would end a 20-year-old law preventing stores from selling milk below their cost. It failed its first vote in the Senate Agriculture and Water Resources Committee, but hours later committee members agreed to reconsider it in May.

"This issue is not going to go away," said state Sen. Jackie Speier (D-Daly City), the bill's author.

Proponents of the bill believe that state law has given larger grocery chains an excuse to inflate milk prices. Opponents--including dairies and large grocery chains--say the law fulfills its intent of protecting smaller grocers from being outpriced by the big guys because it does not let anyone cut their prices too low.

Should the Speier bill pass, "the mom-and-pops won't be able to compete" with the lower prices, said Sharon Hale, vice president of Crystal Cream & Butter Co. of Sacramento. "We fear the loss of competition is a more likely outcome."

Speier agreed to amend the bill to prevent stores from discounting milk below the state-mandated farm price--the amount dairies receive for their milk. That change led committee members to agree to take a second look at their next hearing, May 4.

The second milk bill was even less lucky, with only its author--state Sen. Debra Bowen (D-Marina del Rey)--voting for it. Bowen said she would not give up, comparing the effort to cracking a geode: "You try to crack it from one direction and if it doesn't work you try another angle."

Supporters of both bills were heartened by comments from committee Chairman Jim Costa, a Fresno Democrat from a dairy family. Costa voted against the Bowen and Speier bills, but said several times during the hearing that the laws regulating milk are antiquated.

"We need to look at some form of deregulation," he said after the hearing.

Bowen's bill would have ended California's unique requirement that milk be fortified with calcium and protein, allowing out-of-state dairies easier access to the state's market. Enrichment requirements began as a price stabilization effort in 1962 and later came also to be characterized as more healthful.

At Tuesday's hearing, a Stanford nutritionist said that for children's sake, she wished federal milk standards were as high as California's.

Bowen characterized the opposition's health defense as "bizarre" because "I don't think anyone's arguing that milk as it comes from the cow and is sold in 49 other states is not nutritious."

In many states, she pointed out, regular and enriched milk are labeled as such and sold side by side, letting buyers decide whether the added nutrients are worth the added cost.

The back and forth boils down to a war between dairy conglomerates fought on a field of consumer issues.

Backing the Bowen bill is Mad About Milk, a campaign financed by out-of-state dairies and others. They are not official sponsors of the legislation, however, because Bowen is among a handful of legislators who refuse to accept sponsors.

Behind the Speier bill is the consumer advocacy group Consumers Union, which has long criticized the state's high milk prices. Mad About Milk supports that bill as well.

Opposing both bills, but especially Bowen's, is Californians for Nutritious Milk, a campaign financed by California dairies and others.

Introduction of the bills this year unleashed a flurry of lobbying activity accompanied by news releases heralding "Great Moos about . . . Milk Prices" and bemoaning "Consumers' Udder Frustration."

There have been competing surveys, conflicting experts and pingpong allegations of political shenanigans.

Californians for Nutritious Milk held a milk-and-cookies news conference in March to trumpet the usually routine announcement of fluctuations in the state-set farm price for milk: the 50-cent drop that arrived April 1.

The group even persuaded the committee chairman to support its cause before the two bills came before him. Costa attended that news conference and said, "Now Californians will be drinking the most nutritious milk in the nation at a lower cost."

Mad About Milk was quick to attack the drop as too little, too late. In fact, every snippet of negative news about the dairy industry and state dairy regulators has been snatched up and turned into a news release.

Even when the April 1 drop in farm prices was quickly echoed in price cuts by many retailers, a dispute erupted about their motives.

Opponents of the bills say it proved that the legislation is not needed. Proponents say it proved only that grocery stores were sufficiently cowed by a potential groundswell for the bills--as evidenced by 20 editorials in support of the Speier bill.

Elisa Odabashian, a senior analyst with Consumers Union, was among the naysayers. Although pleased that consumers are getting a price break, she pointed out that until now price surveys consistently found that stores were quick to boost prices when the state increased the dairy payment, but slow to pass on any decreases.

"We shouldn't draw any major conclusions from retail activity right now," Odabashian said. "They're going to try to look as good as they can look."

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