What’s Up With Milk Prices in Seattle?

Discussion
Aug 12, 2003
George Anderson

By George Anderson


If the government-set price for milk in the state of Washington is one of the
lowest in the country, then why are consumers in Seattle and Tacoma paying more
for milk than anywhere in the lower 48 states? That is the question the Washington
State Public Interest Research Group (WashPIRG) asks in a new report, according
to The Seattle Times.


Various theories are offered in the disparity between the state’s farm price
($1 a gallon) and the average store price ($3.52 a gallon). Among these are
reduced competition due to consolidation, the infrequent use of milk as a loss-leader
and private savings enjoyed by holders of a store’s loyalty card.


Dairy farmers in the state also appear at a loss to explain why prices are
so high. “When we look at these prices that just stay up there in the stratosphere,
we say we’d like to see them come down a bit where people could buy a little
more milk, a little more cheese, and we could get rid of some of the supply,
and (farm) prices could go up a bit,” said Jay Gordon, an Elma dairy farmer
and executive director of the Washington State Dairy Federation.


Moderator’s Comment: How do you explain the difference
between the price farmers are paid and what it costs consumers to purchase milk?


Consumer demand and the value placed on a product are
the ultimate determinants of price. The grocers in the Seattle and Tacoma area
have obviously found a price point consumers are willing to pay without it having
a large negative impact on purchases.


Perhaps a better question for us to have asked is, “Are
there any other farmed products that receive the same amount of attention in
terms of price paid to the farmer and what consumers pay? Why the special focus
on milk?”
[George
Anderson – Moderator
]

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