Analysis of Two Related Milk Price Approaches to Address the Noncompetitive Pricing Problem in the Milk Industry: The 40-40 Consumer Approach and the Farmer and Consumer Fair Share Approach

This paper explains how one can implement two alternative policies that provide a partial redress to noncompetitive milk pricing that is currently hurting consumers and farmers. First, we explain the 40-40 Consumer Approach. Then, we present the Farmer and Consumer Fair Share Approach. The first model provides no appreciable benefit to farmers. The Fair Share approach secures a price floor for fluid milk at $17.00 per hundredweight for milk sold in supermarkets that is priced at the ceiling. Retailer and processor margins are limited if they would persist with noncompetitive pricing practices, however, wholesale and retail prices are not set by either of these laws. Moreover, if firm’s price competitively, or even make an attempt to price nearer to the competitive level, their prices would be below the ceiling set by these two approaches during most of the milk price cycle.

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 Record created 2017-04-01, last modified 2018-01-22

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