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How about close to 100 years of successful milk quality regulation that has almost eliminated a major source of food-bourne disease outbreaks? Every time a major outbreak occurs people start demanding stricter food quality regulations. This is not about "them" (the government) versus "us". This is America, the people govern. The populace demands these sort of regulations to protect public health and laws are passed. Last year during the salmonella-tainted egg scare, there were folks standing in front of a congressional sub-committee declaring that the government should have protected them and that something needs to be done; more regulation, more inspection, more compliance. So generally, the regulations on milk are out of concern for the well-being of you and your family.
The reason our governor vetoed the raw milk bill in Wisconsin last year was due to concerns by the dairy industry. It wasn't necessarily due to concerns about competition, but due to fears about what a possible outbreak would do to our state dairy industry. Once again, look to last year's egg scare. A few farms were implicated, but it turned the entire egg industry upside-down, nationwide sales were down for months and it took quite a long time before consumer trust was regained and egg sales returned to normal levels, and the repercussions are still being felt. Dairy farmers live by extremely thin profit margins already, upsets like that can break many farmers. I don't remember the timing of how things went down last year, but it is quite possible that the egg scare directly influenced the result of the governor's vote on our raw milk bill in Wisconsin.
Your post is really on point. I love raw milk, I wish I could buy it here, but I also don't want to go back to the kinds of outbreaks we had 100 years ago. Listeria is a very dangerous disease. I would like to see raw milk producers embrace testing and sanitary standards that are so much more stringent than those for commercial dairies that raw milk actually was thought of as safer than pasteurized. It would be a niche product for those that value the undeniable health benefits associated with raw milk and are willing to pay for that quality. I think that market exists. Especially for cheeses that are not aged to the current 60 day requirement, but also for the milk itself.
ETA: I think sheep and goat's have a really important role to play in this since they freeze so well. It opens up so many safe storage and delivery options.