Cite as: 512 U. S. 186 (1994)
Opinion of the Court
order thus allows Massachusetts dairy farmers who produce at higher cost to sell at or below the price charged by lower cost out-of-state producers.10 If there were no federal minimum prices for milk, out-of-state producers might still be able to retain their market share by lowering their prices. Nevertheless, out-of-staters' ability to remain competitive by lowering their prices would not immunize a discriminatory measure. New Energy Co. of Ind. v. Limbach, 486 U. S., at 275.11 In this case, because the Federal Government sets
10 A numerical example may make this effect clearer. Suppose the federal minimum price is $12/cwt, that out-of-state producers can sell milk profitably at that price, but that in-state producers need a price of $15/cwt in order to break even. Under the pricing order, the tax or "order premium" will be $1/cwt (one-third the difference between the $15/cwt target price and the $12/cwt federal minimum price). Assuming the tax generates sufficient funds (which will be the case as long as two-thirds of the milk is produced out of State, which appears to be the case), the Massachusetts farmers will receive a subsidy of $3/cwt. This subsidy will allow them to lower their prices from $15/cwt to $12/cwt while still breaking even. Selling at $12/cwt, Massachusetts dairy farmers will now be able to compete with out-of-state producers. The net effect of the tax and subsidy, like that of a tariff, is to raise the after-tax price paid by the dealers. If exactly two-thirds of the milk sold in Massachusetts is produced out of State, net prices will rise by $1/cwt. If out-of-state farmers produce more than two-thirds of the raw milk, the Dairy Equalization Fund will have a surplus, which will be refunded to the milk dealers. This refund will mitigate the price increase, although it will have no effect on the ability of the program to enable higher cost Massachusetts dairy farmers to compete with lower cost out-of-staters.
11 In New Energy, 486 U. S., at 275, we noted: "It is true that in [Great Atlantic & Pacific Tea Co. v. Cottrell, 424 U. S. 366 (1976),] and Sporhase [v. Nebraska ex rel. Douglas, 458 U. S. 941 (1982),] the effect of a State's refusal to accept the offered reciprocity was total elimination of all transport of the subject product into or out of the offering State; whereas in the present case the only effect of refusal is that the out-of-state product is placed at a substantial commercial disadvantage through discriminatory tax treatment. That makes no difference for purposes of Commerce Clause analysis. In the leading case of Baldwin v. G. A. F. Seelig, Inc., 294 U. S. 511 (1935), the New York law excluding out-of-state milk did not impose an absolute ban, but rather allowed importation and sale so long
195
Page: Index Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 NextLast modified: October 4, 2007