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Media Hypes Rise in Farm Milk Price, Stoking Consumer Angst

March 7, 2014

A rash of news stories in February has focused on the potential impact of rising farm-level milk prices, stoking fears of record-high consumer prices for dairy foods.

NMPF has provided important context to the issue, reminding the media that farm prices are just now climbing back to where they were in 2007-2008, before the Great Recession devastated dairy markets.

Also, of course, dairy farmers don’t have any control over retail milk prices, which vary widely from store to store. And farmers still get only about 35 cents of every dollar the consumer spends on milk and dairy products.

Farm prices are rising because increased global demand for dairy products is being met in part with U.S. exports, which are now more than 15 percent of total U.S. production. As a result, the supply of milk in this country is not keeping up with demand.

Last year, milk production rose just four-tenths of one percent, as feed costs, weather, and past low prices combined to keep a lid on farmers’ ability to expand output. Even with the recent price rise, however, dairy food inflation has lagged behind both the general inflation rate and the rise in all food costs for a decade.