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Milk Prices: The Disgusting Truth


BlogsMonroe’s Emiie at the 2008 Monroe County Fair.
No, she’s not the disgusting part … sheesh …

Over on BlogsMonroe this evening, Elephant Ear pal and fellow blogger Emiie is lamenting about the price of milk at the Monroe Public Schools:

Monroe Public charges 50 cents for a carton of milk. So I’m sending in $2.50 a week for milk per child. $7.50 for milk a week. Not a math whiz but I think…

1/2 pint for fifty cents

.5 pint = $.50

2 cartons = 1 pint = $1

8 pints in a gallon = $8 a gallon

That just seems excessive. I can buy a gallon for $2 at the store. I realize there is packaging involved, but $6 of packaging?

I consider Emiie to be a friend, and we’ve shared lots of good laughs. A lot at my expense of course … But the price of milk is a serious issue in my opinion.

Here’s the thing: The facts point to $8/gallon being reasonable. Unfortunately, the dairy farmers are being treated unfairly.

I kid you not.

Interestingly enough, today the Associated Press is covering milk prices in Michigan, specifically how much trouble dairy farmers are having financially with there being such a milk glut:

According to the National Milk Producers Federation, prices that dairy farmers get for 100 pounds of milk fell from $20.58 last November to $13.29 in August. Prices are projected to be $14.18 this month. [Ira Krupp, a dairy expert with Michigan State University Extension] said he expected prices to remain down for several more months.

Looking at this a little more closely, I’m reminded of a sign that used to hang in the former Bill Knapp’s restaurant in Adrian, Michigan. It listed how much various items cost in 1975. Google the following words:

1975 prices

Look at the results. Gas was 57 cents a gallon. Pretty cheap. Eggs were 77 cents a dozen. They’re only about twice that now.

But then there’s milk.


“Contains: Milk” Really? There’s milk in there?? I had no idea…

34 years ago in 1975, milk was $1.57/gallon.

Last week at both Aldi and Costco, I paid $1.89/gallon.

Mary and I both bought milk at school in 1975 at 15 cents a half-pint. Using Emiie’s math, that came out to $2.40 for a gallon of milk when milk was $1.57/gallon.

Yes, seriously. That’s what we paid.

Check out the PDF that’s linked from this page on the IDEALS web site. A summary:

Illinois Agricultural Statistics from 1970 show dairy farmers receiving between $5.30 and $5.85 per CWT (hundredweight, or 100 pounds of milk). In 1974, this was up to between $7.10 and $8.90 per CWT.

And to reiterate, today the Associated Press is reporting, “$13.29 in August … ” and “… Prices are projected to be $14.18 this month”.

A difference of less than six friggin’ dollars in 35 years to the dairy farmer for the same 100 pounds of milk.

Do you know what’s worse? This is. That’s right, in July 2009 the various classes of milk were only getting between $9.97 and $12.06 per CWT here in Michigan.

A difference of only 1 – 3 measley friggin’ dollars between 1974 and now.

Yup. Disgusting. That’s what it is.

Meanwhile, the price that farmer pays for fuel has multiplied five times over. The price of a tractor is quite a hefty sum. The electricity needed to run a dairy farm today compared to 1975 is shocking, being $3.51/kwh in 1975 and $10.40/kwh in 2006. And the natural gas used to heat the barns was $1.71 per thousand cubic feet then and $13.76 now. (Source: US Census)

Dairy farmers should be seeing similar increases in what they get for a 100 pounds of milk, roughly $35 – $40 instead of the $14 the AP is reporting.

No wonder so many dairy farmers just can’t make it.

See Emiie, here’s the thing: Milk should be $7.50 – $8/gallon today. That it’s $1.89 in some places is appalling to begin with.

But what you pointed out is disgusting; That some organizations are charging exactly that $8 …

… and the dairy farmers see none of it.

That’s what pisses me off.

The next time you think about what you’re paying for milk, do the farmers a favor and buy as close as you can to where they start the chain of production. Here in Monroe County, Michigan, that means Calder’s. They milk their own cows, process the milk on-site, and even offer home delivery.

Meaning they see the best possible prices. Prices which help them survive.

And that’s important.

Oh, and Emiie? You still owe me a real Elephant Ear contest. Yes you do. Quit arguing. Sheesh …

3 comments to Milk Prices: The Disgusting Truth

  • AR

    I think you have a valid complaint, in general, because I agree there is clearly a disparity between the inflation and the increase in price of the milk paid to farmers. But there are a host of issues that are sort of skipped over or confused here. Just for a couple of examples…

    It’s not just Packaging – The care and maintenance of the equipment, the cost of the carton material and printing (x16 units compared to one per gallon), the distribution to schools – I do believe the pint is going to naturally be more expensive. I’ve had to purchase ready made packaging and it really isn’t as cheap as you might expect.

    There are multiple prices in the supply chain – The price you pay at the store may not be the actual price paid to farmers. Why? Studies show that where consumer buy their milk is where they make the rest of their grocery/short term supplies. Stores will actually sell milk Below cost to get customers in the door. More studies show that if a customer stops buying milk in your store, they will likely take their business elsewhere within 6 months. Stores want customers to buy milk, period.

    As for the comment about the ‘Contains’ statement – this is required by law as milk is a common allergen, and there isn’t a subclause to the legislation that says ‘you don’t have to label the allergen itself’.

    And as a final comment, for honest hardworking farmers, I’m totally behind you, but history has shown that there has been a good share of corruption through, and abuse of the system and government, too. Especially when it comes to school lunch programs. So let’s not automatically deem them all saints, now, and assume that a gigantic industry like dairy is so easily understood and run. I love your suggestion to shop local and direct.

    Anytime I see posts like this I’m a bit skeptical and want to see all of the facts, not just those readily served up by Google and Wikipedia.

    I commend you and your wife for being concerned active citizens, doing your parts to make our world better. Just wanted to balance out your post a little bit. Thanks for reading.

    AR

  • AR

    Oh, and one more thing, it looks like a gallon of milk is ~4.5 pounds. That means for the 100 gallon rates you found, that is ~22 gallons. That would mean that at $14 the farmers are only getting ~60 cents a gallon. That’s even worse than you thought. At the $35 you suggest, that is still just $1.59 to the farmer. Of course, this is all averaged out, so the 2 cow farm and the 2,000 cow farm are all in the group and of course the marginal costs for those two farms are quite different.

    AR

  • Thanks April! These are great and thoughtful comments. However, my comment about the “Contains: Milk” label was supposed to be lighthearted. I just love the obvious obliviousness of such things, like a can of pop (soda where you’re from) where there’s 2.5 servings. Ok, I’ll go find 1.5 other people to share it with … ;-)

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