The Jan. 25-26 article by Sharon Kiley Mack, “Grocers gouge on milk sales, experts allege,” appears to be a little confusing. Let me explain.

It was stated that “… the October 2001 minimum retail price for a gallon of milk was $2.06, while the minimum wholesale price …. was $2.26 [a gallon]”. Common sense would say these two prices are just the opposite of what was reported.

If the minimum wholesale price is actually $2.06 a gallon and the minimum retail price is $2.26 (a reversal of the above stated pricing), then it is safe to say the minimum retail margin on a gallon of milk is 20 cents, i.e. the minimum markup which retailers can charge. Based on past cost studies of retailers (large supermarkets) that I have been part of, it is evident that the actual costing data submitted by large retailers illustrated that their total costs to sell a gallon of milk exceeded the 20 cents per gallon minimum retail margin established by the Maine Milk Commission. How long has the minimum retail margin on a gallon of milk been 20 cents per gallon? The answer might surprise you.

Adrian Wadsworth was quoted as saying: “We need to shame the supermarkets. Milk producers have had a 30 percent decrease in our raw product, yet the stores [retail pricing] have remained unchanged.” This sounds sort of like a John Nutting approach, one that I feel has no merit. Dairy farmer milk pricing and retail milk pricing do not necessarily move hand in hand, nor should they. I would assume using Adrian’s logic that dairy processor margins should also decrease 30 percent or 12 cents a gallon, yet such is not mentioned. Why?

As with Wadsworth, I have a lot of respect for Bob Wellington, a dairy economist, yet when Wellington states: “We need 25 cents of that profit [of the retailers] to go to the farmer,” then I would say he and the dairy farmers he represents are talking socialism of sorts. In other words, you (retailers) got it, we (farmers) want it, therefore we (farmers) are going to embarrass you (retailers) and get you (retailers) to give us (farmers), via legislation, the

25 cents a gallon that you (retailers) have. What the heck am I missing?

Julie Marie Bickford, a spokeswoman for the Maine Dairy Industry Association, stated: “The milk commission builds in minimum margins to protect the retailers,” the assumption being that the retailers need the protection of milk pricing regulation. Mack, however, indicated that retailers can, and apparently have, implemented margins that are higher than those established by the milk commission.

How, might I ask, is the milk commission protecting the retailers? Hello! I believe those retailers being criticized would be very pleased if the milk commission did not establish retail minimum margins at all. It is rather obvious that retailers do not need, nor in my opinion, support minimum retail milk margins. Maybe it would make sense to eliminate retail minimum margins from the Maine Milk Commission law as minimum retail margins seem to be meaningless. What is the purpose of keeping minimum retail margins?

Based on this article it is apparent that at least two pieces of legislation are being proposed to somehow increase the price of milk, i.e. a milk tax of sorts. I would urge the Legislature to proceed with caution and first seek to understand the potential ramifications of any piece of milk legislation for three reasons.

If a milk price increase (tax) is levied against Maine dairies, then it may further reduce Maine dairy farmers’ income as out-of-state packaged milk may displace in-state packaged milk (currently provided by Maine dairy farmers) processed by Maine dairies – this could also result in a reduction of employment at Maine dairies, initial ownership of the packaged milk may transfer to supermarket chains south of the Maine border, skirting a proposed milk tax, and dairy farmers may inadvertently put one of their best political allies, the governor, in a rather tough position. The governor has pledged not to raise taxes, hence any additional tax placed on milk by the Legislature puts the governor in a tenuous position at best.

I have no idea politically who is seeking to sponsor a new milk tax, yet is it possible this is nothing but a Republican ploy to embarrass the governor? Hopefully not.

Milk pricing is extremely complex, yet the answer for higher milk prices, if such is justified, is based on supply and demand factors on a national level, something far beyond the reaches of Maine dairy farmers and the Maine Legislature. I am not seeking to imply that Maine dairy farmers are not experiencing tough financial times, however, if the Legislature seeks to aid Maine dairy farmers, it should come from the General Fund, not from increasing taxes. By the way, I believe food for home consumption (including milk) is tax exempt in Maine.

Benjie Grant, of Holden, is the former president of Grant’s Dairy.