J. Issue: Prevailing Retail Prices for Class I, Fluid Milk, Inside and
Outside the New England Region
There are two significant concerns raised by this issue.
First, the
inquiry addresses the benchmark question of whether retail margins are
covering costs, much as the earlier inquiry addressed whether processor
margins were sufficient to cover costs. Second, the inquiry must
consider the relative retail costs beyond the area subject to Compact
Over-order Price Regulation, as part of the ongoing process of
assessment of the potential impact of price regulation on the region's
retail prices.
James G. Hines, Director of Dairy Services,
submitted for the
record copies of the tracking studies of retail prices conducted by The
International Association of Milk Control Agencies. The Association
tracks and publishes monthly price surveys from a number of markets
nationwide. The following is an extract from three markets:
[[Page 23047]]
Retail Prices--Different
Markets
[1995-1996]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Jan.
Feb. Mar.
April
May
June
July Aug.
Sept.
Oct.
Nov. Dec.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1995
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
MA
(Boston).................................................
$2.49 $2.09
$2.49 $1.99
$2.29 $2.39
$2.39 $2.49
$2.49 $2.49
$2.09 $2.49
NY
(Albany).................................................
2.18
2.18
2.18
2.16
2.16
2.15
2.17
2.17
2.17
2.17
2.19 2.23
NJ
(North)..................................................
2.55
2.56
2.53
2.53
2.53
2.53
2.54
2.53
2.52
2.55
2.56 2.57
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1996
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
MA
(Boston).................................................
2.19
2.29
1.99
2.49
2.59
2.29
2.59
2.59
2.29 2.59 ......... .........
NY
(Albany).................................................
2.23
2.23
2.25
2.26
2.25
2.32
2.4 2.42
2.42 2.46 ......... .........
NJ
(North)..................................................
2.56
2.57
2.59
2.59
2.58
2.58 2.65
.........
2.67 2.67 ......... .........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: International Association of Milk Control
Agencies.
[[Page 23048]]
The Aplin et al extract identified a total, delivered cost of
$1.93, and a total retail cost of $2.12, including combined retail cost
and return on capital. The Compact Commission concludes from
this
survey of prices that, as measured against their identified delivered
cost, New England retailers are currently covering their costs of
production with an adequate return on capital.
The Commission further concludes that this on-going Agencies'
study
of markets both within and outside the New England region provides the
basis for the Commission to monitor the impact of regulation on New
England retail prices. The Commission will be able to utilize this
study data and compare the current, relative alignment in prices
between the New England and New York regions against the relative
alignment once price regulation is in place.\88\
---------------------------------------------------------------------------
\88\ Retail prices are also being monitored currently in
Connecticut, Vermont and Maine. The Commission will have to
establish a tracking program in Rhode Island.
---------------------------------------------------------------------------