Evening star. [volume] (Washington, D.C.) 1854-1972, 1936-10-17
MILK PRICE RAISE
UNNECESSARY, SAY
OFF|C|ALSOF A.A.A.
Consumers Counsel Will
Watch Hearings on Mar
keting Order Tuesday.
DECLARES PRODUCERS :
MUST JUSTIFY STAND
Holds 0ne-Cent-a-Quart Increase
Might Cause Reduction in
Consumption.

Higher retail milk prices will not
be necessary in Washington even II
producers gain an increase for six
months Of / cent quart in the
amount they receive, in the opinion
of Donald E. Montgomery, consumers
counsel of the Agricultural Adjust
ment Administration.
Montgomery said today he would
be present at the public hearing set
for Tuesday by A. A. A under the milk
marketing order recently imposed on
the Washington area, at which the
requested increase will be considered.
ut is up to the producers to show
that they are justified in asking for
the increase" Montgomery said.
If he is not convinced by the
arguments of producers, Montgomery,
will oppose approval of their request
by the dairy section Of A. A. A.,
which fixes the prices milk handlers
must pay the dairy farmers.
1.-THE producers are going to do q
good Job of presenting evidence" he
said.
He added that he could anticipate
many Of the arguments-higher feed
costs, scant pastures, drought losses
and the necessity for maintaining AN
adequate production volume" He has,
he said, information on these subjects
from the consumer standpoint.
Consumers Must Pay.
II the producers win before the
A. A. A., distributors will determine
whether to advance retail prices. A.
A. A. has no control over these, al
though it fixes the price that must
be paid to producers. Leading dis
tributors said yesterday they would
be obliged to pass along to consumers
any increased costs.
But Montgomery said 1t does not
necessarily follow that distributors
will find it wise to increase retail
prices.
A 1-cent a quart increase might
cause a reduction in consumption
that would give the dealers pause, he
pointed out. A contrary opinion was
expressed yesterday by Richard D.
Aplin, market administrator for this
area, who said such a retail price
boost probably would not curtail con-
sumption more than 2 or 3 per cent.
Montgomery said. too, that dealers
must consider the possibility that
retail price increase would drive
consumers to cheaper milk. =.
They have TO take into considera.
ton the competitive price situation"
he said. Cheaper milk can be bought
in Washington and consumers might
turn to that"
Challenges Distributors.
Montgomery challenged distributors
to prove that they would have to in
crease store and delivery prices if they
are to pay the dairy farmer more.
"They ought to show the public
why this would be necessary" he said.
There is nothing in the A. A. A.
act or the marketing order for this
area, however. that would compel
diaries to comply with Montgomery's
suggestion.
The consumers counsel said there
were at least two ways by which dis
tributors can keep retail prices the
same and not suffer loss if producer
prices are raised:
Ito reduce distribution costs.
Much can be done in this line by
charging bottle deposits to reduce
drastically an estimated 100000 an.
nual deficit attributable to bottle
losses, he said.
2-To make up some Of their loss in
wholesaling to retailers. Montgomery
said that competition is so keen in
this branch of the business that re-
tailers get bottled milk at very low
prices For instance, half-pint bottles
. sell retail in most restaurants for
nickel, although the retailer gets
them for az cents apiece, he said.
Analysis Completed.
Montgomery had just completed an
analysis of milk prices in % cities
which shows the spread. or margin.
between the prices paid to pros
ducers and retail prices. These are
crude margins" figured only on the
buying and selling price, and do not
, | represent lie dCludI sIOSS PlOA4S w
the dealer.
OF the 20 cities, only 8 have spreads
higher than in Washington. One
has the same. Three of the that
are higher are classified as partly
higher" since two prices, and hence,
two spreads, are involved.
The cities with the higher spreads
are Phoenix, Ariz.; San Diego, Calf;
San Francisco, Calf; Lexington, KY:
Louisville, KY; Kansas City, Mo-; St
Louis, Mo-, and Detroit, Mich. '"
All the principal Eastern cities have
lower spreads than here. Baltimore's,
is only q tenth Of q cent lower, but
New York's Is So and 81 cents q
quart, compared with the 64-cents-
a-quart spread In Washington:
Philadelphia. ST; Boston and Rich
mond, So.
Montgomery explained that his
table did not include Southeastern :
cities, where the spreads are much
higher" than In Washington.
But the producer and consumer