Analysis of the May 2004 Milk Price Survey with a Comparison to June 2003

Since November of 2002, the Food Marketing Policy Center has periodically conducted price surveys of milk in New York and Southern New England (Cotterill, et. al. 2002; Rabinowitz, et. al. 2003;Cotterill 2003). Results of these surveys, when coupled with data on the underlying cost of the raw milk, have shown that milk channel firms are continually charging unconscionably excessive prices for milk. While it was originally believed that both processors and retailers were exercising market power, information obtained on processing costs indicates that retailers are charging the bulk of the markup. Additionally, surveys conducted in 2003 found that average milk prices in New England were as much as 70 cents higher than prices of similar milk in New York. This is likely due to a New York State milk price gouging law, which states that retailers must offer at least one brand of each type of milk at a price no greater than 200% of the farm price of 3.5% butterfat milk (New York State Department of Agriculture and Markets, 2004). No such law exists in New England