Milk Fight

When Farmland Dairies broke up the New York City milk cartel, the real war began

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It was a clear night and Marc Goldman stood on the top floor of New York's World Trade Center. Slowly savoring the view, he walked the perimeter of the elegant restaurant Windows on the World. Lights from all five boroughs glittered before him. It was all his; he had conquered New York City.

For several years, Goldman, the president of New Jersey -- based Farmland Dairies, had been fighting to distribute milk in the nation's largest city. So last January, following a federal judge's ruling that New York State could no longer deny Goldman's family-owned business access to the New York City market, Goldman decided that everybody still in the office should pile into a couple of cars and head off for a victory dinner.

Far below him that night, Goldman's victory was front-page news, for it spelled an immediate drop of as much as 40? to 70? in the price of a gallon of milk. "Holy Cow -- We Won!" trumpeted the tabloid New York Post. "Prices Set to Fall as Judge Ends Scam." Later, The New York Times called Farmland the "Dairy that Won the East." And New Yorkers themselves, never more patronizing than when they talk of New Jerseyites, mailed kind words across the Hudson. "I pledge to buy Farmland Dairies milk and will urge my friends to do so," wrote a man from West 74th Street. "Mark [sic] Goldman is my hero," wrote another.

To millions of consumers, businessman Marc Goldman was indeed a hero. Never mind that all he wanted to do was what simple geography suggested: take his milk on a 15-minute ride across the George Washington Bridge into the biggest market in the country. But the gate at the toll booth -- New York's antiquated milk regulatory scheme -- wouldn't open for him.

The dismantling of federal regulations has been one of the major business stories of the past decade, bringing changes to such industries as airline and trucking. But deregulation hasn't touched many places like New York, which has its own system of regulating business. It sometimes takes a Marc Goldman to challenge the status quo and open the marketplace once again to competition.

And, in Goldman's case, to suffer the consequences.

Goldman, 40, very nearly bypassed the family dairy company altogether. Farmland traces its founding back more than 70 years to when his grandfather hand-milked a herd of 30 cows and his grandmother delivered the milk by horse-drawn wagon. The dairy farm is gone now; his office stands across the street from a roller rink and an auto body shop in Wallington, N.J. The only cows there nowadays are those an Farmland's half-gallon cartons. Like most big dairies, Farmland processes and distributes milk, but doesn't produce it.

After he graduated from college, Goldman worked at many of the manual jobs at the plant. He'd run the filling machines and he loaded trucks. An office job awaited him. He demurred. His father and his uncle were running the business then, and Goldman alludes to "friction," especially with his uncle. He left on a cross-country drive in a Volkswagen bus, fell in love with Colorado, and settled there as a ranch hand. But he returned to New Jersey. Pondering his future, he realized, "Food was one of the things I considered of value and could feel ethically comfortable with." The rough-and-tumble nature of the milk industry didn't cloud that view, he says, adding, "I wasn't looking for an easy market."

Nor did he return to one. Put in charge of new projects, Goldman first confronted New York State's bureaucratic licensing system in the mid-1970s. Milk splashing into a crystal-clear glass, a familiar metaphor for wholesomeness, in reality flows neither freely nor purely. Rooted in federal price controls and encumbered by various state regulations, milk is as politicized as it is pasteurized -- and perhaps nowhere more so than in metropolitan New York, where the stakes are highest and where the term "street war" is invoked whenever the going gets especially tough. A Depression-era state licensing law gave the commissioner of the Department of Agriculture and Markets discretion to prohibit a dairy from selling milk if it would create "destructive competition in markets already adequately served." According to the commissioner, New York was adequately served by major licensed dairies, of which there were five. It didn't need Farmland, thank you very much; critics charged that this protectionism cost New Yorkers upwards of $2 million a week.

Farmland, which was already selling milk in New York's Rockland and Orange Counties, made an agreement to purchase a small dairy in Westchester County. The dairy did not change hands right away, however, because the sale was contingent on Farmland getting a local license to distribute milk, such licenses being nontransferable. Two lawyers and two and a half years later, Farmland finally secured a license, and a limited one at that, for Westchester County.

Common sense said: continue on a bit to the south, to New York City, Golconda for a milkman. The common wisdom said otherwise: forget it, don't bother trying to get into the city itself, because they'll never let you. Pete Hardin, editor and publisher of The Milkweed, an outspoken milk marketing report, explains that "they" include "the New York City dairy plant unions and the State Democratic party -- one of the oldest political alliances in the country. For decades, the state licensing laws have restricted competition."

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