Got Cheap Milk?

Illegal dairy prices

Alerted by an anonymous tipster, authorities rushed to a grocery store in Mandeville, Louisiana, in January to inspect the milk. Fresh Market was not selling rotten milk. Rather, a State Agriculture and Forestry Commission auditor discovered that the milk, on sale for $2.99 a gallon, cost too little.

Louisiana's Dairy Stabilization Law requires merchants to charge 6 percent more than cost. Failure to do so is a "disruptive trade practice" that could "injure, reduce, prevent, or destroy competition."

State Agriculture and Forestry Commissioner Mike Strain says the law is necessary to keep the price of milk low. Otherwise, a would-be monopolist could sell milk below cost, drive its competitors into bankruptcy, and then jack up prices.

Legislators created the Dairy Stabilization Board in 1974 to guarantee consumers a steady supply of milk at reasonable prices. The board accomplishes that by requiring any person involved in dairy production, transportation, or sale to obtain a license and by regulating promotions. Merchants, for instance, can offer free frozen yogurt samples—but no more than one fluid ounce at a time. Faced with legal action, Fresh Market raised its milk prices.