Bill Introduced to Repeal Law on Milk Prices

Legislation intended to cut California milk prices was introduced Tuesday, raising a cry from grocers and dairies that it could have the opposite effect.

The bill, SB 419 by state Sen. Jackie Speier (D-Daly City), would repeal a 32-year-old law that prevents stores from selling milk below their cost.

Eliminating the restriction would spark competition in California, Speier said, where milk prices are consistently among the highest in the nation, hitting all-time highs of more than $4 a gallon last month.

“It is fundamentally un-American to have a product as essential to child and adult nutrition as milk [be] the only price-fixed food staple in the grocery basket,” she said.

Californians for Nutritious Milk, a coalition of dairies and grocers formed in anticipation of the legislative attack on milk laws, called Speier’s goal of reducing milk prices “commendable” but her approach misguided.

Though it might trigger a temporary price war, said John Handley of the Northern California Grocers Assn., over the long term prices would rise even higher.

The state’s pricing law, the group noted, was enacted to bar large grocery chains--many of which own processing plants or dairies--from out-discounting smaller stores and pricing their “competition out of the marketplace.”

However, bill supporters say large grocery chains have used the law to keep their prices artificially high, while smaller markets remain more likely to discount their milk to attract customers.

Two Consumers Union surveys completed in January in the Bay Area and Sacramento found milk reaching $4.25 a gallon at some major San Francisco supermarkets. Smaller stores nearby sold milk for up to 47% less.

Backing Speier’s bill are consumer groups including Consumers Union, the Center for Public Interest Law in San Diego, and the California WIC (Women, Infants and Children) Assn., which distributes dairy product vouchers to 1.2 million needy mothers and children.

Because the program has finite resources, the more milk costs, the fewer clients can be served, said WIC Executive Director Laurie True.

Even the state Department of Food and Agriculture has conceded that the pricing law may be antiquated, saying that it has not been enforced with court action since the state lost a 1989 lawsuit against a Northern California market chain. However, state officials continue to lean on grocers to raise their prices to include overhead costs.

Another group, Mad About Milk, supports Speier’s bill but is working to lift other state dairy regulations as well, including California’s unique requirement that milk be enriched with extra calcium and protein.

Mad About Milk, an effort financed by out-of-state dairies that covet the California market, asserts that the state’s high prices led to a recent dip in per capita consumption of half a gallon a year.