Global demand pushing local milk costs upward

2014-03-02T07:00:00Z 2014-03-02T16:57:11Z Global demand pushing local milk costs upwardMelanie Csepiga Times Correspondent
March 02, 2014 7:00 am  • 

Those thinking milk prices are too high now had better brace themselves for even higher prices.

Dairy analysts estimate store milk prices could go up by 60 cents this month, reaching their highest ever.

Bill Leep, vice president of Pleasant View Dairy in Highland, said milk pricing is beyond local control to a large extent.

"Every month, we get a price announcement from the USDA (U.S. Department of Agriculture), and we have to adjust the price," Leep said.

Despite what consumers have seen in local supermarkets, "Milk has gone up every month for the past nine months," Leep said.

"In our area in general, the stores have been holding, but at some point, they will have to give," Leep said.

Dave Wilkinson, president of the Strack & Van Til grocery chain, agreed.

"The Chicago area consumers have been seeing very low milk prices compared to other areas of the country. Competition in this market has kept prices lower than they should be, where many retailers are selling milk below cost or at very low margins," Wilkinson said.

What is pushing the cost of milk upward?

Leep said commodity prices for cheese and dried milk powder have been steadily rising.

"We've been told exporting of dried milk powder, primarily to Asia, has been driving up the price. It's a good source of protein for them," he said.

According to NBC News, put the blame on cheese. A short supply of cheese pushed its cost to a peak price of $2.36 a block in January. It had been $1.80 a block. That rise trickled down to milk, analysts said.

The National Milk Producers Federation said China's rising demand last year for dairy was as much as the total increase in milk production in the United States, the European Union and Australia and New Zealand combined.

While some retailers across the country may choose to eat the 30 cents to 60 cents increase predicted, Northwest Indiana retailers have less maneuverability after containing consumer costs for several months.

"Most retailers will have to look at increasing their milk prices. Not to make anymore money, but just to stay even where they are today," Wilkinson said.

The National Milk Producers Federation has said increased milk production is planned, barring weather and other issues.

NBC News contributed to this report.

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