Triangle: Government, Dairy, and Other Interests

I recently read a 1999 economic article titled “‘If It’s Yellow, It Must Be Butter’: Margarine Regulation in North America Since 1886" by Ruth Dupre. The paper uses George Stigler’s economic theory of regulation and interest group theory of government to analyze why exactly the margarine industry was so heavily restricted from the end of the nineteenth century through the end of the twentieth century. I would like to point out an example of a triangle like arrangement in the midst of the regulations passed against the margarine industry.

First, a little background is necessary. The invention of margarine created a fire under the seats of dairy farmers throughout North America. As dairy farmers were the producers of butter, the product margarine sought to substitute, they had the most to lose in the event margarine were to take a strong hold on the market. Dairy industry lobbyists then pushed, supposedly in the “public interest”, for laws that went from bans on artificial “butter yellow” coloring of margarine to total prohibition (354). Up until World War I, beef fat and cottonseed oil were the fats used in the production of margarine in the US, and their corresponding industries, Western cattle farmers and Southern cotton growers, fought the dairy lobby (360). After new processes for hardening fat were created in Europe around 1920, coconut oil became a large part of the margarine industry and domestic interests, cattle and cotton, became much less interested in fighting the dairy lobby and much more interested in getting their products into margarine (360). Over the next twenty years, margarine slowly regained the support of these domestic industries and started to fight against dairy once again (361). 

In the face of similar examples of conflicting interests is where the triangle arrangement lies for government legislators. In particular, the Ontario government was, “torn between two agricultural lobbies: the dairy producers and the soybean growers,” after ‘domestic fat laws’ were passed to stop the use of European coconut oil (360, 361). It is important to note that until this point of this conflict between lobbies, margarine was totally prohibited in Ontario. The dairy industry and the soybean industry accounted for a large part of Ontario’s agricultural economy, and were fighting each other for policies exactly opposite of one another. The Ontario government had the conflicting task of creating policies that somehow appealed to both interests. As each economy had high stakes to gain or lose associated with the passing of any kind of law, the government could not simply appeal to only one interest without simultaneously harming the other interests and themselves. In a manner of speaking, the government had to create regulations in which each party would lose the least. Even more simply spoken: the government had to create a compromise. 

In the case of Ontario’s dilemma, Dupre does not go in to detail but directly states that Ontario chose, “the compromise of a coloring regulation” (361). Compromises seem to have become the ideal strategy to resolve such triangle arrangements and dependent upon the circumstances, there may be no “correct” way to create a compromise. There is a great amount of negotiation involved in these situations, and in many cases, the options are nearly endless. With the daunting task of choosing one of nearly endless compromises, each end of the triangle is pressured to come to a consensus. This pressure continues until an agreement is made, or the parties may enter a cycle of negotiation that may go against the self interest of each party. 

References: 

Dupré, Ruth. “‘If It’s Yellow, It Must Be Butter’: Margarine Regulation in North America Since 1886." The Journal of Economic History. Vol. 59, No. 2 (Jun., 1999), pp. 353-371.