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Press Release |
Contact: Elisa Odabashian or Robin Kane |
SAN FRANCISCO, CA -- Supermarket chains continue to charge among the highest prices for milk in the Bay Area - up to $1.36 (or 47%) more per gallon at San Francisco supermarkets than at many neighborhood mom-and-pop markets, according to a study by Consumers Union, nonprofit publisher of Consumer Reports magazine. Today, Sen. Jackie Speier (D-San Francisco/San Mateo) introduced legislation, sponsored by Consumers Union, to repeal the state's current law barring stores from selling milk below cost as a special.
Consumers Union surveyed milk prices in 79 food stores in four Bay Area counties on January 6-8. The study finds that gouging by grocers, particularly supermarket chains, continues to be a primary cause of high milk prices.
The study also found that major supermarket chains match or nearly match one another in high milk prices within each county. In addition, the study revealed a widening gap between the price farmers receive for milk and the retail price consumers pay. The cumulative effect of this growing gap shows that there is little correlation between the retail price of milk and the farm price, according to Consumers Union. Consumers Union's semi-annual milk price surveys of the San Francisco and Los Angeles areas in the past several years have shown that when the farm price increases, grocers frequently raise the retail price by more than the farm increase; when the farm price decreases, retailers often fail to pass on the full decrease to consumers.
"It makes no sense that supermarkets charge customers so much more for milk than many mom and pop shops," said Elisa Odabashian, Policy Analyst for Consumers Union and author of the report. "The smaller stores pay higher costs per gallon for moving a smaller volume of milk, and many of the big chain retailers are also milk processors so they cut out the middleman."
A survey of stores in the Mission District of San Francisco provides an example of the difference in milk prices between large supermarket chains and small stores in the same neighborhood. The Cala Foods charged $4.23 for a gallon of whole milk, while the neighboring 23rd and Mission Produce charged $2.89 per gallon, and the Bahia Produce and Meat, less than a block away from Cala Foods, charged $2.99 per gallon.
As in past milk surveys by Consumers Union, the study continues to show a uniformity of milk prices between the major San Francisco area supermarkets. In San Francisco county, most major supermarkets (Mollie Stone's, Safeway and Cala Foods) charged between $4.23 and $4.25 per gallon of whole milk, and exactly the same at $4.23 for 2% milk. Lucky Stores charged less than their competitors in San Francisco, but Lucky matches other supermarkets in the other three counties. East Bay and Peninsula supermarkets (Safeway, Lucky, Bell, Mollie Stone's, Cala, Petrini's Andronico's, and Felletti Foods) generally match one another at $3.75 per gallon of whole milk and 2%. Marin county Safeway, Lucky and Mollie Stone's prices are high, mostly at $3.75 per gallon of whole milk; however, other supermarkets in Marin, such as United and Andronico's, charge less at $3.48 per gallon of whole milk.
Consumers Union conducted its last survey of milk prices in the Bay Area in April 1998. Between that time and the time of this survey, the farm price increased $0.34 per gallon, while most retail prices increased $0.37 to $0.66 per gallon.
"Farmers are often blamed for the high cost of milk," Odabashian said "But the real culprits are grocers, particularly supermarkets, and the growing spread between the price farmers get for their milk and the price consumers pay at the checkout stand."
California law does not regulate how high retail milk prices may go, but since the late 1960s, California law has prohibited retailers from selling milk for less than their actual cost. Retailers often cite the law as one reason they cannot sell milk as a low-cost special to lure consumers into the market - they say they are afraid they will face an audit or worse if they lower milk prices.
Sen. Jackie Speier today introduced a bill to repeal the prohibition against sales below cost (California Food and Agriculture Code sections 61383 and 61384). Consumers Union believes repeal of this law could do much to stimulate supermarket competition for milk sales.
"Doing away with the law will not force retailers to lower milk prices," Odabashian said, "but it will remove an excuse they use to justify charging high and almost identical prices. Grocers will have a chance to use milk, rather than potato chips, as a low-priced inducement. We hope they will do so."
The California Department of Food and Agriculture (CDFA) is responsible for enforcing the sales-below-cost law. According to the CDFA, the most recent enforcement action was filed a decade ago. In addition, the law was implemented to prevent chain stores from undercutting "mom and pop" shops. But as the Consumers Union milk price surveys show, those smaller shops often are selling milk for much less than nearby supermarkets.
Sen. Speier's legislation does not address or alter California's nutritional standards on fluid milk, which are higher than in other states. An out-of-state dairy and affiliated groups have launched a campaign, known as Mad About Milk, to lower California standards. Consumers Union does not believe this effort will result in lower retail milk prices for consumers.
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