Food industry specialists and economists are warning that milk could jump as much as 60 cents a gallon putting the dairy staple at its most expensive per gallon cost ever.
Several factors are contributing to the rise in prices. From cheese production, to the harsh winter the Midwest is experiencing, to other market forces, milk could reach an average as high as $4.10 per gallon. Even higher in some regions.
Cheese production sagged late last year causing prices to jump as stocks dwindled and cheese makers ramped up production. Cheese is a large market for liquid milk. Also, international trade in cheese is growing by leaps and bounds, especially in China.
Winter weather was also a factor in lower milk production. For instance, Wisconsin milk production was down 1.9 percent due to the weather.
The California drought may also cause trouble for milk producers later in the year as production of alfalfa, an important feed for cows, could be diminished. The cost of feed may impact milk prices in late 2014 and early 2015.
In fact, California’s drought will likely impact the price of a wide range of foods. The Golden State is an important producer of fruits and vegetables but farmers are saying that they may have to let up to a half a million acres of farmland lay fallow in 2014 due to the drought.
Unfortunately, as food prices are rising, American’s income is stagnant meaning that rising food prices will hit the lower income brackets particularly hard.
CBS recently reported that, “While the government says prices are up 6.4 percent since 2011, chicken is up 18.4 percent, ground beef is up 16.8 percent and bacon has skyrocketed up 22.8 percent…”
But while the prices of these important food staples are going up, median income has only risen by one percent forcing many families to some uncomfortable belt tightening.