Buyers say milk costs have erupted
By Tom Stundza -- Purchasing, 8/8/2007 10:12:00 AM
Lisa Standerfer, purchasing officer at Eastern Illinois University in Charleston, says she has seen prices rise dramatically for milk and other dairy products. And she’s not alone in complaining about the$10/hundredweight increase in milk prices nationally since last September. John J. Wilhelm, director of purchasing at the Upstate Niagara Cooperative in Buffalo, N.Y., also has seen prices of non-fat milk powder increase by 47% over the last two months.
“Milk powder is in short supply domestically,” the chief buyer at the dairy products cooperative in Western New York State tells Purchasing’s monthly buyers’ survey. “The dairy industry is going through an unprecedented period of high costs for non-fat milk powder and whey powder.” He adds that “this is due mainly to exporting these materials to developing countries.”
And, as the price of milk has gone up, so have the prices of cheese, ice cream, coffee shop products and even pizza, according to a report in the Portland, Maine, Press Herald. Among the other reasons for the increased prices of milk include higher costs of feeding cows because so much corn for feed is being diverted to ethanol production. And the cost of transporting milk has increased because of climbing prices for gasoline and diesel. Robert Tigner, Iowa State University Extension dairy specialist, tells The Courier in Waterloo, Iowa, that several other factors have contributed to the price spike for retail dairy prices:
Consumer demand for dairy products increased 2.9% from January to May while U.S. milk production only rose 1.1% in the second quarter. Also, there has been drought in Australia and production woes in New Zealand, two large dairy-exporting countries, reducing global demand. So, the weakened dollar has made American dairy products cheap and attractive to foreign buyers.
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