California invades New York's dairy aisles

California dairy has long been the giant in the U.S. dairy industry. By comparison, Idaho recently bumped New York to fourth in overall dairy production by state.

California recently scored a big victory right on New York's home turf. Its dairy farmers won a contract to make private label butter for Price Chopper, the supermarket chain owned by the Golub family of Schenectady. Price Chopper operates 129 locations, dozens of which are in New York's dairy country. According to the Albany Times-Union:

"We always feel a push from California," said Doug DiMento, spokesperson for Agri-Mark, the New England dairy cooperative which makes Cabot brand dairy products. DiMento said that Price Chopper's California-made private-label butter is "a blow to Northeast dairy farmers."

One interesting facet of this is how California benefits from the different way farmers are paid for milk. Unlike New York, California is not subject to a federal milk marketing order. Again, from the Times-Union:

Dairy farmers in California are often paid up to several dollars less per hundred pounds — about 12 gallons — of milk than farmers in New York. In December, preliminary average milk prices paid to farmers were $18.80 per hundred pounds of milk in California, according to the USDA's National Agricultural Statistics Service. Farmers in New York received $22.20 per hundred pounds of milk in the same month.

That may not be so good for individual farmers in California. But it helps that state compete to get contracts with processors. Dairy farms in California also tend to be much larger than those in the Northeast, so they can improve their bottom line on volume.

Still, it's not like California dairy farmers are whistling zip-a-dee-doo-dah. They're complaining like everyone else about rising energy and feed costs that often make it more expensive to make milk than what they're paid. And they're not happy with their pricing system, either.

The dairy industry is changing quickly. It'll be interesting to see if the milk pricing systems – widely considered arcane and in need of serious reform – will ever become a serious part of that change.

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7 Comments

  1. It's what i like to call the "Walmartization of America"; a race to the bottom, supporting some of the richest people in the world.

  2. If you want to support Northeastern farmers, don't buy Price Chopper butter. That said, what about the other sixty million people who don't read this post?

  3. David says: "The dairy industry is changing quickly. It'll be interesting to see if the free market-intrusion of the milk pricing systems will ever become a serious part of that change."

    Am I to interpret this as a repudiation of the prized American economic policies of "free market capitalism"?

    • Yeah, that's kinda poorly written. What I mean is that the federal milk marketing system – widely considered archane and in need of reform – considerably disturbs the way a free market of supply and demand works. And I hear more and more dairy farmers in NY and other places say they'd prefer to compete in a less regulated system.

  4. It's not just butter. PC is quite intelligent in their product marketing.

    They learn everything they can about their consumers' needs – that "Advantage" card is a goldmine of data. They could probably predict my probably path through the store by now. I've seen a recent rise in PC brand stuff all over the store, usually placed right next to the product they are emulating… at a slightly lower price-point. PC toilet paper, "Nutella", cereal, milk, pancake mix, and yeah… butter too.

    Brutal.

  5. I noticed last year that Price Chopper had put "California" labels on their butter. I sent them an email and got no response. Shame on them! I refuse to buy their butter. Like Michael said, unless everyone reads this post it probably won't do much good- but it makes me feel better!

  6. How sad, these box stores will never care about local farmers. Thankfully Wine in Grocery failed (no thanks to our farm bureau)

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