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MILK PRICE NEWS A publication of the Minnesota Dairy Producers Board 123 1/2 E. Broadway, Little Falls, MN 56345, 320-632-5867 or 616-5847Board requests Attorney General investigation |
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JUNE 1998 |
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| With the aim to improve distressed dairy
farmers’ income and to promote retail sales, June Dairy Month 1998
celebrates the second anniversary of state law allowing retailers to use
milk and other dairy products as "loss leaders" to reduce
consumer prices during the month.
A loss leader is any article that a store sells cheaply or below cost in order to attract customers. "This is good medicine to help the state’s dairy industry combat the unhealthy economics of declining farm income, rising consumer costs, and growing uncertainty over the future of neighborhood and rural dairy cases," said one of the the Board’s consumer representatives Holly Harjes of the Minnesota Food Association. "Remedies are certainly needed for prices that are too low to allow farmers to milk cows, too high for consumers to buy dairy products, and too uncertain for smaller retailers to maintain their dairy cases," Harjes said. "The Board applauds any effort to maintain the farmers, consumers, and local independent retailers in our dairy industry because they are the foundation on which rests our processors and distributors. What better way is there to celebrate Dairy Month," she proclaimed. The law was a response to the plummet in farmers’ mailbox prices in the fall of 1996 combined with rising consumer prices in the Twin Cities, both allegedly caused by processor price fixing. Along with the loss leader, the law required the Minnesota Department of
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Agriculture to investigate the dairy trade practices used by wholesalers and distributors to sell milk and dairy products to large, medium, and small retailers. The investigation was prompted by suspicions that some large supermarkets were given a competitive advantage over smaller independent retailers by the wholesalers and distributors through the unfair use of volume discounts, promotion rebates, fees for shelf space, and a whole array of other trade practices. Unfortunately, the investigation was inconclusive due to lack of cooperation from the majority of wholesalers and distributors who refused to respond to the department’s survey of their trade practices. "While the consumers and farmers on the Board are very grateful for the loss leader as an effort to save the farming, consumption, and independent retail parts of our industry, we’re concerned over the failure to learn if there is, indeed, unfair trade practices that may neutralize the loss leader’s ability to maintain our neighborhood dairy cases," said Board president Jeff Kunstleben. The Board commends Commissioner of Agriculture Gene Hugoson and Dairy Trade Practices Supervisor Mark Pochardt for conducting the investigation and the legislative leadership of Senate and House Agriculture Committee chairmen Senator Dallas Sams and Rep. Wenzel, and Committee members Senator Becky Louery and Rep. Bob Gunther for enacting the legislation.
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