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Editorial: It could be time to cry over this split milk

Last Modified: Thursday, January 31, 2013 6:52 PM

Should the state of Louisiana regulate retail prices?

That’s the overarching question after the state Department of Agriculture and Forestry earlier this month forced a grocery store chain to stop selling milk below cost.

Fresh Market routinely sold a gallon of whole, 2 percent, 1 percent and skim milk at $2.99 one day a week at its stores in Baton Rouge, Lafayette, Mandeville and New Orleans.

When the Ag Department received a complaint, it dispatched an auditor to the Mandeville store. The auditor told store officials that state law requires that retailers cannot sell a product less than 6 percent of the invoice cost after adding freight charges. Two days later, a gallon of whole milk sold for $5.69 at the Baton Rouge store.

Agriculture Commissioner Mike Strain said the regulation actually protects consumers. He said if a grocery store was allowed to sell milk below cost, it could drive competitors out of business, allowing the undercutting store then to drive up the price of milk.

The brouhaha harkens back to a fight waged by New Orleans grocery store owner John Schwegmann in the 1970s. Schwegmann sued then state Agriculture Commissioner Dave Pearce and the state Milk Commission, which set milk prices at the processing and retail levels. Schwegmann wanted to buy cheaper milk from an Alabama company. An appeals court ruled that Schwegmann could not be barred from buying cheaper milk.

The state scuttled the Milk Commission and replaced it with the Daily Stabilization Board. The board dictates the price milk processors must pay dairy farmers.

Which brings us back to the original question: Should government dictate retail prices?

In this instance, it appears Fresh Market was selling a gallon of milk below its costs not to drive a competitor out of business, but as a promotion to attract more customers to its grocery stores. One remedy would be for the chain to sell milk at 6 percent above cost, which would conform with state law, yet offer the milk at an alluring discount.

The question remains: Is the state law that forbids a business from selling below its costs archaic? That may be a subject that eventually either state lawmakers or the court system will have to decide.

• • •

This editorial was written by a member of the American Press Editorial Board. Its content reflects the collaborative opinion of the Board, whose members include Bobby Dower, Ken Stickney, Jim Beam, Crystal Stevenson and Donna Price.

Posted By: bfenn On: 2/1/2013

Title: bfenn

This is outrageous, and is protectionism at its worst. The market should make the price, as in any other free market.
This is just more evidence of the Government sticking its nose where it shouldn't. The Federal Government doesn't
butt its ugly head in individuals lives enough, we have to put up with a protective state now. I guess they would receive several pennies less in taxes behind the reasoning.

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