Press Release March 6, 1997	Contact: Elisa Odabashian, Policy Analyst 415-431-6747 Consumers Union West Coast Regional Office

Got Moo-La?
Bay Area Grocers Continue to Gouge Consumers on Milk
Dairy Farm Price Drops, but Most Grocers Raise or Maintain Price to Consumer

SAN FRANCISCO, CA -- Retail milk prices continue to climb in the San Francisco Bay Area, despite the fact that as of February 1, 1997, the price dairy farmers receive for their milk dropped 20%, or $ .30 per gallon. In February, Consumers Union, nonprofit publisher of Consumer Reports, surveyed milk prices in 108 food markets in four regions of the Bay Area and found that gouging by grocers, particularly supermarket chain retailers, continues to be a primary cause of high milk prices in the Bay Area.

This is the second survey of Bay Area milk prices Consumers Union has conducted in the past six months.

Consumers Union's Bay Area Milk Price Survey shows a vast range of prices at which Bay Area consumers can purchase a gallon of milk. Prices vary from $2.06 per gallon at the low end to $3.85 per gallon at the high end, a difference of $1.79 (or 87%) per gallon.

"This survey confirms our earlier finding--large supermarket chains in the Bay Area are continuing to charge among the highest prices--as much as $1.14 (or 44%) more for a gallon of milk than the local Mom-and-Pop grocers," said Elisa Odabashian, Policy Analyst for Consumers Union and author of the report.

"Milk retailers know that there is no reasonably-priced, nutritional alternative to milk, particularly for the healthy growth of children, and that consumers will continue to buy it at almost any cost," Odabashian said. "Supermarkets move a great volume of milk and most of them process the milk themselves, which drive down their costs considerably. The fact that supermarkets are charging up to 44% more for a gallon of milk than many smaller markets runs counter to economic sense, and certainly to what most consumers expect. Milk retailers are taking advantage of consumers' need for milk."

The one notable change in the increasing milk price trend at supermarkets since Consumers Union's last survey in September 1996 is the $ .24 (or 7%) drop in milk prices at Safeway stores.

"This decrease by Safeway is a commendable effort to pass on to consumers the $ .30 decrease in the farm price. Milk prices at other major Bay Area supermarkets have either increased or remained unchanged since last September," Odabashian said.

"The bottom line is that as of February 1, 1997, dairy farmers are getting $ .30 less for a gallon of their milk and consumers are paying the same or more at most supermarkets. When the farm price increases even a penny, grocers use it as justification to raise the price to consumers exponentially," Odabashian said. "However, when the farm price drops, as it has three times in the past two years, grocers virtually never pass that decrease on to their customers."


"The growing gap between the farm price and the price consumers pay for milk at the check-out stand translates into higher costs to consumers and higher profits for grocers," said Odabashian.

Food stamps and Women Infant and Children (WIC) milk coupons are accepted at the major supermarket chains. Some of the smaller markets do not accept food stamps, and very few of them accept WIC coupons.

"The poorest consumers know that their coupons will be accepted at the major chain supermarkets. So tax dollars for food stamps and WIC coupons are being spent on the highest-priced milk, enriching the biggest retailers," Odabashian contends. "When food dollars are wasted on excessive milk prices, poor children get less food to eat."

Consumers Union's September 1996 milk price survey showed a lack of competition between the supermarket chains for milk sales, and called on the Attorney General to investigate whether there exists an unspoken agreement on the part of the major Bay Area supermarket chains to set the price of milk. That investigation is currently underway.

"This most recent milk price survey supports Consumers Union's contention that the big chains should be competing more with one another through advertising and price-cutting on milk," said Odabashian. "We call upon California supermarket chains, at the very least, to pass along the $ .30 drop in the farm price to milk-buying consumers and to compete with one another in their milk pricing practices."