Exploring the milk price hike

By: Melissa Tune Email
By: Melissa Tune Email

News 12 at 11 o'clock, June 6, 2007

AUGUSTA, Ga.---If you went to the store today to pick up some milk, you were in for some sticker shock.

First it was the gas pumps. Now it's the grocer's shelves. Milk prices are up, and they're expected to increase even more in the months to come.

In May, the average price of a gallon of whole milk in the US was $3.26, up 6.2% from $3.07 a year earlier, according to the Labor Department.

The recent rise in milk prices is affecting everyone, from small dairy companies to you and me...and it looks like it could get worse.

With milk prices escalating, Donald Martin might have to start eating oatmeal instead of boxed cereal. He buys milk about twice a month, but if the price keeps going up, he may have to cut back.

"Inflation is getting kind of high, and in order to afford milk, you can't do it, because the prices keep going up," he said.

Government economists expect the price of milk to reach beyond $6 by September in some places. At the Greg's Gas Plus in North Augusta, it was $3.79 a gallon. Throughout Augusta at various grocery stores, the prices ranged from $3.57 to $6.25.

"Just the cost of everything in general," Donald said. "Supplies, everything is skyrocketed."

But don't blame the dairy farmers. They've been feeling the pain all along. Meet Milton McKie. He's been in the dairy farming business almost all his life.

"For 75 years I've heard 'It's going to get better next year'," Milton told us. "It never has. Don't think it ever will."

McKie and his brothers own McKie Dairy Farm in Edgefield County. They have about 200 cows. They McKies no longer milk the cows themselves--the cows are milked by another dairy producer. Milton says it helps them cut down on their costs, like fuel equipment, and over overhead, but it's still quite costly.

"Tremendous, everything we have to purchase. We raise feed to sell to other dairies," he said. "The heat and high temperature and humidity, the cows don't eat as much, and they're very uncomfortable. They don't produce as much."

That is another factor that can jack up the price: supply and demand. With the supply low now, demand goes up, and so does the price.

"It's a hard life, but it's a good life," Milton said. "I was born into it, so (I've) been there ever since."

Milk producers do not set the price. Milk prices are dictated by the Federal Milk Marketing Order. It assures dairy farmers a reasonable price for their milk throughout the year and it assures consumers of an adequate supply of milk. The organization also helps prevent wild fluctuations in price through periods of heavy and light milk production.

Here's a quick look at some local milk prices at time of writing:

Walmart in Evans: $6.25
Kroger in Augusta: about $4.00 (generic)
Publix in North Augusta: $3.89 (generic)
Greg's Gas Plus in North Augusta: $3.79 (Coburg)
Food Lion in Augusta: $3.57


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