Commission will explore reasons for farmers’ declining milk checks

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(Host) The Vermont Milk Commission wants to know why milk prices stay high in the supermarket while farmers’ milk checks are falling.

The commission says it will collect that information to help determine if the panel should raise farm prices, or institute price controls at the retail level.

VPR’s John Dillon reports:

(Dillon) The Vermont Milk Commission has broad authority to control the market for milk.

One rarely used state statute allows the commission to set a cap on prices charged by retailers.

But before the commission decides to use its price-setting power, it wants to learn more about the margins that supermarkets earn on milk sales.

(Allbee) "There seems to be a trend in some of the markets of the retail price going up and the farmer price going down."

(Dillon) Agriculture Secretary Roger Allbee is the commission’s chairman. The panel is looking at a number of options, including setting a surcharge at the wholesale level so farmers can get paid more.

But first, Allbee says, the panel needs more information from supermarkets about how they set their prices.

(Allbee) "And what we’re trying to determine is what is the disparity today – or if there is any – between what the farmers are receiving and what the consumers are paying and why that disparity, if it does exist, is there."

(Dillon) The possibility of price controls does not sit well with the Vermont Grocers Association, which represents supermarkets as well as smaller stores.

Jim Harrison is the association’s president. He says he’s also concerned about the commission’s inquiry into supermarket milk pricing.

(Harrison) "Are we going to have a hearing next week on how Hellman’s Mayonnaise is priced in a grocery store? This is getting into an area that, quite frankly, I don’t think the Milk Commission has any business being in."

(Dillon) Harrison says it’s likely consumers will pay more if the commission tries to help farmers with a wholesale price premium.

(Harrison) "Logic tells you that if you increase the cost of the item to the merchant then you’re probably going to impact the retail price, but there’s no way of knowing that for sure without seeing what happens in the marketplace."

(Dillon) Allbee says the commission wants a fair pricing system for both farmers and retailers. He says he’s concerned that stores have kept prices high even when the farm price falls.

(Allbee) "We’re trying to figure out what is the reason for that, is it due to the cost structure at the retail side, is it due to the cost structure on the wholesale side, or is it due to transportation costs? Or what are the factors causing the consumer price to increase at the same time the farmer price drops so quickly?"

(Dillon) The commission meets again on November 18th.

For VPR News, I’m John Dillon in Montpelier.

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