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Fluid Milk Market Channel Pricing: Monopolistic Pricing by Retailers Hurts Processors, Farmers, Consumers, and Federal Market Order Pricing

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  • Cotterill, Ronald

Abstract

Fluid milk market orders are routinely criticized by many because they force consumers to pay higher fluid milk prices. The Northeast Dairy Compact was also attacked as a cartel that if eliminated would result in lower prices to consumers. The fluid milk processors through their trade group, the International Dairy Food Association, and the supermarket chains, through the Food Marketing Institute, aggressively push this viewpoint in Washington and more recently in the state houses in New England. In fact, what one has is the pot calling the kettle black. Soon after the Dairy Compact’s demise raw milk prices plummeted 50 cents per gallon. According to IDFA economists’ model, retail prices should have dropped 90 cents per gallon in New England. They dropped only 10 cents. Now raw milk prices have increased 35 cents per gallon, and the IDFA model predicts as much as a 63 cent increase in the retail price. To date prices have increased 10 cents at leading supermarket chains. The crude model that IDEA used to defeat the Compact forecasts so poorly that it is worse than useless.

Suggested Citation

  • Cotterill, Ronald, 2003. "Fluid Milk Market Channel Pricing: Monopolistic Pricing by Retailers Hurts Processors, Farmers, Consumers, and Federal Market Order Pricing," Issue Papers 169498, University of Connecticut, Food Marketing Policy Center.
    • Handle: RePEc:ags:ucofmi:169498
    DOI: 10.22004/ag.econ.169498
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    References listed on IDEAS

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    1. Cotterill, Ronald, 2003. "A Law to Promote Efficient and Fair Pricing of Milk in Connecticut," Issue Papers 169495, University of Connecticut, Food Marketing Policy Center.
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    Cited by:

    1. Yizao Liu & Xuan Chen & Adam N. Rabinowitz & Benjamin Campbell, 2020. "Demand, challenges, and marketing strategies in the retail promotion of local brand milk," Agricultural Economics, International Association of Agricultural Economists, vol. 51(5), pages 655-668, September.
    2. Popovics, Peter Andras, 2008. "Analysis of economic issues relating to the dairy sector, with emphasis on price transmission," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 2(1-2), pages 1-10.
    3. Benaissa Chidmi & Rigoberto A. Lopez & Ronald W. Cotterill, 2005. "Retail oligopoly power, dairy compact, and Boston milk prices," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 477-491.
    4. Lass, Daniel A., 2005. "Asymmetric Response of Retail Milk Prices in the Northeast Revisited," Research Reports 149026, University of Connecticut, Food Marketing Policy Center.
    5. Titus O. Awokuse & Xiaohong Wang, 2009. "Threshold Effects and Asymmetric Price Adjustments in U.S. Dairy Markets," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(2), pages 269-286, June.

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    1. Benaissa Chidmi & Rigoberto A. Lopez & Ronald W. Cotterill, 2005. "Retail oligopoly power, dairy compact, and Boston milk prices," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 477-491.
    2. Cotterill, Ronald & Rabinowitz, Adam & Schwane, Matthew, 2004. "Retail Milk Prices in New England, New York, and Seattle: An Unresolved Issue," Issue Papers 169529, University of Connecticut, Food Marketing Policy Center.
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    4. Ronald W. Cotterill, 2003. "Answers to Questions that Often Surface When Discussing the Proposed Connecticut Fair Pricing Milk Law," Issue Papers 37, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
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