The New Deal established as national policy the assurance of an adequate supply of beverage milk within and for each of the several market areas of concentrated population around the country. All part of its comprehensive strategy of national market regulation, this dairy portion of the New Deal relied upon a two-part, integrated structure of federal and state milk market price regulation.
The federal regulatory structure implemented the underlying policy of ensuring an adequate supply of beverage milk for the country’s population centers. The state regulatory structure was allowed to remain to make corrections of intrastate market imperfections as necessary to promote the underlying national policy, and to provide for orderly dairy markets in the rural regions of the country.
Together, the two-part regulatory program served the broad public interest of all market participants, nationally and locally, including consumers, processors and farmers alike. The regulatory system served to ensure stable, local supplies of raw and finished dairy products for processors and hence consumers. At the same time, the regulatory system provided stability for rural economies dependent on dairy farming.
The technical design of the New Deal’s regulatory system of dairy markets was most ingenious. The Federal Order system at once established raw product floor prices that processors must pay, in different amounts based on the end use of the raw product, and provided for the payment of a uniform minimum price for farmers, regardless of the end use of their milk.
The national regulatory pricing pattern was ingenious in a second regard. Reflecting the dairy industry’s unusual dual market structure, the federal system was devised to apply simultaneously and in coordinated fashion to both the national market for manufactured dairy products and to the local, or regional and intrastate, fluid milk submarkets.