Group Challenges Milk Pricing Policy

Rolling back state policies that guide milk retail prices and nutritional standards would boost consumption and bring lower prices, according to a report released by a self-described consumer group on Tuesday.

But state dairy industry leaders immediately denounced the report, arguing that California’s strict regulations ensure that consumers get a quality product.

Mad About Milk, a consumer group financed by out-of-state dairies seeking to gain a foothold in California, released the report at a City Hall news conference.

The report’s release was timed to coincide with Friday’s expected announcement of a 41-cent hike in wholesale milk prices statewide, consumer activists said.

Los Angeles City Councilman Joel Wachs, a critic of state milk pricing practices, and members of senior citizens groups attended the briefing.

Mad About Milk representatives said they commissioned the report to explain why California retail milk prices remain among the highest in the nation, a claim denied by state authorities.

The report, “How to Reduce Retail Milk Prices in California,” was prepared by Schnittker Associates, a Santa Ynez-based consulting firm specializing in agricultural economics.

According to the report, California consumers pay higher prices for milk because state regulators prevent retailers from selling milk below cost and allow only specially enriched milk to be sold here.

If California repealed the two regulations, milk consumption would go up, consumers would benefit from lower prices and more choice, and farmers would fare better because they would sell more milk, the report concluded.

Wachs said increased competition and lower prices would put a basic commodity within reach of the people who need it most: children and the elderly.

“You are dealing with a product that is among the most basic of all,” he said. “People have to have some inexpensive form of nutrition and milk and bread are the most basic foods.”

Nevertheless, state industry leaders said doing away with the regulations would have a minimal effect on retail prices and would reduce product quality.

“California data show that the basic cost of fortifying milk adds 14 cents per gallon of low-fat milk--less than a penny a glass--and for that they get extra calcium and protein,” said Jim Tillison, director of the Alliance of Western Milk Producers, which represents more than two-thirds of the state’s dairies.

Myrlys Williams, a spokeswoman for the state Department of Food and Agriculture, disputed Mad About Milk’s claims that Californians pay more for milk.

The average retail price for a gallon of whole milk last month was $2.77 in Los Angeles, $2.78 in San Diego and $2.64 in San Francisco, she said. By comparison, shoppers paid $3.14 a gallon in Seattle and $3.03 in Portland during the same period.