locally produced milk.

A Ministry of the Environment-commissioned study released yesterday revealed that Bermudian consumers pay more than twice as much as Americans and Canadians for milk.

And the study, commissioned to examine the pros and cons of the embargo on overseas milk importation, said retail (markup) margins are nearly five times higher than those in the US and account for 25 percent of the price of milk.

This finding led the researchers to comment: "Even given (increased costs), it is difficult to justify an absolute retail margin five times higher.

"This information supports the assertion that Bermuda retailers follow price leadership, and do not choose to compete on the basis of price for fluid milk.'' The study, made public by Environment Minister Irving Pearman, said Bermuda's six dairy farmers and lone milk producer are too small and inefficient to withstand outside competition.

But it also said while the embargo in place to protect them is costing consumers $734,100 annually.

Mr. Pearman said he intends to table the document for debate in the upcoming session of the House of Assembly.

Meanwhile the embargo on milk, due to expire at the end of this year, could possibly be extended for a few more months while Members of Parliament and the public take time to digest the recommendations of the report, Mr. Pearman said.

The analysis was written by agricultural economist Dr. Thomas Spreen, of the University of Florida, Gainesville, and Drs. Michael Barnes and Katherine Knowlton of the Virginia Polytechnic Institute and State University, in Blacksburg.

Weighing in at 36 pages, it provides a sobering view on the current state of the Island's milk producers, non-competitive retail food sector, and consumers.

Among other findings on milk prices, the study revealed: The MarketPlace grocery chain, with 44 percent market share, dominates the retail food sector and operates in a price leadership position which the other the players follow; Retailers pay a wholesale price of $2.64 for a half gallon of fresh milk and sell it to the consumer for $3.50, an 86-cent profit; Dunkley's, the Island's sole dairy, earns 80 cents per half gallon to process and deliver; and dairy farmers receive 92 cents per quart of milk, but must expend at least 36 cents per quart for feed, as well as cover all operating and labour costs.

The study said there are seven dairy farms operated by six farmers on the Island. Three of those farms are milking no more than five cows each while four farms range 95 percent of the Island's total 202 active dairy cow herd.

Of the seven operations, only one dairy farmer earns the bulk of his income from the industry.

The report said total milk production in 1996 was 1.53 million quarts, even though Bermudians consume -- on a per-capita basis -- 24.5 quarts of milk annually, well below North American and European levels.

The report said that while Dunkley's could operate as a monopolist in the raw milk market and in the wholesale fluid milk market, there was little evidence the dairy had abused its position to reap excessive profits.

And it added that the size of the Bermuda market meant only one fresh milk handler could operate profitably.

Turning to question of milk imports, the researchers said that based on estimates at the time, consumers would pay 56-cents-less-per half gallon for imported extended-shelf-life-milk (ESL), milk that has been exposed to higher pasteurisation temperatures, but has a shelf life of 60 days.

And it said the importation of fresh milk is problematic whereas the importation of ESL milk is feasible, but would be a death-sentence for the Island's small dairy industry.

ENVIRONMENT ENV FARMERS AG SUPERMARKETS BUSINESS BUC