But don't believe dairy farmers' laments that rising fuel and feed costs are to blame. While the dairy farmers strike sympathetic postures in public, in private, they benefit from an interlocking series of government-mandated milk cartels that have been jacking up milk prices for decades. In Virginia, that may be costing consumers from 50 cents to $1 per gallon.

Virginia is part of the Southern Dairy Compact, a regional milk-marketing cartel stretching from Texas to Virginia. It keeps out cheap milk from the upper Midwest and through its subsidies pays more to dairy farmers who keep their production down than to farmers who try to grow their herds. When you can't import milk from other states and farmers are discouraged from making more milk here, you get a tight market and high prices.

The system benefits farmers and milk processors at the expense of people living on a budget.

And the dairy farmers and milk processors want to keep it that way. In Washington, they invest millions in campaign donations and lobbying to keep the rules in place. Last December, President Bush signed a bill advocated by Democratic Senate leader Harry Reid enacted to slap down a single farmer in California who'd found a clever way around the rules. It cut the cost of milk in California Costco stores by 25 cents a gallon, a move that saved California families millions.

Dairy farms and milk processors in Virginia would be fools not to love the system. The Government Accountability Office reported in December 2005 that the cost of making a gallon of milk in the South is about twice the cost of making it in bovine-friendly enclaves such as Wisconsin. That discourages Southern dairy interests from finding ways to compete with more-productive farmers.

The system of regional dairy compacts, first enacted in the Northeast, is a perfect example of a policy that was smart when it started, but that has become more and more counterproductive with each passing decade. The America of the 1930s was a far different place. One in five Americans worked on farms. Only 13 percent of farms had electricity, and a family man with a good salary would need to spend every penny of five months' salary to afford a refrigerator.

Source: Virginian Pilot