MISSISSIPPI STATE -- Recent high demand for dairy products has pushed milk prices to near-record highs even before schools resume their massive use of milk.
Bill Herndon, dairy specialist with the Mississippi State University Extension Service, said milk prices have been steadily increasing since the middle of 2006 when milk was at a 25-year low.
“This July was the 13th month in a row to have increased milk prices,” Herndon said. “The public is responding by consuming fewer products, and farmers are responding by gearing up to produce more milk.”
Historically, August, September and October have the highest milk prices. Herndon said this is because of the combined effect of high demand from schools and lower milk production caused by the stress of heat and humidity on dairy cows during these months.
Herndon said this year, fluid milk prices are high because of higher-than-ever demand.
“Usually milk prices respond mostly to supply-side factors, but this time, it has been a demand-driven run-up in milk prices,” Herndon said. “Milk prices have responded to very strong domestic and international demand for milk and dairy products.”
Herndon said China and India, with a combined population of nearly 2.5 billion people, have increased demand for dairy products. He said this demand growth was caused by the industrialization of these huge economies.
“Suddenly, many of the new Chinese and Indian industrial workers have a lot more wealth or income to buy products, and it's no surprise that with this new income, they want to buy dairy products,” he said.
Although farm-level milk prices are high and dairy farmers are getting more money for their product, their feed costs have increased more than 50 percent, fuel and fertilizer prices have doubled, and labor costs are high.
“Farmers are not making additional revenues off this, but they're just being able to pay those increased costs of producing milk,” Herndon said.
With high milk prices, some consumers struggle to make their grocery dollars cover the cost of dairy products.
Brent Fountain, Extension nutrition specialist, said the protein in milk is a great source of energy and should not be cut from or limited in diets because of its cost.
“Even though the cost is up now, it is still a very important food group to consume because of the variety of nutrients dairy products offer,” Fountain said. “Children ages 2 to 8 need two 8-ounce glasses of milk or similar dairy products a day, and everyone else needs three glasses a day. The vitamins and minerals either added to milk or found in milk are important to our health.”
When trying to cut costs, powdered milk that can be reconstituted is an option. Dairy products such as yogurt and cheese can be substituted for the more costly fluid milk.
“One cup of yogurt is equal to one serving of milk. A third a cup of shredded cheese or 1 1/2 ounces of cheese such as Swiss or cheddar also is equal to a serving of milk,” Fountain said.
Ice cream is a poor substitute for milk as the cost is usually higher, and it is high in fat and sugar.
With school back in session, families can cut costs a bit at home by encouraging their children to drink milk at school breakfast and lunch programs, where it is always provided.