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    New York Claims Sour Milk Pricing

    State attorney general finds some 30 percent of retailers checked set costs above state threshold prices.

    ALBANY, N.Y. -- New York Attorney General Eliot Spitzer is again questioning milk pricing in the state, saying consumers are not benefiting from the low wholesale prices being endured by dairy farmers. A survey over three days in June by the attorney general's office found that of 190 convenience stores, supermarkets and other retail stores checked, nearly 30 percent were selling milk above the state-set threshold price.

    For the month, that threshold price was $2.27 a gallon for milk upstate and $2.44 a gallon downstate, which is defined as Orange and Dutchess counties south. Stores in New York City identified as violators were charging an average of $2.82 a gallon last month while apparent violators upstate were charging an average of $2.59 a gallon, the Associated Press reported.

    The threshold price is based on the wholesale price that New York farmers got for milk under the federal milk pricing system. That price was $12.31 per hundred pounds --11.6 gallons -- for the Syracuse-area milk market, which covers the bulk of the state. It was the third consecutive month that the federally set wholesale price was unchanged. While wholesale milk prices are at or near historic lows, "retailers must answer why their milk prices continue to be so high," Spitzer said in a release Sunday.

    The threshold milk price cannot be more than 200 percent of the wholesale price farmers get for unprocessed milk. Spitzer has pushed a bill in the legislature, so far unsuccessfully, to get the threshold reduced to 150 percent of the wholesale price. Industry groups have staunchly denied charging too much for milk. They contend the threshold price often does not accurately reflect processors' and retailers' costs for packaging, transportation and energy.

    Stores found to be selling milk above the threshold prices are being sent notices warning them that Spitzer can go after them for price gouging if they continue. When challenged, retailers must show the net invoice price they paid for milk, plus other costs involved in handling and selling the produce. Retailers can avoid charges of improprieties under the law by proving they are not selling milk at "unconscionably excessive" prices.

    Spitzer aide Marty Mack said last month's survey was a follow-up to one done by the attorney general's office in 1999. The earlier price check also found excessively high retail prices compared to the wholesale price of milk and Spitzer said the price of milk dropped by up to 50 cents in some stores after their charges were questioned.

    John Lincoln, president of the New York Farm Bureau, said his group supported Spitzer's inquiry. "At a time when dairy farmers struggle to cut costs on their farms to help make ends meet, it is troubling to find there are some retail operations violating state law," he said.

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