Got milk? Got money?

Got milk? Got money?

August 20th, 2011 by Mike Pare in News

Grace Clark picks out some milk from the refrigerator unit at Bi-Lo on Friday. Milk and dairy products await customers in cold storage at the Signal Mountain Road Bi-Lo on Friday morning.

Photo by Jake Daniels/Times Free Press.

Bobby Baughn bought milk in Chattanooga for his 85-year-old mother Friday and was struck by the high price for the staple product

"This is ridiculous," he said, noting the $3.92 price for a half-gallon of premium milk at the Walmart on Signal Mountain Road.

Milk prices this high, he said, hurt seniors.

"She's on a limited income," Baughn said about his mother.

Store prices for milk in the region are up 34 percent from last year and nearly 40 percent over two years, government figures show. Higher costs for fuel and corn along with export demand are creating what one industry expert calls "a perfect storm."

"We try our best to be inexpensive," said Scottie Mayfield, president of Mayfield Dairy Farms in Athens, Tenn. "We don't control how stores price it."

A check of milk prices in Chattanooga on Friday showed they vary widely by store and brand. Aldi on Highway 153 was selling milk for $2.99 a gallon, while the highest price at Walmart for a premium selection was well over $6 per gallon.

Phillip Brooks, part owner of Brooks Dairy in Ooltewah, said milk producers are getting a little more for milk, but "nobody is making a killing."

He said producer costs diesel fuel, insurance and corn for feed are higher.

"Corn is going through the barn roof," Brooks said. "I hate that prices have gone up in the store for consumers."

Rick Bryson checks the stocks of dairy products in a refrigerator unit at Bi-Lo on Friday. Milk and dairy products await customers in cold storage at the Signal Mountain Road Bi-Lo on Friday morning.

Photo by Jake Daniels/Times Free Press.

Boyd Brady, an extension dairy specialist at Auburn University, said corn prices have probably tripled as heat and drought stress farms. Brady also said the commodity is used in ethanol production.

"When corn goes up, everything seems to follow," he said.

Brady said other products such as switchgrass and pine trees can be used for ethanol. If government made the decision to use those for ethanol, corn prices would go down and other goods would follow, he said.

Kip Faulhaber, Bi-Lo's vice president of sales, marketing, advertising and pricing, said when milk prices rise, the grocer tries to negotiate with its vendors to soften increases.

Also, he said, Bi-Lo tries to find more effective ways to get milk from processors to its stores.

For example, the company recently decided to make the delivery of perishables at night.

"So trucks are moving through the system faster," he said. "Therefore, that puts less cost into the system."

Mayfield said milk prices could go up a little more in September. Then, he said, projections are for milk to come back down.

But, he said, exports of milk to China and other countries are "driving things pretty strong."

Mayfield said ice cream prices are a little more affected by the price of key ingredient butter fat. Still, he added, butter fat prices are the highest they've been this year.

Brooks said dairymen have a tendency to overproduce when prices are high, causing those to moderate.

But, he recalled that just a few years ago when the recession hit, he was selling milk for the price it was when he was in middle school.

"It killed us," Brooks said.

About nine months later, prices began picking up, he said.

"The American public doesn't realize how cheaply they eat," Brooks said. "The farmer gets the short end of the stick."

Mayfield said that fluid milk sales are down nationally from a year ago as some buyers balk at paying higher prices.

"There's no question that's happening," he said.

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