The stores will just raise the price on other goods. . .

I agree w/ jpx72x on this one...ok so report them for price gouging on milk. Next week that box of cereal will be $5.50 instead of $4.50. And that steak you like? It'll be $15 for a package instead of $12. The loaf of bread you use to make sandwiches? $3.50 instead of $2.25.

My kids drink on average one gallon of milk a day. The cost of milk really adds up around here, but a whopping 40-cent difference in price isn't going to make me shop somewhere else, or throw a hissy fit about it and scream 'gouging!!'.

Believe me, I'll scream about something important that really makes a huge difference in my budget first--like the cost of gas. ;) It's now cheaper to buy a gallon of milk than a gallon of gas. THAT is sad.

I see your standpoint, jpx72x, and I agree. I think people get mad looking at the long run, though. Buying a gallon of milk every other day, that extra .40-.50 cents can add up to nearly 50 dollars a year. Some families just don't have that much money to spare at all.

Does the state even have any teeth?

So how exactly are consumers being "price gouged" here? Who determines the fair price for a gallon of milk in New York?

You'd think supply and demand would set prices, but it is an election year and we gotta detract the masses from the important issues with stupid stuff like this.

Next month on Consumerist:
Milk shortages hit New York City

Have price controls ever worked. Let the market determine the price. Aside from getting rid of this silly law lets push Congress to stop passing those farms bills that really do hurt our pocketbooks. Talk about something that actually does screw us at both ends. First out tax dollars go to big farmers and then we end up paying more for the food they produce. Ugh.

Don't like the price, go to one of the 14% of stores that aren't "gouging" their customers. Why isn't the price that the store owners paying shown here? Maybe the distributor is gouging. Trace it back to the cow; maybe Bessy is withholding in hopes of getting better alfalfa to cud on.

How does the customer know they are being gouged in the first place, for any product?

Glad to see that Consumerist commenters have some understanding of economics, even if Consumerist editors don't.

I was an econ minor in college, so my reaction to price controls is "that's never a good idea".

Even by price control standards, the NY one sounds bad.. It says it's recalculated monthly. A lot can happen in a month, and it seems like there's a good chance that the cost of milk could go up in 3 weeks to the point where the maximum price is lower than the cost of production/wholesale cost - which means either the store violates the law, loses money on every unit it sells, or stops selling milk...

If you think that $3.93 is bad for a gallon of milk...
Try lactaid milk! $3.93 for a half gallon! Isn't that horrible now?

@madanthony
Milk prices aren't that much different in Pennsylvania, either. Frankly, I think we're feeling a lot of the burn from the ever rising price of diesel (amongst other gas). Everything is just more expensive.

Lets also consider that rents/cost for business in the city are more then for those elsewhere in the state. So that $3.93 price restriction on milk statewide may mean a profit of $.20 for a supermarket in Albany, but a loss for a corner market in Manhattan.

Why not margin controls? On Store Brand Milk, Bread, Butter, and Canned Goods - 5%. On National Brand - 8%.

Or make it go all the way through the supply chain. From Cow to Shelf nore more than a net 20% margin on the raw price and expenses.

I'm sorry, but his daughter drinks HOW MUCH MILK?!?

TWO TO THREE GALLONS A WEEK?!?

Even for a growing kid that is a LOT of cow milk.

Jeeeeeeeeze.

@Keavy_Rain: Very well put!

When almost all the milk retailers are charging the higher "gouging" price, you would think that's because the market costs of the milk inputs overall have risen, and not because any single retailer is trying to make a quick buck.

Why doesn't NY state just set fixed prices for everything, in order to join the great consumer paradises of North Korea, Zimbabwe and Venezuela. Let me know how that works out.

Someone asked, and I'd like to ask again... how does one determine the "fair market price" of a product, and how does one go about determining at what price people are being "gouged"?

When you commit to the one brand of milk from grass-fed cows, it doesn't really make a difference. That said, I think a lot of non-NYers don't understand that simply "going elsewhere" might involve walking 2 or 3 blocks for whatever place charges the least for whatever product.

It's not unusual to make a few stops to get everything you need, walking and carrying groceries for the entire trip. However, it's also a factor in why we're in better shape than the average Middle American. :)

@dabusdriver: hail comrade!

Other mammals secretions, probably not the best thing we should be consuming. Don't we stop drinking milk after weening?

If they have price gouging laws that cover milk, why not gas?

Sometimes I'm happy I'm lactose Intolerant.

//Drinks 3 gallons of iced tea a week, no problem.

@laserjobs: I'm surprised at the tardiness of this sentiment.

@Scuba Steve: I am too, but enjoy lactose free milk. For some reason it lasts 2-3x longer than regular milk.

BTW: I think New York City milk sellers are charging more for the growth hormones they put in the milk.

*oh noes the milk industry is now going to sue me!!!*

"17-year-old milk price-gouging law regulates the price of milk based on the size of the retailer and costs of production, among other factors. The price threshold is recalibrated monthly: This month, it is $3.93 for a gallon, $2.01 for a half-gallon, and $1.04 for a quart"

That $3.93 is most likely the price that can be charged by a high volume store, which means a low volume can legally charge more.

A gas regulation would work the same way, which means we would pay the same prices that we currently pay (unless the local mom&pop corner gas station is gouging).

$3.99/half gallon of organic milk on 77th/1st.

Aren't the oil companies making up BS about their production costs, saying they have to charge more now to offset future costs, based on a lot of what-if stuff that is pretty flimsy?

@RetailGuy83: Maximizing the profit margin does several bad things.

First, and biggest, is it changes the capitalist incentive from being the most, to being the least expensive. If I get more efficient at making milk, my profits go DOWN. Example: Let's say I produce milk at 2000 gal/week for $1.50/gal costs. If I make 10% max profit, I can charge $1.65/gal for that milk, $.15/gal profit. If I reduce that to producing at $1.20/gal, I can charge $1.32/gallon, a profit of $.12/gallon. In the current market, If I reduced my costs, my profits would go up. Under your proposal, they go down. If every producer has an incentive to be LESS efficient, just wait for prices to skyrocket.

The second reason percentage limits are bad is fraud. If I can lie about my costs and inflate them, and then make that pure profit. All price control systems generate fraud and black markets if they're strongly restrictive.

if there is a black market on milk...something is very, very wrong.

but "86% of milk sellers are price-gouging?" that makes as much sense as "all our children are above average."

@huadpe: Thats a fair point. But barring collusion (which puts this example in lala land), the margin cap system would really allow the market to determine the price. Sure, you may make $.03 more a gallon because your costs are higher, but if you sell less milk then your gross revenue and gross profit dollars are less.

Fraud I can definately see as an issue, but man if you ever got caught you could just hang the closed sign out front and go home forever.

Thankfully I don't have that milk consuming ex of mine anymore! I drink soy...it lasts a long time too. Milk is gross!!!

More than $3.93 is price-gouging in NY?

Hell, I've been paying nearly $4.50/gallon here in Jersey for the past few months. They're getting off light.

Growing up in Pennsylvania, I was aware of the PMMB, Pennsylvania Milk Marketing Board.
There was so much milk produced that the price that dairy farmers received very low - too low for a small farmer to make a living even if they had what seems like millions of gallons of milk output. They would often spray field with their milk, or just dump it ( when TV cameras were present )to keep so much of it from going to market in an attempt to keep supply down and prices up. For better or worse, milk wasn't a strictly supply and demand, let the consumer decide, type pricing model. In my 40+ years I have never heard any other PA resident ever mention the PMMB. You may want to check your own state, and local family dairyman before jumping to any conclusions or conspiracy theories.

Wow 4 bucks for milk! That sucks, I pay 2.80 here in good ol' New Hampshire.

I really wish inflammatory words like "gouging" could be reserved for actual gouging, which I personally associate with unethical attempts to inflate profits in a situation like a natural disaster or a sudden supply crisis.

This is simply a discovery that a price-fixing law -- which most people wouldn't even support if they understood it -- is going unenforced across the state. And it's probably going unenforced because the relevant enforcement agencies are well aware that the law does nothing for anyone and therefore is a terrible choice of priority if you have limited enforcement resources.

An agency employee sent to enforce a price-fixing law is an agency employee not spending her time enforcing laws that actually have consumer protection benefits. It's not enforced, everyone knows it's not enforced, it wouldn't make a lick of sense to enforce it, and everyone involved knows it. Chest-pounding about this is no different from the dumb "gas-tax holiday" proposals -- an example of a politician trying to make it sound like he's doing something to help families when, in fact, he is not. The actual pro-consumer position here, in my opinion, is "Here is another stupid publicity stunt masquerading as actual action on the struggling economy."

(And, seriously, if your kid is consuming five cups of milk a day, you have an unhealthy relationship with the milk industry to begin with. Not really the point, but still true.)

so does this price limit apply only to regular milk? what about organic milk?

I don't understand. Do kids really need to drink milk at all? I mean, will they get sick, wither and die without it?

When I was a child, my family probably went through a half gallon a week. I only put it in my cereal. I drank far more juice and water than milk.

Maybe the milk lobby needs to be seriously curtailed. No more "got milk" adverts. This 2-4 gallons a week seems insane.

I would definitely not call charging 50 cents or more over "gouging", but I guess NY has some crazy laws. In PA, we have a state minimum price...stores can charge whatever they want, but not below a certain amount. A few PA chains as well as Walgreens etc.. sell milk at minimum as a "loss" leader (or "break even" leader I guess) to get in traffic.

Are all of our Consumerist commentators laboring under the delusion that we live in a free market, where supply and demand actually determine prices? Someone was asleep in class...

The farm bill repassed this week contains the following, among other provisions:

About $40 billion for farm subsidies, and almost $30 billion will go to farmers to idle their land and for other environmental programs.

Increases subsidies for some crops and provide more dollars for growers of fresh fruits and vegetables.

Expansion of dairy subsidy programs.

We don't have a free market: we have welfare for corporations and powerful interests....wake up and smell the sour milk.

@goodcow:
Please tell me you are not complaining about the price of organic milk- if you are, that's pretty silly. You don't need to drink organic milk, and honestly it is a complete waste of money. Organics are not healthier than conventional foods. You are choosing to pay a premium for a product that is honestly only good for sucking money out of your wallet.
I for one have a reason to complain about the price of milk- I have no other choice than to buy lactaid free milk a $4+ dollars a half gallon. You can go and buy normal milk at that price for a gallon a be fine. There is no need whatsoever to buy organic milk.

@bunjyzeke: I believe I mentioned the farm bill in my first post.

Anyhow, of course there is welfare given to corporations, but there is almost welfare being given to individuals. The question is which is worse? I think both are. And we'll have more welfare and big government once Obama gets elected, but thats another topic.

*almost=also

@cedarpointfan:

Most of the over-hyped working poor in this nation have cars, color televisions, and cell phones. If the 50 cents every other day hurts, have them cut back on cigarettes.

@NoStyle:

The gas companies aren't gouging us that bad either. Trent at The Simple Dollar has his take on Massive Oil Company Profits, and puts it into perspective. A good read...

[www.thesimpledollar.com]

(fifth question down)

@triscuitbiscuit: I wasn't complaining, for organic milk that's cheap. The main supermarkets in Manhattan (Gristedes, D'AG) are complete rape when it comes to pricing. The family owned Russian health food/organic store I shop at has amazing pricing.

As for organic stuff not being healthier, that's debatable, and the benefits vary depending on product. For dairy though, which is pumped full of anti-biotics and growth hormones, it does make a big difference.

@bunjyzeke: Yes, our subsidies to farmers are a travesty, and I fully support eliminating them. Unfortunately, because of the way democracy works it's unlikely that this will happen anytime soon. The individuals that benefit (farmers) have too much incentive to spend all their efforts lobbying, while those that are hurt (consumers) are hurt so little that we don't really care.

@goodcow: See this page: [www.nationaldairycouncil.org]

"Both organic milk and regular milk are natural and pure. Stringent government standards that include testing all types of milk for antibiotic and pesticide residues ensure that both organic milk and regular milk are wholesome, safe and nutritious."