Federal milk marketing orders came into existence as a result of the Agricultural Marketing Agreement Act of 1937, which gave the Secretary of Agriculture open-ended powers to manipulate milk prices. The rationale for the legislation was to reduce disorderly marketing conditions, improve price stability in fluid milk markets, and ensure a "sufficient quantity of pure and wholesome milk."

Federal milk marketing orders operate as a federation of regional units with a raft of intricate regulations to govern the overall price to be paid for milk in each region. In addition to establishing a formula to determine a minimum national price for milk, the milk marketing orders impose a premium price ? a "differential" ? based upon the distance from Eau Claire, Wisconsin, to where the milk is produced. The orders also enforce different prices depending upon the end use of the milk.

The program's tangled web of mind-numbing pricing schemes has metastasized into a multilayered, incomprehensible, intrusive labyrinth increasingly divorced from economic realities and market forces. This archaic system provides an all-obtrusive federal meddling in milk pricing. Each and every product containing milk costs consumers more as a result of the marketing orders, making them little more than a milk tax.

The federal milk marketing orders impose a $1.5 billion annual milk tax on consumers, and a very unfairly applied tax at that. Those who can least afford the added cost ? low-income families with young children ? are hit the hardest. The federal milk marketing orders also add $40 million annually to the cost of the school lunch program. Americans are hit twice by this milk tax -- as taxpayers and consumers.

Primarily due to the "differential," milk marketing orders force consumers in New York, Texas and Florida, for example, to pay 30 to 35 cents more per gallon of milk than those in Wisconsin and Minnesota. Perversely, the differential system also penalizes dairy farmers in the most efficient dairy farming regions and rewards dairy farmers operating in high-cost, inefficient areas far from Eau Claire.

During consideration of the 1996 Farm Bill, producers in high-cost production areas wanted continued protection from competitors in lower cost production areas. While Congress called for the gradual elimination of dairy subsidies in the 1996 Farm Bill, it kept the outmoded and unfair milk marketing order system intact by directing the Secretary of Agriculture to merely "consolidate" the orders. However, the Farm Bill also provided the Secretary authority to address pricing issues related to the milk marketing orders.

The United States Department of Agriculture (USDA) proposed "consolidation" of the milk marketing orders and other proposals related to milk pricing options, including so-called alternatives to the current minimum price, revisions of the milk classification system, and options to the existing Class I pricing differentials. None of USDA's proposals eliminated minimum pricing, the milk classification structures or the regional differentials. Instead, USDA's proposal further inflated milk prices, made the products less competitive, and resulted in even more government regulation, not less. The most significant change proposed was to reduce the 31 regional orders to 11.

The 106th Congress wiped out even the minimal reform proposed by USDA, retaining only the reduction in the number of orders from 31 to 11. In fact, Congress even took another step backward by "temporarily" reinstating the dairy price support program.

Complete elimination of the milk marketing order system and the dairy price support program would result in milk marketing being more responsive to consumer demand and would free the industry to pay greater attention to the marketplace. Milk would be produced where it can be done most efficiently and competitively and manufactured into the products that are wanted.

The federal government should have no role in the production or manufacture of milk or dairy products in this country. Excessive federal government regulation is preventing a $50 billion industry from becoming more competitive and profitable.

The federal dairy program heedlessly pits region against region, fracturing the country and forcing taxpayers and consumers to pay unacceptably and artificially high prices for milk and dairy products. After 60 years of government price manipulation, it is long past time to get the government out of the milk business.