Investigation Reveals Apparent Milk Price Gouging

Attorney General Spitzer said today that an investigation by his office has revealed that many retailers across the state are failing to pass on historically-low milk prices to consumers and appear to be violating state law.

Over a three-day period in mid-June, investigators from the Attorney General's office conducted a statewide survey and found that dozens of stores were charging prices for milk that may be defined as "excessive" under the state's milk price gouging law.

"With prices to farmers at historic lows, retailers must answer why their milk prices continue to be so high," Spitzer said.

Investigators checked the retail price of a gallon of milk at 190 supermarkets, convenience stores and other retail shops throughout New York State. The investigation found that nearly 30 percent of the stores were selling milk at prices that exceeded the state-published "threshold price."

Unlike virtually all other products, milk is regulated by the state. State law limits the retail price for milk to 200 percent of the price of Class I fluid milk paid to farmers.

At the beginning of June, the New York State Department of Agriculture and Markets set the threshold price at $2.44 per gallon in the New York City area and $2.27 for the upstate region.

The stores in the metropolitan New York City region that were identified as possible violators charged an average of $2.82 per gallon. Upstate New York stores identified as possible violators charged an average of $2.59 per gallon of milk. Some stores were charging as much as $3.49 per gallon.

John Lincoln, President of the New York Farm Bureau, said: "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. New York farmers simply desire to work in a fair system, and I applaud Attorney General Spitzer and his office for ensuring that retail stores play by the rules."

Russ Haven, Legislative Counsel for the New York Public Interest Research Group, said: "Shame on the supermarkets for gouging consumers on the price of milk. Jacking up the retail price of milk certainly doesn't help New York's struggling farmers or encourage shoppers to choose nutritious milk over junk beverages."

The stores found selling milk above the threshold price are being sent a warning notice from the Attorney General's office and may face enforcement actions under the state's price gouging statute if they fail to reduce prices or justify the increased price as attributable to charges beyond their control.

"An additional thirty or forty cents on gallon of milk may not seem like a lot money, but it quickly adds up for working families," Spitzer noted.

Spitzer's office conducted a similar survey of milk prices in 1999 and found that many retailers had not passed on to consumers a significant decline in the price of milk paid to farmers. After the survey was released and retailers were notified of pending enforcement actions, milk prices dropped by an average of 50 cents.

"What we have seen repeatedly is that the price of milk can be raised with incredible speed, but declines extremely slowly," Spitzer said. "This apparent manipulation of milk prices benefits only the retailers."

"Our goal is always to enhance compliance with the state's milk pricing law," Spitzer said. "The law was implemented to protect consumers and dairy farmers and must be complied with fully. "

Separately, Spitzer has proposed legislation to strengthen the state's milk pricing law by reducing the threshold price from 200 percent to 150 percent and by making other changes to facilitate enforcement.

This investigation was handled by Deputy Attorney General Marty Mack and Assistant Deputy Attorney General Christopher Walsh of the Division of Regional Offices.


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