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The hidden milk tax comes back


As chair of both the House Agriculture Committee for 16 years and the Senate Agriculture Committee from 2013 to the present, Starr has worked hard for a long list of plans to give money from people who buy dairy products to the people who make them.

Starr and his lawyer, Dan Smith, came up with the idea for the Northeast Interstate Dairy Compact in 1990. This was a plan by a group of states to force dairy handlers to pay farmers more for their milk than the market price (and as always, pass the cost on to consumers, at the rate of 12 cents per gallon). This milk regional government was approved by Congress in 1996, but it ended in 2001.

In 2008, Starr and Smith gave the Milk Commission a draught order that would tax milk handlers 38 to 50 cents per gallon. Milk would cost more at grocery stores, general stores, and quick-stop shops because of the tax. Every dairy farm in Vermont would get some of the money. Most of the nine people on the Commission were not willing to agree. Farm Bureau and the dairy cooperatives were not either.

Then Smith came up with a way to fix a big problem: the fact that consumers had to pay more for milk because prices had gone up. Let’s put a tax on milk handlers and price controls on grocery stores together. So, the farmers would get more money, the handlers’ “surplus profit premium” would be taken away by the government, and consumers wouldn’t have to pay more. Brilliant! Even the Commission wouldn’t agree with that.

The next year, Starr and Senator Peter Shumlin, who was running for Governor at the time, introduced a bill that, strangely, did nothing to help farmers. It gave the Legislature the power to control how much retailers could charge for milk. Shumlin said that this bill “takes a step toward helping Vermonters with their economic problems.”

The Starr/Shumlin bill to control prices was finally passed, but its price control parts were taken out. Instead, the bill gave the Milk Commission, which didn’t have to answer to anyone, the power to charge families with young children a hidden milk tax and give the money to members of Bobby Starr’s special interest group. Again, the Commission turned down the offer.

In 2021 Gov. Phil Scott created a Commission on the Future of Vermont Agriculture. Its report had some good ideas for improving the dairy industry, but nothing about Starr and Smith’s long-awaited dairy pricing programme. So, they came up with the idea of a “Task Force to Revitalize the Vermont Dairy Industry” and took turns leading it.

In its 20-page bill, the Task Force says that the current federal milk market order “threatens the State’s dairy industry, which is a threat to the health, welfare, and reasonable comfort of the State’s residents.”

The bill says that it will “clarify the Milk Commission’s discretionary power to set a fair minimum price that milk handlers must pay to milk producers for milk that is processed and made in the state.” The minimum price has to “provide a reasonable economic return to dairy producers,” who have very different costs of production.

Most of the draught bill describes the steps the Commission must take to get the required over-order premiums from the handlers. The handlers will, of course, add the cost to the price of the milk they sell to retailers, which the retailers will then pass on to their customers. The over-order price should not give Vermont’s 583 remaining milk producers a reason to make more milk.

It is against the law to sell milk from another state for less than the minimum price set by Vermont. Any handler who deals in discount-priced milk will pay a “administrative penalty” of $10,000 for each violation and not to exceed $50,000 per day for multiple violations.

So that’s it. The Commission has the power to say what price handlers must pay producers above the market price. This is a hidden tax on milk. The price hike will eventually be passed on to consumers, and anyone selling milk for less than the new price will be hit with “administrative penalties.” This is nothing less than taking over the Vermont dairy industry and setting prices.

Over the past 30 years, the same people have been asking the government to force people to pay more money for dairy products. If they finally get what they want, their milk tax and price controls will turn dairy farming into a public utility where the government controls production, prices, and farm income. All of it will be paid for by raising the prices of dairy products for families who will never get the message.

At the same time, the Legislature is passing the wrongly named “Affordable Heating Act,” which is based on the same hidden tax method: a price increase for heating oil that will be paid by people who will never figure it out.


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