Drought expected to drive up cost of milk, cheese
The heat and drought ravaging much of the nation will soon be hitting America at the supermarket counter: cheese and milk prices will rise first, and corn and meat are probably not far behind.
By Chip Somodevilla, Getty Images
A customer scans the expiration date on gallons of milk sitting on a cooler shelf at a Safeway grocery store in Washington.
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Price hikes in basic food staples are causing huge concern to milk producers and others who rely on dairy to sustain an important part of the national farming economy.
The rises foreshadow expected price hikes in coming months for other food staples, such as meat, says Bruce Jones, a professor of agricultural economy at theUniversity of Wisconsin-Madison. Dairy is affected quickly because cows immediately make less milk.
There will still be milk to buy, says Roger Hoskin, an agricultural economist with the Department of Agriculture's Economic Research Service. "I can't imagine situations where you'd have people standing in line to get milk at the dairy counter. But they might not want it at the price it's selling at."
He adds that "you'll see less cheese on pizzas and in salad bars."
Temperatures in the 90s and above mean cows give less milk, and sky-high feed prices are making it more expensive to feed them. Add to that the cost dairies must pay for fans and sprinkler systems to keep the animals cool during long hot days and nights.
This year, every state east of the Rockies is enduring its hottest or second-hottest year on record, according to the National Climatic Data Center. Overall, 28 states are seeing their hottest year since accurate weather records began in 1895.
Milk prices are actually the lowest they've been in 18 months because of surpluses built up over an ultra-mild winter and spring. In March 2011, wholesale milk sold for $19.60 per hundred pounds. Last month, it was $16.10, according to USDA National Agricultural Statistics Service figures.
By August, the cost of a gallon of milk at the supermarket could rise by 10 to 15 cents and by Christmas an additional 25 cents on top of that, says Mary Ledman, chief analyst with the Daily Dairy Report in Libertyville, Ill.
Wholesale cheese prices are at about $1.72 a pound. "I expect the cheese price to get up to $1.95 in November," says Jerry Dryer, editor of the Dairy & Food Market Analyst in Delray Beach, Fla.
"We've had seven records here in July that have already been broken," says Richard Gorder of Gorder Dairy in Mineral Point, Wis. His 60 Holsteins are producing about 20% less milk because of the heat. "They don't want to do anything, they don't eat," he says.
Since there's been no rain since the beginning of June, "I'm looking at a corn crop that's 75% and 100% gone," he says. Corn is close to $8 a bushel. "If I have to go into the market and buy that corn, it will take me between two and three years to recover."
In Illinois, cows normally give 90 pounds of milk per cow per day. "Now they're down to around 60 pounds," says Jim Fraley of the Illinois Milk Producers Association in Bloomington, Ill.
It's an area of huge concern to milk producers. At the American Dairy Science Association annual meeting in Phoenix this week "we had a standing-room-only meeting on the needs of cows under heat stress," says Ellen Jordan, a dairy specialist at Texas A&M University-Dallas.
The top milk producing states are California, Wisconsin, Idaho, New York and Pennsylvania. Only New York is "in decent shape," in terms of heat, says Pamela Ruegg, a milk quality expert at the University of Wisconsin-Madison. States like Illinois, Indiana and Ohio have been severely affected.
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