Precious milk

first_imgBy Cat HolmesUniversity of GeorgiaSkyrocketing gas prices are no secret. But now Americans arenoticing higher tabs when they go to pay for milk, pizza and icecream, too.That’s because milk prices have more than doubled since this timelast year, said University of Georgia agricultural economist BillThomas. “The base price for milk was $9.41 last year and it’s$19.66 now.”The cause? A slew of factors that have combined to create “almosta perfect storm,” Thomas said.What happenedFor the past three years, dairy farmers have made some of thelowest prices in history, said Bill Graves, a UGA ExtensionService dairy specialist. “For the past two years, they’ve made1975 prices.”The result was that many dairy farmers downsized or quit, and theones who remained added cows.Another factor is the case of bovine spongiform encephalopathy,or mad cow disease, in a single U.S. dairy cow last December.That cow came from Canada, so the United States stopped importsof Canadian dairy cows. That action cut off a major supply ofreplacement dairy cows, Thomas said.To compound the problem, the high price of gas has raisedtransportation costs, and feed prices have soared.On top of everything else, the demand for milk started to pick upas the economy improved.’Perfect storm'”All of a sudden, we have a higher demand for milk and a low milksupply,” Thomas said. “The net effect was to drive the prices up.”The rise in dairy prices is unmistakable at Peppino’s Pizzaria, alocally owned restaurant in Athens, Ga. Prominent signs on eitherside of the cash registers read: “Due to the price of cheese going very crazy, we have to raise the price of [our pizza].”In a recent PizzaMarketplace.com survey, 70 percent of themarkets surveyed said they’ve raised their pizza prices or wereplanning to do so in the near future.Where’s the money going?”It’s sure not going into farmers’ pockets,” Graves said. “It’sthe retailers, not the producers, who set the prices. About 30percent of what you pay goes to the farmer. The other 70 percentgoes to processors, distributors and retailers.”Thomas notes that a gallon of milk at the Athens Navy Commissaryis $1 cheaper than at the grocery store where he normally shops.”The higher prices are helping dairy farmers recover, butretailers are definitely making money off milk right now,” Thomassaid.Thomas predicts that base milk prices will start to decline inthe next couple of months.”Fluid milk (prices) will continue to increase for the nextcouple of months and then … start to come back down,” he said.”Will the retail milk prices come back down? That’s the bigquestion. And right now, nobody has the answer.”(Cat Holmes is a news editor for the University of GeorgiaCollege of Agricultural and Environmental Sciences.)last_img


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