Why is milk $1 more expensive? A look down the supply chain to explain soaring prices

Grocery store owners and farmers faced with inflation

At southeastern Pennsylvania's DND Market and Deli, prices are up for nearly everything. Owner Shailesh Patel told "CBS Mornings" co-host Tony Dokoupil that a gallon of milk at his store costs close to a dollar more than it did in comparison to last year. 

The local market isn't the only one seeing soaring prices. Nationwide food prices increased by 13.1% in July — the biggest jump in a year since March of 1979. The average price for a gallon of milk in the country also jumped almost a dollar since the start of the pandemic as well. 

But Patel says he isn't the one seeing the profit from the milk's dollar increase, and instead says it eventually makes its way to the wholesaler. 

While Wendell Gehman, a third-generation farmer who raises cows, says he does sell milk for more than he previously did, he notes that it's to cover increased costs he now faces to feed the cows. He said feed that used to cost him around $3,000 a month is now closer to $4,500 to $5,000, and that he also does not make any additional profit despite the increased selling prices.

But Kevin Guldin, who co-owns Oley Valley Feed, said the extra dollar doesn't stay with him either. He says the rise in feed prices can be attributed to things like rising gas, corn and soybean prices which contributes to making the feed. He blames the supply chain increases on "world economics."

"This is a global market in what we do," Guldin told Dokoupil. "You have no one to complain to."

Economics reporter Jeanna Smialek of the New York Times agrees. 

"I think it is so difficult to talk about this because inflation is no individual person's fault," Smialek said.

"The government did a lot of stimulus during the pandemic and that helped to push up consumer demand, which is part of the inflation story," she said. "I think we can absolutely say that corporations expanded their profit margins during this period. You know, corporations saw that their costs were increasing, increased their prices. They increased their prices by more than they necessarily needed to just to cover those costs. However, that is kind of how capitalism works."

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