Do federal milk marketing orders in the USA stimulate decentralized milk production everywhere, versus centralized production in most economically reasonable states (states with a lot of free lands, low costs, better climate, etc.)? How does this motivation work?
Decentralization involves the distribution of production of products between different locations. The process is significant in saving production costs such as transportation of products. It also ensures an adequate and reliable supply of products evenly while ensuring local development.
Decentralized milk production in the United States undergoes enhancement by the federal milk marketing department. The purpose of distributing milk production is to save on production costs such as long-distance transportation. These results to increase in prices for milk and its products a factor that limits maximum consumer demand capacity. The process also helps to promote the development of local areas through the profits earned from milk production.
Centralized milk production occurs in areas where production resources are easily accessible at cheap costs such as land as well as favourable climatic conditions for forage production. The conditions favour many people to carry out milk production. Therefore, prices remain to be low but increase as distribution distances increase. The reasons account to why decentralization takes place to minimize the extra costs. The action succeeds through coming up with techniques such as zero grazings to introduce milk products in various regions. Through this, price moderation, relative production costs as well as local development becomes an assurance.