News from the Tennessee Valley State, Local and National news
MONDAY, JUNE 11, 2007

Consumers sour on rising milk prices
Experts project a high of $4.50 per gallon this summer

By Garry Mitchell
Associated Press Writer

MOBILE — Drought, high fuel and feed prices, a surge in international sales and the cost of dairy operations are factors boosting milk prices to record levels and hitting consumers in the pocketbook.

In Alabama, the price for a gallon of milk has already broken a 2004 record of $3.57 a gallon. Agriculture economists say it could hit $4.50 this summer.

“You could say it has been cheap all this time and now just starting to catch up with cost,” said Auburn University dairy expert Boyd Brady.

Lower farm milk prices last year resulted in a slowing of the growth of total milk production in the U.S., with less milk coming from dairy farms into the supply chain.

The current surge in milk prices has some Alabama consumers, who are already struggling with higher gasoline prices, concerned about a grocery budget-buster.

“It’s probably not going to stop with milk. As gas has gone up, everything else has gone up as well,” said Air Force Lt. Col. Jim Jovene of Montgomery. He and his wife, Karen, have six children, ages 4-17.

“My kids just drink a ton of milk,” he said Friday. They purchase about 10 gallons a week, he said, paying $2.40 at the military commissary, but $3.67 at Winn-Dixie.

“It’s cheaper to cook breakfast for children. Cereal and milk could cost $10,” said Ricken’s Food Mart manager Tracy Duke in Baldwin County. The Summerdale store had milk for $4.39 a gallon Friday.

In Mobile, Stacy Smith said her four children drink about four gallons of milk a week.

“It’s close to $4 a gallon now, $3.79 for store brands,” Smith said.

“The cheapest I’ve got it was $3.19,” said Courtney Taylor, who has two small children drinking three gallons a week. “Thank God my husband’s got a good job.”

Just another cost of living

Louella Johnson said she has 21 grandchildren and some of them “drink milk all day long.” But she said there’s nothing she can do about the price.

“Rent, lights, gas, power. It’s outrageous,” she said in a cost-of-living litany.

University of Missouri-Columbia agriculture economist Scott Brown said the price could reach $4.50 in August before dropping later in the year to around $3.50. The previous record came in June 2004 at $3.57 per gallon, he said.

“The number one factor driving milk prices higher is international demand for dairy products like nonfat dry milk and whey products,” Brown said. “Our pricing system here in the U.S. results in all milk prices moving higher.”

Mississippi State University agriculture economist Dr. Bill Herndon said U.S. dairy sales to China and India are growing. He said the U.S. is taking up the slack caused by a dairy export decline from drought-hit Australia and New Zealand’s inability to expand its production.

Also, dairy labor costs — amid a crackdown on immigrant workers — influence the milk price.

“It’s hard to find people willing to work 365 days a year,” Brady said in a telephone interview Thursday.

Fewer dairies to meet demand

Dairy operations in the Southeast have declined in number as milk arrives from states with industrial-size dairies in the West and North to meet the shortfall in supply.

With the lingering drought and record-high corn prices, driven up by the ethanol craze, Brady said feed costs have climbed. Feed is the largest operational cost for dairy farmers.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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