Higher retail milk prices: dilemma or opportunity?

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When I buy milk at the grocery store, I look for a blue label, indicating it is my favorite brand’s version of 2 percent low-fat milk. Then, I scan the entire array of jugs until I find the ones with the longest freshness dates. Price is not really a concern — I will pay for milk as readily when it is $3.80 a gallon than when it is $2.80 a gallon.

But price is a concern for many other consumers, and that is where the dairy industry faces a potential dilemma.

I got a hint of this when Tom Gallagher, CEO of Dairy Management Inc., which manages the dairy checkoff, announced to an industry meeting last November that per-capita fluid milk sales would probably be down in 2007 because of volatile price hikes affecting one-gallon jugs of milk.

All of the staples — milk, eggs, meat and produce — have gone up in price. In fact, according to the November consumer price index, food prices through November were on pace for the largest annual increase in 17 years. The price of a gallon jug of milk was up 30 percent in November compared to the same time a year earlier.

The news media is all too eager to go out and find examples of consumers cutting back on milk. A Dec. 20 article on CNNMoney.com cited a family that’s cutting back on milk because of the higher prices. And, it wasn’t some family on the edge of poverty either. The head of household was director of wealth management for Oakworth Capital Bank and a food-price expert, according to the article.   

  • We may be reaching a point where some consumers rebel at higher milk prices — if food and energy prices continue to increase and the nation’s economy heads into
    a recession.
  • The vast majority of consumers look at three things in particular — fat content, freshness date and price. They are not wondering whether the cows were supplemented with recombinant bovine somatotropin or not. The real battleground appears to be the news media which tends to give the activist point-of-view.
  • Therefore, with higher milk prices at the retail level, the dairy industry has an opportunity to educate the news media. Dairy producers can’t meet everyone’s needs if they are handcuffed by onerous environmental regulations, crackdowns on immigrant labor and assaults on technology. 

 



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