August 21, 2010

No free lunch, and no free milk: State tells Shaw's to end giveaway

The 'buy six and get one free' promotion is great for customers, but not for an important source: Maine's dairy farms.

By Tux Turkel tturkel@pressherald.com
Staff Writer

Got milk?

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click image to enlarge

Maine sets a minimum price for milk to prevent large retailers from selling it below the price of production for the state’s dairy farms. Shaw’s offer dragged the price below the minimum.

2008 Press Herald file photo

Got free milk?

Not anymore. Not in Maine.

The state has asked Shaw's Supermarkets to end a new milk giveaway promotion, saying it violates Maine law.

Shaw's, which initially had permission to run the program, immediately complied.

"On Monday, I asked them to discontinue it," said Tim Drake, executive director of the Maine Milk Commission. "It's against the milk commission's rules and statutes."

The industry's supporters say Mainers should understand what's behind the action.

On one hand, such supermarket promotions encourage people to drink more milk. But when milk is sold below the cost of production, it eventually drives more dairies out of business.

"If our dairy farms go out, that won't help anyone," said Cheryl Beyeler, executive director of the Maine Dairy Promotion Board.

Here's what happened:

Shaw's began a two-month promotion on July 30, for free milk. Shoppers who used the store's Rewards Card and bought 6 gallons could get a seventh gallon free. The giveaway was promoted in the five New England states where Shaw's does business, and on the company's website.

Before offering the program in Maine, Shaw's e-mailed Drake to get permission. Drake forwarded the request to the Attorney General's Office, which approved it. Then Drake went on vacation.

When he returned, he heard from Shaw's competitors. They complained that the promotion was illegal. Drake checked the state's case file and, sure enough, similar promotions had been denied in the past. He called Shaw's and said Maine's approval had been a mistake.

Maine sets a minimum price for milk. The law is decades old, designed to prevent large retailers from offering milk from out of state as a loss leader, at prices that are below the cost of production for Maine dairy farms. The current minimum price is $3.55 a gallon for whole milk.

Giving away a gallon for every six purchased violates the law by dragging the average price below the minimum, Drake said.

At Shaw's, customers who hit the 6-gallon target have been asking for their free gallon.

"We can honor those," said Steve Sylven, a Shaw's spokesman. "We just can't offer any more milk points."

A few customers have asked this week about the program's demise in Maine, he said. It will continue in Vermont, New Hampshire, Massachusetts and Rhode Island.

"We devised the program to drive milk sales," Sylven said. "Unfortunately, we have to discontinue it."

The mission of the Maine Dairy Promotion Board is to boost sales and consumption. It wants to slow the decline of dairy farms in Maine -- the number is down from 330 farms a year ago to 310 today.

Farmers have been especially hurt in the past year by a plunge in wholesale prices. That's why giving away milk won't help the industry in the long run, Beyeler said.

Beyeler said she appreciates the fact that cutting $3.55 from a grocery bill is meaningful to a parent who's trying to feed a family in tough economic times. But she's also aware that Maine consumers, in general, are very supportive of local agriculture and want to buy milk from Maine dairies. In some states, milk is shipped from far away.

"Without minimum prices, our dairy farmers would be in far worse shape than they are," Beyeler said.

 

Staff Writer Tux Turkel can be contacted at 791-6462 or at: tturkel@pressherald.com

 

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