May 31, 2004

 

 

US Dairy Prices May Have Risen To Top
 

Rising dairy prices in US have whipped Southern Nevada milk drinkers into a frothy lather in recent weeks with little relief in store during the coming hot summers months.

 

Nevada State Dairy Commission data show that Las Vegas-area residents in May were charged on average 78 cents more per gallon of whole milk than they paid just two months prior. And the worst price increases have yet to be realized, commission Executive Director Mike Compston said this week.

 

"We may be at or very close to the peak in June," said Compston, who said early market trends point toward another 5 cent-per-gallon price increase at stores next month.

 

Still, Compston said market trends also show milk prices will likely level off this summer before creeping down again, possibly as soon as September.

 

"Cheese and butter prices are starting to soften," Compston said. "We are not going to have any huge increases ahead."

 

The nation's dairy industry is suffering from several economic conditions that seem to have converged in recent weeks. They include increased demand brought on by a recovering U.S. economy, herd limitations caused by a Canadian outbreak of mad cow disease, high feed costs and other manufacturing problems.

 

As a result, fluid milk prices in the Western United States escalated to $17.26 per hundredweight (approximately 11.63 gallons of milk) in April, up $3.13 from March and $7.25 more than April 2003.

 

May's advance price in Southern Nevada is $21.05 per hundredweight, while June's advance price is pegged for $22.53.

 

Raw milk prices are set by the U.S. Department of Agriculture based on actual cash market prices and supplies of raw product. Its prices are used to determine what consumers pay for products such as milk, cheese, yogurt and ice cream.

 

Rising gasoline prices have also hurt the dairy industry by increasing producers' cost to get their products in the hands of consumers, Compston added.

 

"Producers aren't getting a big piece of the pie," he said. "It's a strange thing; we're all being hit with all of these additional costs at the same time."

 

The commission each month conducts a random pricing survey among retailers in various Nevada communities, including Las Vegas. Its most recent survey, conducted May 11-13, showed that local consumers paid an average of $3.62 per gallon of whole milk, up 58 cents from April.

 

Actual store prices varied from $4.29 at a Kmart store in Henderson to $2.88 at a Food 4 Less store in east Las Vegas.

 

In mid-March, the Las Vegas-area average was just $2.84, according to commission data.

 

However, recent price pressures were not limited to whole milk. A gallon of 2 percent milk cost shoppers $3.46 per gallon in May, up 63 cents from last month, while gallons of 1 percent and non-fat brands over the same period reported cost increases of 53 cents and 45 cents, respectively.

 

Nevada has approximately 25,000 dairy cows at its 36 dairy farms, where farmers must continue to make do with their existing cattle supply because they are now unable to bring in more animals from Canada thanks to the recent mad cow scare.

 

Milk cows typically take 24 months "from birth to barn," so Compston said adding more milk-producing animals is not a short-term answer until the border is open or today's calves mature.