Short Summary by the Vermont Delegation of
                     "Public Interest and Private Economic Power:
                     A Case Study of the Northeast Interstate Dairy Compact"
                    by the Univ. of Connecticut: Prof. Ronald Cotterill

                    Summary: An independent study by the University of Connecticut has
                    determined that price gouging and "tacitly collusive price conduct" by retail
                    stores and processors was the major cause of the price increase in fluid
                    milk after the Interstate Dairy Compact was implemented.

                    History: This confirms what the Vermont Congressional delegation said at
                    the time – retail stores had no justification for increasing prices in July
                    1997, when the Compact was implemented because the prices that farmers
                    in the New England region received for their milk had dropped by 35 cents
                    per gallon months before the Compact was implemented.

                    As the Wall Street Journal pointed out then, in "Are Grocers Getting Fat by
                    Overcharging for Milk?," beginning in November, 1996, the price that
                    farmers got for their milk dropped by almost 25 percent -- or 35 cents or so
                    per gallon. Retail prices stayed high which locked in a huge profit margin
                    for stores.

                    June 30, 1997, the day before the Compact was implemented, the Boston
                    Globe reported that "The region’s major supermarkets are raising their milk
                    prices 20 cents a gallon [today], ignoring arguments that their profit margins
                    are big enough to absorb a new price subsidy for New England dairy
                    farmers that takes effect this week."

                    University of Connecticut Report: The report concludes that supermarket
                    retailers and milk processors have bilked consumers out of almost $50
                    million in the New England region – and blamed it in part on the dairy
                    Compact. The report notes that: "At Compact implementation, market
                    channel firms moved jointly behind an 18-20 cent increase in retail prices
                    to lock in the extremely wide marketing margins that existed in June 1997."

                    The study notes that "the implementation of the Compact, a distinct
                    non-market event with considerable signaling of price intentions, seems to
                    have facilitated tacitly collusive pricing by processors and retailers."

                    The report shows that the Northeast Dairy Compact was responsible for
                    only 4.5 cents of the 29 cent increase in retail prices in the months after the
                    Compact was implemented. Increased profits by milk processors and
                    supermarkets accounted for 11 cents of the retail price increase, and other
                    factors such as strong raw milk markets and increased non-milk input costs
                    accounted for the rest.

                    A summary of the Report notes that "leading firms in the
                    supermarket-marketing channel have used . . their dominant market positions
                    to elevate retail milk prices well beyond level justified by the Dairy
                    Compact Commission action and other cost increases. The public interest is
                    being subverted by private economic power."

                    The report notes that Suiza Foods has acquired major processors in the
                    region such as Garelick, West Lynn Creamery and Cumberland Farms and
                    so the situation in only getting worse for consumers. Also, "Suiza has
                    closed, or caused the closure and dismantling of several milk processing
                    plants in New England." Suiza has closed very substantial milk plants: Stop
                    & Shop’s Readville MA plant, the New England Dairies in Newington, CT,
                    and the Cumberland Farms-Massachusetts plant. Thus Suiza is following the
                    approach that the best way to eliminate competition is to buy your
                    competitors and then dismantle them.

                    The Report points out that in the Boston and Providence areas, Suiza
                    processes between 80 and 90 percent of the milk sold in supermarkets.

                    The report indicates that: "The retail price data strongly suggest but cannot
                    definitely confirm that the region’s dominant processor, Suiza Foods, tacitly
                    cooperated with leading retailers, Hannaford and Stop & Shop, by pushing
                    up other retailers’ wholesale prices."

                    The Report highlights that in terms of the time after implementation of the
                    Compact that: "Thus 72 percent of the price elevation in the supermarket
                    distribution channel is due to exercise of market power by processors and
                    retailers."

                    Benefits to Farmers: The Report notes that the "Compact has increased
                    dairy farm income 128 million dollars in the July 1997 to July 2000
                    period."

                    The report notes that the Compact, since its existence, has maintained its key
                    feature which is simply to assure that the price farmers receive for milk
                    does not fall below $1.46 per gallon.

                    Miscellaneous Points: The study used supermarket scanner data to obtain
                    supermarket prices for milk. For most purposes, the study looked at the time
                    period beginning 18 months before the compact implementation in July,
                    1997, and through July 2000.

                    Stop & Shop, Hannafords and Star Markets increased their marketing
                    margins the most, 15 cents/gallon, or more, after implementation of the
                    Compact. Shaw and DeMoulas increased margins 9 cents and 12
                    cents/gallon, respectively.