1. Change in the Epicenter of Milk Production and the Impact on Retail
Prices
    The Compact Commission previously determined that there has been a
distinct movement away over time of the epicenter of the region's milk
supply. The loss of dairy farms in the New England region, and in
particular,

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in the Southern New England region, has forced the epicenter of the
region's production further and further from the region's population
centers. This movement has involved both the loss of supply by farms
closest to the population centers and the replacement of that supply by
more distant farms, primarily in New York and Vermont. The location of
these more distant farms themselves, in turn, has moved ever father
away from the region's population centers.\93\
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    \93\ The 1989 Massachusetts Extension Order, at page 14, cites
testimony that the transportation costs for this most distant supply
``would currently run $2.00 to $2.50/cwt (17-22 cents/gal) and would
require capital investments that few truckers would be willing to
undertake.'' Extension Order at 14.
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    This feature of the stressed circumstance of the region's milk
supply described in the first finding analysis has had a direct,
adverse impact on retail milk prices. The Commission bases this
conclusion in part on the determination that transportation costs are a
significant input of the retail price for milk. As noted, the federal
Market Order System allows 72 cents per cwt to cover transportation
costs from the representative ``country'' zone to the Boston, ``city''
zone.\94\ This single cost input, alone, accounts for over three
percent of the total delivered cost to the retail outlet, when measured
against the Aplin et al extract identification of $1.93 for delivered
cost/gallon. (11.6 gallons per cwt). It follows, by definition, that an
increase in transportation costs attributable to greater hauling
distance will result in an increase in retail prices.
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    \94\ The discussion, supra, of transportation costs indicates
that this regulated calculation of cost does not fully account for
the true cost.
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    The Commission's conclusion is also premised on a similar finding
contained in the December 29, 1989 extension of the Massachusetts Milk
Stabilization Order. This Order found that a 50 mile shift in milk
prices causes a three cent increase in milk prices.
    The evidence in the record thus demonstrates that the epicenter of
the region's milkshed has moved away from the population center to a
significant degree, and that this shift has had a measurable impact on
retail prices. The Compact Commission concludes that this adverse
impact on retail prices will continue as long as the milkshed is not
stabilized.