Over the course of the twentieth century, the U.S. dairy industry grew from small local farms to a modern sector with industrial farms selling products worldwide. This change can be attributed to dairy farms’ increased milk production per cow, largely accomplished by adopting new technology and management practices. Many of these new practices are more feasible for larger operations. Dairy farms with fewer than 100 cows are typically family-run and grow their own feed, raise heifers on site, and allow cows to graze on open pastures. In contrast, dairy farms with 500 or more cows typically rely on purchased feed, off-site heifer raising, indoor feedings, and hired labor. As technologies improved productivity and required greater operational scale to be cost effective, production shifted toward larger farms, leading to a heavily industrialized dairy sector over time.
The U.S. dairy industry is highly regulated, covering milk pricing, labeling, advertising, and educational promotion. Dairy product regulation in the U.S. is administered under the Federal Milk Marketing Orders (FMMOs), which were created to ensure market stability and fair pricing, enhance the livelihoods of dairy farmers, balance the bargaining power between milk producers and processors, and ensure a reliable supply of dairy products for consumers. Because cows produce milk every day and milk spoils quickly, farmers have to sell it at a rapid pace. This means they have a limited ability to negotiate price, leaving farmers vulnerable to price instability. FMMOs intervene by setting minimum prices and governing how milk is allocated across both regions and product categories. FMMOs use pooling and classified pricing to stabilize supply and pricing. Since their adoption in the 1930s, Congress has continually revised and consolidated FMMOs through legislation such as the Agricultural Marketing Agreement Act of 1937 and the 1966 Farm Bill, consistently emphasizing the objectives of producer fairness, market stability, and consumer access to quality milk.
At the same time, broader market trends have shifted, and with plant-based milk alternatives gaining popularity, the dairy market is changing. Plant-based milks such as soy, almond, and coconut now hold significant market space and appeal to consumers for health, dietary, and environmental reasons. Despite usage of the “milk” label, plant-based milk products are not subject to the same regulatory and financial obligations as traditional dairy products. These differences have introduced a competitive imbalance, raising questions of fairness, transparency, and policy effectiveness.
Part I of this Note discusses the current regulatory landscape shaping the dairy industry. First, the discussion explores the history of the FMMOs and tracks how the regulations have evolved into their current form. Next, it describes the purpose of the FMMO system and its function of stabilizing the unpredictable milk market. This Note then situates checkoff programs, discussing them within the broader regulatory structure governing dairy producers.
Part II traces the growth of plant-based milk. First, it discusses plant-based milk’s origins and market growth, reflecting shifts in consumer attitudes toward the health and environmental impacts of their food choices. This Note next turns to the regulatory environment shaping both dairy and plant-based beverages. It begins with federal labeling rules, focusing on the Food and Drug Administration’s (FDA’s) authority and the application of standards of identity. It then compares the U.S. and European Union (EU) labeling approaches and considers international influences, including the effects of tariffs and the COVID-19 pandemic on the beverage market. Next, Part IV describes the “free ride” issue, in which plant-based products benefit from the differences in regulatory burdens. This Note then proposes a shared-burden framework under which all producers using the “milk” label would participate in the FMMO obligations and checkoff assessments. Part V sets out the policy rationale for the shared-burden system and identifies mechanisms for implementation consistent with existing market structures. Finally, this Note concludes by arguing that a shared-burden approach would promote regulatory fairness, strengthen consumer trust, and protect the integrity of the “milk” label across the changing beverage market.