[ OUR OPINION ]
Got milk monopoly?
Unfortunately, the
answer is yes
|
Foremost's decision to shut down permanently leaves the state with only one milk processor, Meadow Gold Dairies, and the prospects of higher prices a sole operator can command in such an isolated island market. Even though about half the milk sold in Hawaii comes from the mainland, most of it has been shipped to Hawaii in bulk, then processed and distributed by Meadow Gold or Foremost either under their own labels or under store brands.
Meadow Gold has said it will "do everything feasible to meet" consumer needs with "most economical" products, but Foremost's demise will surely change the dynamics of the Hawaii market.
There are numerous components involved. In previous years, supermarkets and big-box stores had the milk they sold under their brands shipped to the state already fully processed and packaged. More recently, pasteurized milk has been transported in bulk. The two dairies assumed the final processing and distribution, presumably to cut retailers' costs of delivery, storage, stocking shelves and removing dated products.
Whether retailers will again bring in ready-for-sale shipments will largely depend on how Meadow Gold adjusts to being the only show in town. If the company increases its prices, stores will have to weigh resuming that practice against the costs of taking on tasks Meadow Gold performs and the shorter shelf life of the mainland-processed products.
Lack of competition in Hawaii has forced drivers to pay among the highest gasoline prices in the nation, even when oil prices drop. When two of the largest Hawaii-based airlines proposed a merger, residents feared increased fares and decreased service, but that proposal fell through. In some cases, monopolies are set up intentionally to boost an industry, as happened with cruise ships here, but generally, sole-source services and commodities abandon consumers to higher prices.
As taxpayers, residents have a big stake in Meadow Gold. The federal government requires the state Department of Education to serve milk to public school students. That means the state is buying 150,000 half-pint cartons of milk for every school day and although the federal government helps with the bill, school officials are even more concerned about Meadow Gold's ability to provide adequate supplies, which became a problem when Foremost first quit production.
In any case, Meadow Gold is now the big gorilla in the milking room. Although state officials have no say in the company's business affairs, Governor Lingle should keep her eyes on the situation and raise a stink if prices increase significantly. Consumers should do the same.
