ICE CREAM, CHEESE PRICES TO INCREASE

Popular national ice cream makers are raising their prices at the time of year when most people crave something cold, sweet and creamy.

The price of butterfat has increased in the last few weeks, which has caused the ice cream prices to rise. The recent increase in price for butterfat -- from $1.20 to $1.98 in the past nine weeks -- is normal for the industry.

Butterfat is the fat in milk that is used to produce butter, and adds richness to ice cream, sour cream and cream cheese.

Ben and Jerry's and Edy's brands of ice cream are raising prices on their summertime treats to cover the increase in production price.

Joe Horner of the University of Missouri Extension in Perryville said that in order to understand the increase in prices, consumers need to understand that there is chaos in the milk market right now.

The market's instability can be attributed to several things, Horner said. First, the U.S. government is no longer buying surpluses of milk and milk products to keep the market stable. Secondly, the process of regulating milk pricing goes back to the 1930s. The industry is trying to change the system, but not many people fully understand the new pricing methods yet, he said.

"This is a natural thing, it's a free market economy at work," he said. "But, the farmers don't like it because they would rather prices be stable and the consumers don't like it because they want the same prices when they go into the store."

It may sound contradictory for farmers to want stable prices, but an increase in butterfat prices doesn't necessarily mean more money for farmers.

There is a two month gap in what the manufacturers pay farmers for milk based on the Basic Formula Price.

"It's important to remember that in the last three years the dairy market has had very low profitability. This has gotten rid of many farmers and cows for the industry," Horner said. "Prices for milk are going to have to increase steadily for a period of time before many people will become interested in milk again."

Jerry Siemers, a dairy farmer, said the milk supply for this area was recently 200 tractor trailers short of quota and milk had to be brought down from the northern states.

"Almost 12 months out of the year we are underproduction," Siemers said. "Last month production was down 5.7 percent."

Many older dairy producers are "tired of the rat race," Siemers said. Although the younger farmers are expanding in the industry it is impossible to keep up with those who are leaving.

Siemers said a larger portion of the consumer price goes to pay people in the processing industry, than goes directly to farmers.