The Northeast Dairy Compact was established in an effort to restore the authorit

Question

The Northeast Dairy Compact was established in an effort to restore the authority of the six New England states to set prices for Class 1 fluid milk sold in the region. Recognizing the regional character of the northeast dairy industry, the Compact serves several major functions. These functions include assuring the region of an adequate supply of milk, recognizing the cultural and economic benefits of a viable dairy industry in the region and facilitating the Constitutional rights of individual states to act collectively in order to regulate milk prices. Adequate Milk Supply The mission of the Compact Commission, the governing entity established to implement the Compact, is to take such steps as are necessary to assure the continued viability of dairy farming in the northeast and to provide consumers with an adequate, local supply of fresh milk. The participating states resolved that the dairy industry is the paramount agricultural activity of the northeast. Dairy farms, and associated suppliers, marketers, processors and retailers are each an integral part of the region's economy. Their ability to provide a stable, local supply of milk is a matter of importance to the health and welfare of the region. Cultural and Economic Benefits States in the Compact region have found that dairy farming is essential to the region's rural communities and character. The farms preserve open spaces, sculpt the landscape and provide a base for a diversity of recreational pursuits. In defining the rural character of our communities and landscape, dairy farms also provide a major draw for the regional tourist industry. Regulating Milk Prices for the Public Interest The participating states concluded that their ability to control the price that dairy farmers in the region receive for their product is essential to the public interest. Assurance of a fair and equitable price for dairy farmers ensures their ability to provide milk to the market as well as encouraging the vitality of the northeast economy and preserving open spaces. 1. Based on the government-set price control explain the Northeast Dairy Compact that was once in place in the northeastern United States. 2. The compact affected the quantities demanded and supplied for participants in the compact because of ? This affected the market for milk produced by those producers outside the dairy compact by? 3. 3. Economists have found that while the Northeast Dairy Compact functioned, midwestern dairy farmers lost their dominance of milk production and sales because of?

Explanation / Answer

1.The Northeast Dairy Compact was created in lines with the Government price control system. The objectives of both, the Govt price control and the Compact is to raise the income level of the milk producers and ensure adequate supply of milk products to the consumers. The Northeast Dairy Compact also focuses on some other issues in addition to the govt price control such as:

Thus Northeast Dairy Compact unlike the government was also focusing on many social and cultural aspects of New England region in addition to milk production and marketing activities.

2. The quantity demanded and supplied affected in the following ways:

3. The producers of Midwest region in the USA faced a worse of situation as the milk price in this region was lower to that of the Northeast Dairy Compact region. The Midwest region was earlier the dominant producer of milk and milk products in the USA. This happened mainly due to additional supply of milk to processing units for manufactured milk products in the Compact region.

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