MILK RULE IRKS RURAL NORTH DAKOTA GROCERS

CHRISTINE BLANK

BISMARCK, N.D. (FNS) -- Independent grocery operators in North Dakota are upset about a new milk rule that they say will boost retail milk prices and push more shoppers out of rural community stores.

The rule, set in motion by the North Dakota Milk Marketing Board, here, this summer, says that private haulers can deliver milk to supermarkets as long as the stores buy at least 45 cases. Previously, milk was delivered primarily through distributors contracted by milk producers such as Land O'Lakes and Cass Clay. Private haulers, including supermarket wholesalers, weren't allowed to pick up the milk.

According to opponents, the rule would hurt small grocers because, although a 23% discount is given for retailers that pick up milk at the dock of a dairy, they don't have the storage space to purchase 45 cases or more.

"This might only serve to speed up the out-migration of people from rural communities," said Lynn Nottestad, owner of Food Plus in Maddock, N.D. Rural people who travel to the cities to buy nonperishable products may see milk for 60 cents less, he said, and start purchasing it there. Currently, milk prices between small towns and cities varies only "a few pennies," Nottestad said.

"We service 100 accounts in small towns -- not one of those qualify for 45 cases," said Paul Nelson, chief executive officer of Hartz Foods, Thief River Falls, Minn.

Distributors should be able to qualify for a discount on 45 cases, just as they do with all other products they order, according to Nelson. "We're after a level playing field," he said.

After receiving complaints from both retailers and wholesalers, the North Dakota Milk Marketing Board said it would reconsider the rule at an upcoming meeting, though the new rule would remain in effect while the matter is reviewed.

John Weisgerber, director of the Milk Marketing Board, said the appropriate time for retailers and wholesalers to suggest alternatives to the rule would have been at the hearing.

"The board held a public hearing in June, at the request of retail grocers, to consider other options," he noted. "Retailers testified in support of change -- asking for other options for how they receive milk -- and the board voted in accordance."