Milking Every Penny's Worth

Have you checked out the price of milk lately? Be prepared to be confused, baffled and amazed.

What people pay for milk in California is based upon a complex combination of state regulations and retailing strategy.

The state determines the minimum price that milk processors -- the companies that bottle milk or turn it into cheese and ice cream -- must pay farmers. The price fluctuates monthly based upon what butter, cheese and powdered milk sell for on commodity exchanges.

Retailers can set milk prices as high as they want, but state regulations prohibit them from selling milk below cost unless they can prove they are matching the price of a competitor.

Depending on the brand and how many cartons you want to purchase, you can pay anywhere from $2.70 to $6.99 for a single gallon of milk, and that's just at one grocery store -- Ralphs.

It doesn't stop there.

The Fresh & Easy Neighborhood Market chain was recently asking $2.99 for a gallon of fat-free milk and $3.18 for low-fat milk, but the price dropped to $3.08 for 2% and whole milk. It didn't charge extra for low-fat milk when purchased in a half-gallon carton.

"It's crazy," said Elisa Odabashian, director of the West Coast office of Consumers Union. "There is no reason why you should pay 50% to 100% more for what is basically the same product. The farmers aren't the ones getting the extra money. The retailers know that consumers just don't shop around for milk."

Consumers should pay attention in the dairy section, even if it just amounts to looking at the prices of the various brands where they shop, she said. It's one of the easiest ways to trim a grocery bill.

Saving just a couple of dollars a week on milk adds up to enough money to purchase about two tanks of gasoline over the course of a year, Odabashian said.

Lots of stores -- not just supermarkets -- sell milk. You can find it in Rite Aid, Target, Wal-Mart, Costco and gas station mini-marts, and the prices can be all over the map.

There are more than a dozen stores selling milk on a four-mile stretch of Los Alamitos Boulevard from Seal Beach to Hawaiian Gardens. They include small Latino grocers, multiple big-chain drugstores, large supermarkets and an upscale Sprouts Farmers Market natural food store. The price can double, depending on where you shop and how much you buy.

Regardless of where it's sold, most milk will be located in the back of the store, forcing people to pass by aisles of other merchandise on the way to the dairy case.