Just Askin’: The price of milk

Said Kappy Koch, a director on the Illinois Milk Producers’ Association board: “Stores are doing it as a loss leader to gain customers. The store price has nothing to do with what the dairymen receive.”

Joseph V. Balagtas, an agricultural economics professor at Purdue, agreed:

“It’s possible a small portion of that price difference could be explained by different brands or other quality differences (organic vs conventional), or different costs for milk or for running the store. But it would be hard to imagine that such a big difference in retail milk prices could be fully explained by cost differences, which brings us back to the loss-leader story. Once the store gets the shopper inside the door, they can make up for losses on milk sales by selling other more profitable items to the shopper. Milk is commonly thought to be used as a loss-leader in this way.”

 

Source: The News-Gazette

Link: http://www.news-gazette.com/news/business/2017-09-10/just-askin-the-price-milk.html

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