These supermarkets remain at the top of the price survey, charging considerably more for milk than do many smaller neighborhood markets. The farm price for milk is regulated in California. Retail milk prices are not regulated in California, but grocers are prohibited from selling milk for less than their actual costs. With no cap on retail prices, grocers are free to charge as much as they want for milk as long as they do not sell it for less than their actual costs. Our September 1996 survey reported that regulation of farm prices by the state was the reason many grocers gave for charging consumers exorbitant prices for milk.
Farmers feel that retailers are reaping most of the benefits.
Based on the information provided to them, many consumers are misled into believing that the current retail price levels are solely the result of CDFA's farm price adjustments. To help address this problem, we have directed the Dairy Marketing enforcement staff to take more active steps to prevent the distribution of misleading information on retail milk prices. The growing spread between the farm price and the retail price of milk is caused by grocers using the slightest increase in the farm price as justification to increase retail prices exponentially. Since January of 1995, there have been three decreases in the farm price. However, grocers rarely lower their milk prices when the farm price drops.