Retail milk prices to rise 50 cents

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Consumers will soon pay more for a gallon of milk in the grocery store. By next month, the retail price for a gallon of milk will increase by about 50 cents, says Ed Jesse, dairy economist at the University of Wisconsin.

Retail milk prices have already begun to creep higher. Between March 1 and April 1, the average price for a gallon of milk in the U.S. increased 15 cents per gallon — from $2.85 to $3 per gallon, says Jesse.

The retail price spike is not limited to fluid milk. The USDA also predicts a 4-percent to 6-percent increase in retail prices for all dairy products this year.

“In the last couple of years, the increase has been 1 percent to 2 percent a year, so this is significant,” says Annette Clauson, an economist with the USDA’s Economic Research Service.

The hike in retail prices comes in response to a continued shortage of milk, which is being fueled by several factors, including high feed cost, a reduced supply of Posilac and high replacement-heifer prices.

“It’s almost a perfect storm of factors, any one of which wouldn’t have much of an impact, but together have kept a heavy lid on production,” says Chris Galen, a spokesman for the National Milk Producers Federation.

However, higher prices won’t last forever. Dairy producers typically ramp up milk production in response to favorable farm-gate milk prices. That should start sending prices downward, says Jesse. “The question is when and how badly,” he adds. “The hope is they will slide down gradually.”

Associated Press

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