Spike In Milk Costs Has Consumers, Companies Paying Near-Record Prices
By Tim Jimenez
PHILADELPHIA (CBS) - Recently, Starbucks CEO Howard Schultz spoke about the coffee giant having to spend more on milk. A market analyst says the rise of dairy prices affects companies and consumers.
Jerry Dryer is editor of the weekly Dairy & Food Market Analyst newsletter. He says that trip down milk aisle is costing up to 5 percent more than a year ago.
"It's a classic supply and demand story," and with Howard Schultz' comments, Dryer focuses on what's known as the all-milk price: "the average price that milk producers across the country receive for 100 pounds of milk," which equals 8.7 gallons of milk.
So, in February, Dryer says that cost a record $24.70 -- 27 percent higher than last year. A big reason, he says, is a boost in milk exports, especially to China.
"Seven or eight years ago we exported about 5 percent of our U.S. production. Last year we exported 15 percent of our U.S. production."
Dryer expects the March all-milk price to be the new record. But he says rising production later this year means a drop in prices.