Milk prices rising steadily

As consumers have been dealing with the rising price of gas this summer, the cost of another source of energy is hitting home: milk.

According to Gary Lee, vice president of procurement at Prairie Farms Dairy based in Carlinville, Ill., modest price increases have occurred every month this year but the biggest ones have taken place in the past two months.

"I think there might be one more increase before we see a leveling off," he said. "It will be sometime in 2008 at least before we see a major fall-off in dairy prices."

At Prairie Farms, the cost of whole milk has gone up more than 40 percent in the past year. That amounts to about a dollar more a gallon, Lee said. Along with fluid milk, Prairie Farms sells cottage cheese, ice cream and yogurt. Lee said prices for those products have gone up accordingly.

The record average retail price for a gallon of milk was $3.57 in June 2004, according to the U.S. Bureau of Labor Statistics. If prices keep going up, a new record may be set this year.

The increases are attributed to a variety of factors, including a reduction in the number of U.S. dairy famers, high international demand and the effect of ethanol production on the availability of corn to feed cows.

On Wednesday, the cheapest brand at Schnucks in Cape Girardeau was selling skim milk at $3.14 a gallon, 2 percent at $3.29 and whole milk at $3.49. Food Giant's prices were the same, with the exception of skim milk, which was 5 cents less.

Both grocery stores were selling Prairie Farms milk for more. Prairie Farms skim milk was $3.49 at Schnucks and $3.59 at Food Giant; 2 percent was $3.79 at both stores; and whole milk was $3.89 at Schnucks and 10 cents more at Food Giant.

Lori Willis, director of communications for Schnucks, said the cost of 2 percent milk, the store's best-selling milk product, has gone up 69 cents a gallon since April.

"A lot of people are not aware that these increases are beyond our control," she said, adding that Schnucks officials are trying to lessen the effect by raising the prices gradually. That may be helping. "We haven't really seen a significant change on consumer buying patterns," Willis said.

She attributed the increases to basic supply and demand. There are fewer U.S. dairy farmers this year than last year, reducing the supply, she said, but at the same time international demand for milk is high.

Lee said Australia and New Zealand are big dairy suppliers but have had bad weather for several years in a row, causing cattle to be less productive. Countries that import a lot of milk from those countries are turning to the United States for supplies, he said.

The United States is also coming off two years of low milk prices, Lee said. Farmers have also been milking fewer cows after feeding them differently because of higher feed costs, he said. The higher feed costs are due to the increased demand for corn to make ethanol.

The higher milk prices have already affected what students pay for lunch in the Jackson School District and may do so in the Cape Girardeau School District.

At a meeting last month, the Jackson school board voted to raise lunch prices by 25 cents to $1.75 at all elementary schools and by 15 cents to $2 at the middle, junior high and high schools, according to Rita Fisher, assistant superintendent of personnel and instruction. Those prices include one carton of milk.

A Jackson middle school, junior high or high school student who eats at school five days a week can expect to pay about $3 more per month. Elementary students can expect to pay an extra $5 per month.

Cape Girardeau School District superintendent Dr. David Scala said the school board has not yet determined the lunch prices for the 2007-2008 school year but will do so at its meeting Monday. Prairie Farms quoted the Cape Girardeau schools prices of slightly less than 25 cents a carton for the delivery of skim and 1 percent milk. Last year the price was about 16 cents per carton.

tkrakowiak@semissourian.com

335-6611, extension 137