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The Minimum Unit Pricing law requires that the cost to deliver a gallon of milk must be at least a specific amount, which is set by the government. This is not a direct subsidy but rather a minimum price that the milk must be sold for to be profitable. The product is priced above the minimum price at the retail level. The minimum price is the same no matter how much the product weighs.
Supporters of the law say that consumers pay the same amount for the product no matter how much they buy. This is not necessarily true. Consider a grocery store with a special sale, where $1.00 off a carton of milk is advertised. Consumers are more likely to buy a gallon when the price is $1.00 off, but they are also less likely to buy a gallon when the price is the same. The increased supply of the product at the lower price would naturally drive the price down.
However, it is unlikely that the milk producers will be so directly affected. The milk producers are paid a fixed amount for each gallon of milk. The only thing that is affected is the amount of milk they produce. The government does not require them to produce more milk than they need to meet the demand, and in some cases, they are able to under-produce the amount of milk needed. This means that they are under no obligation to sell at a loss.
Supporters of the law also argue that the law will end the “steaming of milk.” Steaming is the process of heating and condensing milk to preserve its quality. Many dairy producers choose to steam milk in order to prevent spoilage of the milk during transport. The new law requires that the producer must sell the milk un-steamed. Producers who steam their milk at the retail level are subject to fines be359ba680
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