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CALIFORNIA'S UNIQUE MILK STANDARDS STIFLE COMPETITION.

Byline: GARY M. GALLES Local View

FOR decades, California has imposed different standards for milk than the rest of the United States, requiring additional nonfat milk solids (SNF, for ``solids, not fat,'' in the bureaucratic lexicon) in fluid milk.

These unique restrictions are defended by our dairy interests as ``higher standards'' intended to benefit milk drinkers, particularly by increasing calcium consumption.

This claim was repeated last week by the Department of Food and Agriculture before the California Supreme Court, in an attempt to overturn a Court of Appeals ruling that would have opened the state to sales of milk meeting federal standards.

However, it is false.

Using California's milk standards as a means to raise calcium consumption has always been suspect. They were triggered by falling sales of butterfat, not calcium concerns. California imposes SNF standards, but there are no calcium standards, nor is our milk systematically tested for calcium content. The most commonly drunk type of milk, especially by children - whole milk - has the least calcium of any type sold in the state, and less than whole milk sold in other states. None of this is consistent with calcium being a major concern.

But the clincher is that this year, the California Senate Agriculture Committee, at the behest of state dairy interests, killed a bill (SB 1264, by state Sens. Debra Bowen, D-Redondo Beach, and Joe Dunn, D-Garden Grove) that would have set explicit calcium standards for California milk at the levels our dairy industry claims result from current SNF standards.

If current standards are really intended to increase milk's calcium content, local producers would not object to explicit calcium standards, rather than a requirement that they add certain amounts of SNF. Calcium standards achieve the same goal, but without intrusive and costly restrictions on how they are to be met.

The only reason to oppose calcium standards is if current regulations achieved some goal beyond calcium content. And they do - for California's dairies. But it is a goal that hurts California consumers - keeping out- of-state dairies from competing for their patronage.

While most out-of-state milk varieties already meet the proposed calcium standards, they do not do so by adding SNF, as California law requires. So the SNF standard keeps out competition which calcium standards would let in.

California's current standards, therefore, violate a general principle of efficient regulation. Whenever you want to achieve a certain result (calcium content), and that result can be measured, the most efficient way to achieve it is to set a standard and test to see whether it is met. It is not to specify how the standard is to be met, because the means specified may not be the least costly approach.

To protect California dairies from competition, Sacramento enforces inefficient SNF standards for milk in order to penalize out-of-state dairies, not for failing to provide consumers enough calcium, but for failing to do so using the unique method in-state dairies have adopted.

This distinction is important, because while California is the largest and lowest-cost milk producing state in the country, we have long had among the highest milk prices, far higher than neighboring states such as Arizona.

California's higher prices could not persist if much lower-price outside producers were allowed to sell here. But our unique SNF standards prevent that. Switching to a calcium standard would allow California consumers to benefit from the now-excluded competition. That is why our dairy interests killed the proposed calcium standard.

That inefficient milk standards have persisted in California for one-third of a century, despite their anti-consumer effects, is dramatic testimony to whose interests have been most important in Sacramento.

But our state Supreme Court now has the power to truly act in milk consumers' interests, by ending in-state producers' ability to exclude out-of-state competitors from our market. And it should do so, as our dairy interests can no longer hide their harmful restrictions behind a fig leaf of concern for Californians' health.
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Title Annotation:Viewpoint
Publication:Daily News (Los Angeles, CA)
Date:Sep 17, 2000
Words:656
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