Wednesday May 2 12:34 AM ET
Report: Milk Prices Being
By ADAM GORLICK, Associated Press Writer
Supermarket chains and dairy processors in New
England have been gouging milk prices ever since a price
control program was created to keep small dairy farmers
from going out of business, according to a newly issued
report by the University of Connecticut.
The report, conducted by the university's Food
Marketing Policy Center, and released Tuesday, says that about $50 million of the
$130 million increase in milk sales across New England has been pocketed by the
supermarkets and dairy processors during the first three years since Congress
passed the Northeast Dairy Compact in 1997.
``They've been using the compact to widen their profit margin,'' said Ronald
Cotterill, director of the Food Marketing Policy Center. ``They took advantage of
the compact. They've maintained that the bulk of the increases in milk prices has
been because of the dairy compact, not because they've increased their profits.''
The compact comprises the six New England states and is set to expire this
unless Congress reauthorizes it. It boosts consumer milk prices in New England by
setting a minimum milk price paid to area dairy farmers by dairy processors, who
are trying to kill the compact.
Chris Flynn, president of the Massachusetts Food Association, which represents
the state's major supermarkets and dairy processors, said he had not seen the
report Tuesday and could not comment specifically on its findings.
``The supermarket business is extremely competitive,'' he said. ``But the
are something I'm highly suspect of.''
According to the study, milk prices increased from an average of $2.49
just before the compact, to $2.78 a gallon by 2000. The increased profits by dairy
processors and supermarkets account for 11 cents of the 29-cent increase,
Cotterill said. In contrast, the increase caused by the dairy compact was 4.5 cents
a gallon, he said.
``The processors have said they're just matching the increases caused by
compact,'' Cotterill said. ``But they locked in a much higher retail price and were
making huge profits.''
The study also blames higher milk prices on a monopolization of dairy processors.
It singles out Dallas-based Suiza Foods Corp. for controlling about 85 percent of
the supermarket milk business in eastern Massachusetts, eastern Connecticut and
Amy Nelson, a Suiza spokeswoman, would not comment on the report and
referred calls to the International Dairy Foods Association, a Washington-based
Officials from IDFA did not immediately return telephone messages left
by The Associated Press.
The study didn't surprise consumer advocates.
Connecticut Attorney General Richard Blumenthal said he and attorneys general
from other New England states, including Massachusetts, are planning legal action
against retailers and dairy processors.
``There are too few producers and sellers of milk, and little competition
consumers to get better prices,'' Blumenthal said.