Spitzer Seeks Stronger Milk Price Gouging Law

Attorney General Spitzer today proposed new legislation to clarify the state's milk price gouging law and strengthen protections for consumers and farmers.

"When the price of milk rises, consumers think that farmers are receiving more money for their product," Spitzer said. "This is not always true. In fact, it is the middlemen in the distribution chain who often benefit from rising prices -- not the dairy farmer or the consumer."

"With this legislation, we will ensure that there is a fair mark up on farm milk prices, a mark up that more accurately reflects actual costs. In addition, this legislation will give my office the authority to investigate and act on possible milk price gouging." Spitzer made the announcement at the Tunis Sweetman Dairy Farm in Warwick, N.Y.

The proposed legislation would change the way milk price gouging is determined legally and enhance the Attorney General's authority to enforce the statute. Specifically, the proposed legislation would lower the threshold at which an official price gouging examination by the Commissioner of Agriculture and Markets would be triggered.

Current state law provides that the Commissioner must make a determination if a retail price for milk is unconscionably excessive if it is either (1) above the state's established minimum; or (2) 200 percent higher than the price paid to dairy farmers.

Spitzer's bill would reduce that threshold from 200 percent to 150 percent. The proposal also would reform the manner in which unconscionably excessive milk prices are determined by taking into account the costs related strictly to the marketing of milk. In doing so, this bill recognizes that, because milk has a short shelf life and its sales are generally higher volume than other products, basing the calculation of overhead on expenses for a store's entire inventory is unfair. The bill would consider exclusively the marketing costs of milk.

The bill also calls for the independent enforcement of the price gouging law by the Attorney General.