Getting a cool glass of milk takes more cold, hard cash

From Correspondent Jim Hill

LOS ANGELES (CNN) -- Grocery shoppers around the United States have been doing double-takes at the dairy case lately, gawking in disbelief at the price they have to pay for milk. "It used to be a dollar a half-gallon; now it's $2, $2.15. It's terrible," said one shopper.

Just about every dairy product, whether it's regular, no-fat or low-fat, is high-cost, compared with a year ago. Industry price-watchers have seen the cost climb nearly 20 percent for this staple of staples.

"It's very important for my children -- I can't stop, especially when they're growing up," said one woman.

People in the dairy business say the reason behind the price increase is as plain as the spots on a Holstein cow, and it all started with bad growing weather in the Midwest. The poor weather led to poor grain crops, which in turn led to higher prices for feed grain.

Now, milk cows are being fed less because their food costs more. Therefore, they are producing less milk.

"It's caused dairymen to go out of business," said farmer Gene Koopman. "It's changed the way people are feeding their cattle, and the end result is you have less milk and the demand has been good, so the prices start going up."

Unlike other commodities, consumers can't count on other countries to take up the slack. "Under the way the current dairy programs work, it must be produced in the United States," said E. Linwood Tipton of the International Dairy Foods Association. "There's only a tiny bit that is permitted to be imported."

Milk consumption has remained healthy in part because of a successful advertising run by the California Milk Advisory Board. But a spokesman said the continued demand for milk has not caused the higher prices.

Rather, the supply of milk to grocery stores may have taken an extra hit because dairy farms find it more profitable to sell their produce to cheese- and butter-makers.

If high milk and dairy prices are hard to swallow now, the future could be even tougher to digest. Prices may continue their climb, and even once they begin to slide, some experts predict it will be another 18 months before prices settle back to where they were a year ago.

Related site:

• National Dairy Database from the U.S. Department of Acriculture

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