Price of milk on the rise

Increased costs will benefit family dairies

Just as the price of gas has increased, so goes the cost of milk.

Jay Gordon, executive director of the Washington State Dairy Federation, estimated that farm prices are probably going to be at about 50 cents a gallon for the next couple of months.

"At the retail level, it's hard to say," he said. "It's going to depend on what the stores do. The mark-up has been pretty healthy the last several years at the retail level."

Gordon said that people are having to pay more for milk for several reasons.

"A lot of producers have gone out of business in the last couple years," he said. "The prices we've had since Sept. 11 have just been horribly low."

Costs like increased gas prices, increased insurance and increased minimum wage have contributed to putting these farms out of business, he said.

"In the past two years, we've probably lost 75 dairy farms in this state," Gordon said. "We lost 38 just between Halloween and the first of March. We were losing ten a month this winter."

Producers going out of business translates to fewer cows, Gordon said.

Another reason is because the Canadian border was shut down last May. American dairy farmers typically purchase some 80,000 cows from Canada, which uses on a different style of dairy farming, Gordon said. They operate on a quota system, and when they exceed that quota, they can make more money selling excess cows or young stock to American farmers.

"That source of extra cows for the past year has not been available," Gordon said. "The third thing was that the beef prices for the past year have been pretty good, so American dairy farmers have culled marginal cows to hamburger plants, again reducing the number of cows."

Milk prices are up all over the nation, he said.

"It's still a good value," he said. "As farmers, it irritates us a little to see the price go up so much in the store but the stores have the same increased costs that we do, so who am I to say their prices should stay the same?"

Greg Day and Sue Cole, pricing analyst and public affairs director, respectively, for Brown & Cole Stores, which owns Food Pavilion, said that prices went up an average of 50 cents a gallon in order to remain competitive and pay suppliers.

"Right now, everyone is watching one another, trying to figure out what to do," Day said. "We don't expect (consumer reaction) to be positive. I drink milk too. I don't like it anymore than anyone else."

Cole said that the store is as anxious and hopeful to see milk prices stabilize as customers.

"Unfortunately, the increase in milk prices will also affect cheese, ice cream, butter and other milk products," she said. "I think that our customers are savvy enough to look around and recognize that this is not a problem of the grocery store arbitrarily raising prices."

Gordon said that looking at the price of milk in comparison to the prices of everything else, consumers are going to pay a little bit more.

"Hopefully they know that this is going back to keep some family farms in business," he said. "Most people don't realize, except for the Washington State University research dairy program in Pullman, every other dairy farm in this state is a family farm."