Starting tomorrow, consumers will pay an extra 15 cents for a quart of fresh milk, after the Office for Dairy Regulatory Industry (ORIL) issued an administrative order two weeks ago that scrapped the maximum selling price for manufacturers.
The order sets a minimum selling price for various packages of fresh milk at the processor level, and a fixed profit margin at the retailer level, which results in the new price for consumers.
Starting tomorrow, a quart of milk will cost $1.99, a half gallon $3.97, and a gallon $6.97.
The Secretary of the Ministry of Agriculture, Ramon Gonzalez, reported that it is an experiment in the conclusion of the study they are carrying out and that, in his opinion, it will show whether there is a need to increase the profit margin for processing companies. .
Do you think that the high price of milk is justified?
However, the official emphasized that such a large increase was surprising, as he estimated that the increase per liter would be between one and two cents.
“The processors were demanding massive increases. As the comprehensive study concluded, we chose to offer them this opportunity – as a test – so that they could freely set their selling price, based on variable costs such as energy, fuel, etc., but the exact amount is an abuse. If we see that the consumer. The practice is continuous and unreasonable, we are canceling the order, and re-establishing a cap,” warned Gonzalez, who predicted that a final decision could be made in about two weeks.
The minister indicated that the minimum price according to the regulations is $1.84and that a higher price cannot be arbitrarily imposed on the merchant, because any increase must be negotiated.
“Merchants will have to wear gloves with the processing plants to achieve a price that is as reasonable and not as offensive as the price they intend to charge,” he said.
Processing plants, Switzerland – with 70% of the fresh milk market – and Tres Mongitas – with 30% of the market – stressed to speaker That the increase is the same in the two companies and that it will take effect next Thursday.
The head of agriculture expressed his concern about the resolve of fresh milk producers.
“I am amazed that both companies would impose the same increase without reaching an agreement, which is ‘price fixing’ – agreements between competitors to increase or decrease price levels – and this practice is illegal. Each manufacturer should explain how it got to this number.”
Regarding the coincidence in the price, the director of ORIL, Javier A. Lugo Rullán, confirmed that after examining the expenses, the fact that both manufacturers set an increase of the same amount could be a coincidence and not by mutual agreement.
You understand that an increase of 15 cents per quart of milk is within a reasonable profit, taking into account the increase in operating costs.
That starts on Thursday, but with prices competing, they’ll start to adapt. We always look at market flexibility. We do not set single prices. “We are aware that factories will be making adjustments and that prices should start dropping next week,” said Lugo Roland.
He added that the order, which is new, is not written in stone, so they will be monitoring market behaviour.
Vaquería Tres Monjitas announced that the new price for consumers of fresh milk will be set widely, and that it will provide the consumer with more value and a lower price per ounce in larger packages.
Orlando Gonzalez Nunez, general manager of Tres Monjitas, stated that “this way, the consumer will be able to buy a larger product, pay less per ounce, with confidence that it will stay fresh longer.”
According to Gonzalez, economic studies conducted by fresh milk processing plants indicate a need for an increase of more than 20 cents per quarter, and in initial talks with ORIL a temporary increase of 16 cents per quarter has been proposed, while a temporary increase of 16 cents per quart has been proposed. Agency completing their own market research.
The average increase in all volumes of Tres Monjitas milk will be 8 cents per liter.
Regarding setting the price, he stated that it was based on an internal analysis of expenses, and that they were the first to announce the increase to customers.
Egberto Torres, CEO of Swiss Dairy, explained that traders will learn about the price adjustment tomorrow, because they are still “reviewing two things”. This will be official on the 1st of September. We are not entitled to comment until then.”
however, speaker I learned that the increase would also be 15 cents per liter of milk, and that it would apply to all merchants.
Traders are interacting.
Nestor Rivera, president of the Association of the Bread Industry, said that the rise in the price of milk – the second so far this year – affects customers, because it is added to the price of coffee, to increases before fresh milk, in the rise in prices of flour, oil and packaging bags, and stressed that traders are no longer They can afford more raises.
“This increase benefits the producers, not the trader. For us, they haven’t installed a single increase and we are the ones marketing and selling the product to the consumer. It’s really hard to be able to run a small business today. Many businesses can close their doors with a lot of increments,” Rivera stressed.
For his part, the trader, Antonio Melendez, said that the increase affects the profit margins for selling fresh milk.
“There have been several consecutive increases in recent months, destabilizing operations, as we cannot pass on all of these increases to our clients. You always have to take some part and profits will continue to decline.”