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Archive for Tuesday, July 31, 2007

Dairy demand puts prices at a premium

Fuel costs, international pressure play roles in summertime spike

Shane Sadler, a Checkers employee, stocks up the dairy case Monday at Checkers, 2300 La. Dairy prices have increased, but most people buying milk have no idea why the prices have risen.

Shane Sadler, a Checkers employee, stocks up the dairy case Monday at Checkers, 2300 La. Dairy prices have increased, but most people buying milk have no idea why the prices have risen.

July 31, 2007

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Randy Flory milks some of his 100 cows on his family farm south of Lone Star Lake on Friday afternoon. Flory remembers when there used to be 53 dairy farms in Douglas County; now there are only seven.

Randy Flory milks some of his 100 cows on his family farm south of Lone Star Lake on Friday afternoon. Flory remembers when there used to be 53 dairy farms in Douglas County; now there are only seven.

Tina Hernandez, a Lawrence mother of three, recently bought two gallons of Country Club Vitamin D milk for $3.29 each.

"It's ridiculous, just like gas," she said.

But as is the case with gasoline, she doesn't buy any less milk when prices climb.

"We have to keep up with what we normally use," she said. "We're used to what we drink, and you can't deprive your kids of milk. How often do you get kids volunteering to drink so much milk anyway?"

Depending on the brand and type, milk prices now range from $3.29 for skim to $3.79 for 2 percent. A gallon of milk cost less than $2 last spring.

And it's not just milk. All dairy products are more expensive now, including cheese and yogurt.

Costs going up

Several factors - ranging from weather in Australia to the U.S. Department of Agriculture's dairy storage - play a role in this volatile dairy market.

But the overriding reasons can be traced to supply and demand, dairy experts say. July is a low-supply month, and international markets are looking increasingly to the United States for dairy products.

This means dairy farmers are making more money, but their costs also have increased.

"I don't want you to think we're out here getting rich," said Randy Flory, a Lawrence dairy farmer who has been in the business for 34 years. "Our fuel prices went up, feed prices skyrocketed; we're not sitting out here wondering what to do with our money."

Flory, 52, who has 230 cows on his farm south of Lone Star Lake, said today's prices are the best prices he's ever seen.

Flory said he is paid for every 100 pounds of milk he provides. Right now, he's paid $20 for every 100 pounds, compared with $11 18 months ago.

"Six months from now, things might look a lot different," Flory said. "Things won't be so rosy."

And Eugene George, who has a dairy farm 5 miles south of Lawrence, said he is making about $1.80 for every gallon of milk his cows produce. That compares, he said, with $1.40 a gallon last year.

But Flory and George have seen rising production costs - costs farmers must pay before the cows are milked twice a day. And those have an effect on price.

Dairy cows eat a mixture of ground corn, soybeans and cottonseed. Mike Bodenhausen, assistant director for the Kansas Dairy Association, estimates corn prices are up 35 percent to 45 percent, and fuel prices are up about 10 percent.

Economic factors

Don Blayney, economist for USDA's animal and science research department, said there are two main reasons dairy farm prices are high now.

First, Blaney said, milk supply generally is low in the summer.

"All price pressure is coming from demand side," he said. "There are so many people consuming."

The second reason is pressure from abroad. International demand for dairy products is strong but main suppliers in New Zealand, Australia and Europe have suffered severe weather, he said.

Usually, those regions produce almost half of the world's dairy products, he said. So pressure is on the United States to export more dairy goods.

"Booming economies around the world are demanding more and more of the product, particularly China," Blaney said.

"In the U.S., consumption of dairy products is a mixed story," he said. "In most cases, consumption is either flat or declining. Fluid milk is coming down over time, but the consumption of cheese has gone up a lot."

And recent health trends also factor in, said Mike Brouk, a dairy economist at Kansas State University. Whey, condensed protein from dairy, is found in protein bars and shakes that are popular now.

"We went through a period here a few years back where dairy was bad for human nutrition," he said. "That turned around. Now it's viewed to be a good thing in the diet. All that has some impact on demand."

Dairy prices have nearly peaked, Brouk said, so consumers can expect to see lower prices in coming months.

Comments

amanda_lazer 7 years, 1 month ago

Looks like the milk is cheaper in Lawrence. I just paid $4.28 Sunday at the new Walmart in N. Topeka.

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booze_buds_03 7 years, 1 month ago

I drink a gallon every 3 days. The cost increase is still nowhere near the cost increase I have seen in gasoline in terms of my monthly consumption.

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karensisson 7 years, 1 month ago

Cow's milk is actually not good for you.

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juscin3 7 years, 1 month ago

Milk is high in Gardner too. I was going to buy the 2% but they were actually out of it, so I had to buy Vit. D. The Wal-Mart brand milk is just as high as the name brand milk. Might have to switch to instant. That's what we had when I was growing up. Nasty as all get out, but beggers can't be choosers!

Seems like everything is going up but our wages!!!!

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Adrienne Sanders 7 years, 1 month ago

Cows milk is for calves, not people.

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jmadison 7 years, 1 month ago

Corn used for production of fuel rather than for feeding livestock has impacted price of milk, meat, etc.

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nut_case 7 years, 1 month ago

jmadison (Anonymous) says:

Corn used for production of fuel rather than for feeding livestock has impacted price of milk, meat, etc.

This is surely true, however, recent reports:

http://www.ethanol.org/pdf/contentmgmt/Impact_of_Corn_and_Energy_Prices_in_the_Grocery_Aisle_June_07-1.pdf

indicate that rising gasoline prices have twice the impact on grocery prices as corn prices.

This seems to make sense considering gasoline or diesel is involved in pretty much every step from food production and transport while corn is a relatively minor cost in most foods.

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mom_of_three 7 years, 1 month ago

I can't imagine having to buy milk for young kids with these prices. Mine are teenagers and still drink lots of milk, but nothing like when they were kids.
Some milk prices at some stores went up weeks ago, and then I watched Checker's prices climb.

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bugmenot 7 years, 1 month ago

No one's trying to make anyone else a vegetarian. Why do people respond so angrily to posts that say soy milk tastes good? Do you honestly think the vegan police are going to come to your house and take all your meet and dairy away? Lord, people, there are bigger problems in this world. Soy milk alone I've never liked, but flavored soy milk tastes much better than flavored milk. Go figure.

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just_another_bozo_on_this_bus 7 years, 1 month ago

Genetics and luck play by far the largest role in determining longevity. But there is little doubt that high levels of consumption of meat and dairy carry high risk factors if longevity is your goal. That said, drinking lots of organic soy milk has its own risk factors, even if they are considerably lower than drinking factory-farm cows' milk.

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aquakej 7 years, 1 month ago

logarithmic: Thanks for your post! I started drinking soy milk a few years ago when I suspected I was lactose intolerant. Now, I drink it because the dairy industry is cruel. It tastes the same as real milk, and it lasts much longer in the fridge! It does cost a little more, but it's worth it to know that I'm not drinking a cow's bodily secretions.

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Confrontation 7 years, 1 month ago

juscin3: I remember when my grandmother would use powdered milk. She'd add a little vanilla to it, which made it tolerable.

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bugmenot 7 years, 1 month ago

Grandmas know how to make everything taste a little bit better. :)

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person184 7 years, 1 month ago

Defender says........... Actually, every old person I have known were red meat eaters. Most of them lived very productive lives until very near their deaths from old age. We're talking people 80-100 years old, so I call this line of reasoning bullshiz.


Back in the day milk and meat were a little closer to nature in that they didn't inject hormones and other things into the animals. I raised steers in 4-H and it was a painful realization leading them to the trucks at the end of the fair. Since then I try to avoid red meat for health and ethical reasons (I'm a vegetarian in progress). If we lived like they did in earlier years, eating meat might be more of a necessity, but it clearly is not necessity now.

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just_another_bozo_on_this_bus 7 years, 1 month ago

b3-- I see you are as equally ignorant on nutrition as on all other topics you ever post on.

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OldEnuf2BYurDad 7 years, 1 month ago

I know Randy Flory. He and his brother (and the rest of the family) work their butts off for that milk. How many of the rest of us get up to work at 3:00 a.m.?

"it's a proven fact that they do everything they can to get these machines, err, cows, to produce more milk"

Keep in mind that small dairies like Randy's don't do a lot of 'stuff' to their cows. They mostly just feed them well, and medicate them when they are sick.

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blackwalnut 7 years, 1 month ago

Defender said "Actually, every old person I have known were red meat eaters."

It ain't the same meat. They didn't used to fill meat full of growth hormones. Cows used to eat more natural grass. The meat used to have more Omega 3 and other good stuff. Now, to get meat like those old people eat, you have to go to the Farmer's Market and pay some local farmer $4 a pound for hamburger.

It's the same with milk. Milk is full of bovine growth hormones.They sieve out the globs of pus that result from the cows getting mastitis because those hormones make them produce more milk than is natural. Yuck. I was buying the hormone-free stuff in glass bottles for awhile but they had a bad run of selling me spoiled milk - at 3 different grocery stores - and one grocer told me they'd had a problem with the supplier, so I won't buy that milk anymore either.

At our house, we keep some cow's milk and also goat's milk which doesn't have the hormones and is more digestible. We eat less meat and get it from suppliers who don't use growth hormones. It works for us.

I don't want to convince other people of what to eat and drink - suit yourselves!

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