Louisiana state regulators recently prohibited Fresh Market’s (a supermarket chain) weekly milk promotional deal because the price was too cheap, which violates state law.
Fresh Market was forced to pull milk from its $2.99 once-a-week promotion after a state auditor objected to the low price. The supermarket routinely sells a gallon of (skim, 1 percent, 2 percent or whole) milk for $2.99 on Tuesdays, limiting the quantity to four per customer.
But state law requires retailers’ markups to be no less than 6 percent of the invoice cost after adding freight charges.
“They can sell it 6 percent over cost all day long. It’s when they sell it below cost that it becomes a problem,” said State Agriculture and Forestry Commissioner Mike Strain.
During the second week of January, the price for a gallon of whole milk in Baton Rouge ranged from $4 to $6.89.
Drewry Sackett, Fresh Market’s marketing, public relations and community relations manager said, “Because milk is a commodity product with regulated costs that are subject to change, at the current cost, due to Louisiana state law, we are unable to honor the $2.99 Tuesday deal for (Fresh Market) milk….”
Lafayette stockbroker Kenneth Daigle said he is outraged that the state would intervene in order to control a retail store’s prices.
“Should we do the same thing with bread? Should we do the same thing with soft drinks?” he asked.
Strain said the regulations exist to keep the price of milk as low as possible. Allowing a supermarket to sell milk below cost could drive competitors out of business, allowing the store to then increase the price of milk, he said.
Daigle disagrees with Strain’s approach.
He said it is understandable for states to regulate the wholesale price, ensuring that farmers receive fair compensation for their labor. Controlling the price on the grocery store shelf is heavy-handed, Daigle said.
“If retailers want to take a loss, so be it,” he said.
Michael Krieger of Liberty Blitzkrieg blog comments: “Yep, at a time when millions are struggling every day to make ends meet, the state of Louisiana has decided it’s a priority that the cost of milk is higher for consumers in the state. This is exactly what happens when bureaucrats exert to much influence in our daily lives.”
Krieger adds: “No one can seem to put a banker in jail, but sell milk too cheap and regulators are all over you. What a disgrace.”