Douglas concerned about retail milk price regulation

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(Host) Governor Jim Douglas says he’s concerned that a state milk commission may try to regulate retail prices.

The commission is considering the regulation as a way to get more money to farmers without hurting consumers.

VPR’s John Dillon reports:

(Dillon) The state Milk Commission is considering a plan to levy an assessment on fluid milk and return that money to farmers.

Agriculture Secretary Roger Allbee is chairman of the commission. His boss, Governor Jim Douglas, questions the proposed regulation.

(Douglas) “All else being equal, I prefer to see the free market prevail.”

(Dillon) The milk commission’s proposal has changed somewhat since it was first floated in late summer. The draft order no longer sets a specific premium. Instead, the commission says it will meet monthly to look at economic conditions, and set a premium if it’s warranted.

And the commission said it may also institute price controls at the retail level in order to prevent stores from passing on the full premium increase to consumers.

Douglas says he’s concerned that retailers would not be able to fully recover their costs.

(Douglas) “Every sector in Vermont is facing some additional stress, retail included. To suggest to the retailers that they have to accept a narrower margin when they’re also trying to keep the price of gasoline down if they’re a mom and pop store or trying to deal with the increased cost of delivering food at the wholesale level into their establishment is quite a request of them. So I think we have to look at all different sides of the equation and see what makes sense.”

(Dillon) Essex-Orleans Senator Bobby Starr is a member of the milk commission. He says the idea of capping retail prices is aimed at supermarket chain stores, not mom and pop groceries.

He says the supermarkets have a pattern of not lowering the price of milk on their shelves, even when the price they pay to milk processors goes down.

(Starr) “In reality, if you check the prices at the supermarket level and what they’re paying for it from the processor, they’re making a huge profit. And there’s plenty of room from that huge profit to cover that increase that the milk commission is talking about.”

(Dillon) Starr says that the milk market has been controlled through government regulation for decades. He says the commission is trying to tweak the market to benefit farmers.

(Starr) “There’s ample money within the system right now. So everybody could make, the processor could make a profit, the retailer can make a profit. And there’s enough in there so we could give a premium to the Vermont dairy farmers and it should raise the price of milk to the consumers a penny.”

(Dillon) The milk commission is authorized by law to set retail and wholesale prices in the state. It’s a rarely used power. And Governor Douglas says he can’t veto what the commission orders.

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

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