Comprehensive market-wide dairy price regulation was thus a well-settled matter of legislative policy in New England and New York during the extended period between the Great Depression and the 1970s. Consistent with the second state-based part of the design, individual state Milk Control Boards retained a vital and active regulatory presence in state dairy marketplaces in the period between the Great Depression and the 1970s. Many states, and particularly those in New England and New York, had in place throughout this forty-year period dairy price regulation at all levels, from farm-gate to retail outlet.
At the farm-gate level, the state price regulations served as "over-order" or incremental increases in the federally established floor prices charged to processors for their raw milk product supply and paid to farmers for that supply. The amounts of these incremental increases varied from state to state, and even within states depending on variations in local production conditions and other circumstances. The regulated prices were set through state administrative hearing procedures and operated with the full force of law.
The stability of this individual state, or second, component of this two-part system was dependent on the primarily intrastate movement of the chief products of raw milk and fluid beverage milk. To sustain effective regulatory control over minimum pricing in the marketplace, state Milk Control Boards had to exercise authority over all the milk marketed in a regulated area. Milk moved from outside to within an individual state’s regulated environment but not made subject to the in-state price regulation could be strategically priced to undercut the regulation in order to gain a competitive advantage.
Before the 1970s and the evolution of the regional marketplace, the legal authority of the state Milk Control Boards was not at issue. Raw milk and fluid beverage milk moved predominantly within state territorial boundaries and thereby subject to the regulatory control of the state's milk control board.
The evolution toward regional dairy marketplaces, however, meant that increasing amounts of milk crossed the states' territorial boundaries. This change in the marketplace drastically changed the regulatory pricing landscape for those markets.