The Colorado Milk Marketing Board (CMMB or Board) was enabled by the Colorado Agriculture Act of 1938 and first convened in the early 1960’s under the auspices of the Colorado Department of A

Colorado Milk Marketing Board: How it Functions and Call for Sunset Review

The Colorado Milk Marketing Board (CMMB or Board) was enabled by the Colorado Agriculture Act of 1938 and first convened in the early 1960’s under the auspices of the Colorado Department of Agriculture. The Commissioner of Agriculture exercises ultimate authority over the rules and actions of the CMMB.

The CMMB was enabled by the Colorado Agriculture Act of 1938 but was first convened in the early 1960’s under the auspices of the Colorado Department of Agriculture. The Commissioner of Agriculture exercises ultimate authority over the rules and actions of the CMMB.

The Board creates rules around wholesale pricing of some dairy products, but exempts seemingly random entities and products in the supply chain. CMMB auditors are authorized to examine the books of non-exempt entities to ensure compliance with its rules. Note in particular the Board does not exercise authority over the prices paid to the 180 milking dairies in Colorado (or other states), nor does it exert controls over retail milk prices charged to the public or institutions except by manipulating wholesale pricing. Instead, the Board uses its authority to demand weekly reporting of prices on milk products sold at the wholesale level after it has been pasteurized by one of the six pooling dairies. However, the rules are unevenly applied and appear to cater to special interests. For instance:

• the CMMB requests internal “transfer pricing” from vertically integrated retailers/handlers/processors/manufacturers like Safeway and Kroger when retailers process and package their own milk products and distribute them to their own retail stores; but
• exempts retailers like Wal-Mart from price reporting even though Wal-Mart operates its own dairy plants; and
• exempts yogurt, powdered milk, evaporated milk, and condensed milk from its oversight even though these products are widely used as significant ingredients in many milk products produced by manufacturers that in turn must report their wholesale prices; and
• the Board depends on largely outdated and even fictitious “channels of trade” in its analysis of pricing, rebates and discounts offered in the wholesale supply chain, since by all accounts the dominant retailers are vertically integrated poolers, processors, manufacturers and distributors of milk products; but
• the Board responded to a CORA request for names of reporting entities by stating it “does not maintain a list of reporting entities”, and
• the Board refuses to allow discounts and rebates based on the overall volume purchased by a retailer from a single distributor, instead allowing discounts based only on the volume of deliveries to each individual-store;
• which results in retail prices to independent grocery stores being up to 20% higher than at Safeway and Kroger, who conveniently have seats on the CMMB along with a representative of the DFA plant.

Currently, the Board has issued rules that are targeted specifically to disadvantage organic and grassfed milk products that are produced out of state and sold via full-line grocery distributors. Those sales can only be discounted based on the volume of deliveries to each store site, meaning small rural and independent grocers are arbitrarily charged up to 20% more. This new policy clearly benefits conventional milk producers and the dairy co-op by making natural, organic and grassfed brands financially out of reach for most shoppers.

How is the Colorado Milk Marketing Board funded?

In addition to administrative support provided by the Department of Agriculture, the CMMB taxes (certain selected) wholesale milk and milk product sales at $0.03 per hundredweight. This money funds a senior executive staff of five plus an auditing and support staff of six. Price reports and discount schedules are sent to the CMMB by mail, fax, and email. CMMB staff print them on paper, physically ink-stamps them as “approved by the Commissioner”, and places them in metal filing cabinets. There is a fee of at least $30 to access a price list, which may require a formal CORA request. Yet, the Board states that its activities are critical to maintaining “price transparency”. Moreover, current CMMB rules have the effect of significantly and irrationally increasing retail milk prices, especially at independent and rural food markets.