Queen Cow and the Eau Claire Rule : Eau Claire as the New Deal Base Point for the Federal Milk Marketing Order

Abstract

The Federal Milking Marketing Order (“FMMO”), established as a part of President Roosevelt’s New Deal in 1937, supposedly established Eau Claire as the national base point, or the site from which minimum fluid milk prices are set. The colloquially known “Eau Claire Rule” sets Class 1 (beverage) milk prices as a function of distance from Eau Claire, Wisconsin (Mahon 2004). That is, the farther that one travels from Eau Claire, Wisconsin, the more that Class 1 milk prices increase, which is shown in the 1975 Price Structure for Milk map by Floyd Lasley. One can see that prices generally increased as one got farther in distance from the tri-state area of Minnesota, western Wisconsin, and northeastern Iowa. Farmers suffered the immediate economic consequences of the drought of 1930, as it resulted in reduced public demand for agricultural products. This forced farmers to increase production in order to cover business costs, despite rapidly plummeting prices from the continually deepening nadir of economic despair. With this story in mind, this research seeks to illuminate the reasons why, of all places, the federal government assigned Eau Claire as the base point of minimum milk prices.