Spilled Milk Is Mandatory in Montana

Montana’s rules drive up costs and force grocers to manage milk deliveries tightly, which sometimes results in empty store shelves. The rules also contribute to consumer waste. Families see the “sell by” date on cartons at home and throw away partially full containers sooner than necessary. “Consumers get confused,” says Mr. Hertz, the president, CEO and majority owner of

Moody’s

Market, which has five Montana stores and one in Idaho.

Unfortunately, the 12-day rule is just one regulation designed to benefit the dairy industry at the expense of consumers. Examples abound.

The U.S. Food and Drug Administration has indicated that it intends to ban terms like “coconut milk,” “almond milk” and “oat milk.” The proposed enforcement, an attempt to silence plant-based milk producers, represents a clear First Amendment violation. Yet the FDA has vowed to move forward with its unconstitutional crackdown at the request of powerful dairy groups worried about a 50-year downward trend in cow milk consumption.

Montana isn’t the only state dealing with regulatory capture of its dairy industry. Florida regulators tried to force dairy farmer

Mary Lou Wesselhoeft

in 2012 to call her all-natural, pasteurized skim milk “imitation skim milk” because she refused to add synthetic vitamins. Dairy farmer

Randy Sowers

faced a similar struggle in Maryland.

Oregon dairy farmers Joseph and

Brenda Cochran

fought for their right not to support milk industry advertising that hurts their brand. A federal rule forces dairy farmers to pay for industry advertising whether they want to or not. Regulators don’t seem to care that campaigns like “Got Milk?” obscure the distinction between small- and large-scale farming, which works against traditional producers like the Cochrans.

Mr. Hertz knows from firsthand experience how influential the dairy industry can be. As a Montana state senator and previously as a state representative, he has sponsored legislation to end the 12-day milk disposal rule every year since 2015. But the bills never go far.

The Montana Livestock Board, which enforces dairy regulations, says the 12-day rule gives rural shoppers the freshest milk possible, reducing the need for frequent trips to town. But in more candid conversations, regulators talk openly about protecting the state’s milk industry from competition. Out-of-state rivals simply don’t have time to transport their milk to Montana before the peak sales window closes.

Mr. Hertz says the rule also eliminates milk as a “loss leader,” a pricing strategy where retailers sell one product below market value to stimulate other sales. Instead, retailers must raise prices on milk to cover the waste.

“For every gallon of milk I throw away, I have to sell seven or eight gallons to make up for it,” Mr. Hertz says. As a result, milk costs about 30 cents more a gallon at his Montana stores compared with his Idaho location.

Mr. Hertz understands the desire to support local farmers—especially in places like Montana, where dairies are closing and milk production is declining. But forcing grocers to dump milk doesn’t help. What dairy producers need is freedom to innovate, not rigged rules designed to compensate them for needless government restrictions holding them back.

Montana uses a quota system to regulate how much milk each dairy in the state may produce. Mandatory advertising fees, which survived the Cochrans’ lawsuit, provide another example. So does unequal enforcement of organic milk regulation, which favors large-scale operations. “People don’t want to start in milk now because it’s so heavily regulated,” Mr. Hertz says.

Consumers ultimately pay the price, especially when family finances are tight.

Ms. Ewing is a senior attorney and Mr. James is a writer at the Institute for Justice in Arlington, Va.