MILK PRICES TO GO DOWN; AGENCY CUTS 50 CENTS OFF COST PER GALLON.
Consumers should see some good news in the dairy aisle of their grocery store Monday: lower prices.
In fact, the price of milk is expected to drop one dollar or more per gallon, the first significant drop for the vitamin-filled staple in years. ``We are in the process of dropping milk prices,'' said Kevin Herglotz, a spokesman with the Vons grocery chain.
The price drop follows some bureaucratic wrangling in Sacramento that, in the end, means good news for consumers and thinner profits for the state's farmers.
On Wednesday, the state Department of Food and Agriculture slashed the amount paid to dairy farmers for milk by about 50 cents a gallon, to $1.19.
The agency will cut the price of milk by 15 cents again next month, which could push prices lower than they've been in two decades. CDFA spokeswoman Myrlys L. Williams said because supplies are plentiful, the wholesale price will go down to $1.04 beginning Jan. 1.
Each month, the California farm milk price is adjusted based on prices of dairy commodities traded on the Chicago Mercantile Exchange, Williams said.
Those price decreases should start showing up in grocery stores beginning next week, with the average price for a gallon of milk at Vons stores in Los Angeles down to about $2.35 a gallon, said Herglotz. Currently, the average price is around $3.39 a gallon.
``Typically, price increases or decreases in our retail prices reflect the wholesale price,'' said Judy Decker, a spokeswoman for Albertson's stores, which recently merged with Lucky Stores Inc. ``Our objective is to remain competitive.''
Customers should see price reductions even at upscale and specialty markets. ``Our grocery buyer is aware of the price decrease, and Whole Foods will respond with lower prices for our consumers,'' said spokeswoman Elizabeth Carouillano.
The price for a gallon of milk at Whole Foods Market in Woodland Hills ranged from $2.99 for Dairy Mart milk, to $3.69 for Alta Dena and $4.99 for a gallon of Horizon organic milk.
Down the street at a Ralphs grocery store, the average price for a gallon of milk was $4.29, while a two-pack sold for $6.99.
Meanwhile, as supermarkets adjust their milk prices, state officials say the main reason for the price decrease is due to an increase in milk production across the country, particularly in the Western states.
The new price changes represent the latest in a series of dramatic ups and downs over the past 18 months. A number of factors, including shortages and high demand, drove the price the state paid to dairy farmers from $1.18 in June of last year to around $1.70 in December.
As supplies improved by April, the farm price in California was reduced to $1.20 a gallon, before rising again to $1.69 in October.
Under California law, the Department of Food and Agriculture is responsible for establishing a minimum milk price paid to dairy farmers to ensure an adequate supply of fresh milk is available to consumers at reasonable prices. The agency does not regulate the retail price of milk.
The regulation of milk in California began in 1935, when the Legislature passed the first law designed to correct some of the market failures and disorderly practices.