Press Release June 4, 1997	Contact: Elisa Odabashian, Policy Analyst 415-431-6747 Consumers Union West Coast Regional Office

Got Moo-La?
Los Angeles Area Supermarket Milk Prices Still Higher Than At Smaller Stores
Despite Drop in Prices, Supermarket Chains Still Gouging Consumers with Highest Prices

SAN FRANCISCO, CA -- Many Los Angeles area supermarkets continue to charge more for milk than smaller neighborhood stores, according to a survey conducted by Consumers Union, nonprofit publisher of Consumer Reports. Despite a recent drop in supermarket prices, milk prices for consumers continue to be high following a long trend of milk price increases. In late May, Consumers Union surveyed 77 food markets in Los Angeles and Orange Counties and found that gouging by grocers, particularly supermarket chain retailers, continues to be a primary cause of high milk prices in the Los Angeles area.

This is the second survey of Los Angeles area milk prices Consumers Union has conducted in the past seven months.

Consumers Union's Los Angeles area Milk Price Survey shows a vast range of prices at which Los Angeles consumers can purchase a gallon of milk. Prices vary from $2.19 per gallon at the low end to $3.99 per gallon at the high end, a difference of $1.80 (or 82%) per gallon.

"Large supermarket chains in the Los Angeles area continue to charge among the highest prices in the area--as much as $1.80 more for a gallon of milk than the local Mom-and-Pop grocers," said Elisa Odabashian, Policy Analyst for Consumers Union and the author of the report. "There is little competition on milk between the big chains, as evidenced through the lack of advertising and price-cutting,"

"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, driving down their costs considerably. The fact that supermarkets are charging so much more for a gallon of milk than many smaller markets runs counter to economic sense, and certainly to what most consumers expect. Retailers are taking advantage of consumers' need for milk."

Major supermarket chains accept food stamps and Women Infant and Children (WIC) milk coupons. Some of the smaller markets do not accept food stamps, and very few of them accept WIC milk 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."

Reversing the trend of increasing supermarket milk prices, many Los Angeles area supermarkets dropped their retail milk prices by 6 to 10% since Consumers Union's last survey in October 1996. This decrease was in response to a 20% drop in the farm price on February 1, 1997. Specifically, many stores have lowered their retail prices by $ 0.22 to $ 0.40 (to their current $3.55-$3.99 retail price per gallon). The price farmers receive for milk dropped $ 0.30 (to $1.26 per gallon) in February. The farm price dropped by another 9% (to $1.16) on June 1, 1997.

"We commend the retailers for the recent drop," said Odabashian. "But we must point out that when the farm price increases even a penny, grocers generally raise the price to consumers quickly and exponentially. When the farm price drops, as it has three times in the past two years, grocers have slowly passed on a fraction of the decrease to their customers."

"If that historical trend continues, the large gap between the farm price and the price consumers pay will steadily grow. The gap translates into higher costs to consumers and higher profits for grocers," said Odabashian. "We encourage retailers to give consumers a break and pass along the June 1 farm price decrease."