Thursday, March 4, 1999

Milk drinkers
to get price break

Local consumers could see
April prices fall by 50
cents a gallon

By Rob Perez


The retail price of Hawaii milk is heading down next month, possibly by close to 50 cents a gallon.

A planned 50-cents-a-gallon cut in raw milk prices in California will trigger a similar reduction in prices paid to Hawaii dairy farmers. That, in turn, is expected to lead to lower milk prices on local store shelves in April and May.

But to what degree is uncertain.

State officials say that will depend on how much of the savings milk processors pass to retailers and how much the store owners are willing to pass to customers.

The processors purchase raw milk from farmers and sell the finished product to distributors and retailers.

If most of the savings reaches retailers, one supermarket executive said isle consumers can expect price reductions of roughly 50 cents a gallon.


"It should reflect those lower costs," said David Higashiyama, marketing vice president for Times Super Market Ltd., which operates 13 stores on Oahu. "We mirror the wholesale cost changes that are charged to us."

A spokeswoman for Foodland Super Market Ltd., which has 27 stores statewide, said her company would reduce milk prices if it gets a reduction in wholesale prices. But she couldn't say whether any wholesale savings would be passed entirely to consumers.

Officials with Hawaii's two main processors, Foremost and Meadow Gold dairies, could not be reached for comment.

Even small reductions likely would be welcomed by isle shoppers, who now pay among the nation's highest prices for milk.

A gallon ranged from about $4.50 to more than $6 at major supermarkets yesterday, though sales could bring the tab to as low as $3.50 at some stores.

By contrast, a gallon costs less than $2.60 in Atlanta. In California it averaged $3.06 in January.

"This is like liquid gold," said Florida visitor Jennifer Thompson as she perused milk prices at an Oahu store yesterday afternoon. "Who can afford this?"

Hawaii uses the California price for raw milk as a benchmark for setting the minimum price for 100 pounds of locally produced raw milk. When the California price is adjusted, usually every two months, the state automatically adjusts the local one, always keeping it $12.20 higher.

That gap is roughly equal to the cost to processors of bringing mainland milk to the islands.

In announcing the record 50-cent reduction for April and May, California officials cited an increase in supplies nationwide.

The announcement came after months of rising prices. Industry officials have blamed weather-related production lags and high demand fueled by a strong economy for the increases.

Walter Mitsui, acting manager for the state Department of Agriculture's commodities branch, said Hawaii consumers should see prices falling in April. "It may end up at 20 cents or 40 cents (savings), I don't know," Mitsui said.

The Sacramento Bee contributed to this report.

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