Local dairy farmers say they're not to blame for high milk prices

Dairy farmer Jack Hamm explains the system used to store milk before transport at Lima Ranch in Lodi on Tuesday. The cows produce 13,000 gallons of milk a day. The milk is shipped in the United States and overseas to countries like China and Japan. (Whitney Ramirez/News-Sentinel)

Local dairy farmers say they're not to blame for high milk prices

By Chris Nichols
News-Sentinel Staff Writer

Saturday, July 7, 2007 6:40 AM PDT

Comments (7 comment(s))

The price for a gallon of milk — and your favorite cheesecake, yogurt and frappuccino — is on the rise.

Reduced-fat milk hit a record high $3.10 per gallon this month, though you'll be hard pressed to find it that cheap. That's just the minimum retail price set by the state's Department of Food and Agriculture.

Gallons of milk have jumped as high as $4.69 at some local stores, up more than a dollar over years past.

And the base price for a pound of cheddar cheese, a benchmark for other cheeses, is also up sharply, to $2.08 from $1.17 a year ago, according to the Chicago Mercantile Exchange.

Local dairy farmers say the price hikes aren't their fault. And they're not getting rich, several said, even though milk prices have climbed seven consecutive months.

Even so, the price spike hasn't gone down easy with consumers.

"What can you do? It's like gas prices," said Herb Fromm, after lugging groceries into the bed of his Ford pickup outside S-Mart Foods on Kettleman Lane.

Fromm, a retired truck driver and manager for Standard Oil Co., said he and his wife won't stop drinking their couple gallons of milk per week.

"I drink milk," he said. "I drink a lot of milk, I always have. I grew up on it."

Each month, the state sets the minimum price milk processors must pay dairy farmers (now at $1.98 a gallon for bottling-grade milk), based on current market forces.

Another dollar or more per gallon is added to the cost once the milk is processed, bottled and trucked to grocery or bulk food outlets where the final price is set.

Milk: From cow to countertop

Dairy cows graze at Jack Hamm's dairy in Lodi on Tuesday. The feed -- made up of alfalfa, soy bean powder, cotton seed, wheat hay and corn -- is key in the amount of milk the cows produce. (Whitney Ramirez/News-Sentinel)

The process has many safeguards but is also fairly quick. Milk can move from a cow all the way to your cup in less than a day, according to dairy experts.

Here's are some of the major steps:

• Milk is channeled from the cow to a refrigerated storage tank at the dairy.
• Samples are then pulled to safeguard against foreign materials and antibiotics.
• It's then trucked to a processing plant, where samples are again checked.
• Workers pasteurize the milk (heating it to destroy viruses and bacteria).
• It's also fortified with more solids, fats and nutrients like vitamins A and D and calcium.
• The mixture is bottled and typically trucked to a retailer's distribution center.
• From there, the product is taken to local stores.

Source: Kevin Abernathy, California Dairy Campaign executive director

Dairy production at a glance

California has been the nation's leading dairy state since 1993, when it surpassed Wisconsin in milk production. California is ranked No. 1 in the U.S. in the production of fluid milk, butter, ice cream and nonfat dry milk.

California leads the nation in total milk production, producing approximately 19 percent of the nation's milk supply.

California's 2,200 dairy families house 1.5 million milk cows. Approximately one out of every six dairy cows in the nation lives in California.

If California were a separate nation, it would rank eighth in the world in cow's milk production, fifth in the world in cheese production and ninth in the world in butter production.

Source: California Dairy Quality Assurance Program

The state sets no maximum for how much can be charged.

Greater demand for milk in China and India combined with a smaller worldwide supply has pushed local dairy prices up, said Michael Marsh, chief executive officer for Western United Dairymen of Modesto.

Normally strong supply in Australia and New Zealand has plummeted due to a prolonged drought. And European dairies are no longer exporting as much milk because plush government subsidies have been rolled back.

"We're kind of in the middle of a perfect storm — it's a positive storm for (local) dairy farmers," Marsh said.

Last year was more of a nightmare for California dairy farmers. More than 90 dairies shut down due to low prices and higher feed costs. And last summer's heat wave killed roughly 21,000 cows and 10,800 calves, Marsh said.

"Last year our prices were so low, we're still trying to come out of debt," said Cathy Kaehler, co-owner of Kaehler Dairy Farms off East Armstrong Road, just south of Lodi.

"(Prices) are kind of out of control right now and we have nothing to do with it," she added.

Local dairyman Jack Hamm said he understands some consumers are experiencing "sticker shock" at the grocery store.

But he and several other farmers said dairy retailers are the ones that maintain the high prices.

Two of the nation's largest sellers — Dean Foods and Kraft Food — did not return calls for comment.

In the meantime, big dairy buyers like school districts, and pizza and ice cream companies have been hit by the price hike. Pizza Hut has already raised its prices, with Cheesecake Factory scheduled to do the same.

Lodi Unified School District supplies 20,000 lunches each day, making milk available at 49 different school sites.

Cindy Oliver, who buys milk for the district, said LUSD is spending more on milk this year, though she did not have specific figures Friday.

Producers Dairy drops off a load of milk at Lodi Middle School on Friday. Lodi Unified School District supplies 20,000 lunches each day, making milk available at 49 different school sites. LUSD is spending more on milk this year, though it is not known how much more. (Jennifer M. Howell/News-Sentinel)

She said, however, she has a meeting planned next week with the district's food services director to discuss the rising prices.

Oliver added that the school has no plans to cut back its milk purchases.

"Absolutely not, that's not an option," she said.

Downing a large cup of peanut butter ice cream this week at Cold Stone in Downtown, Calvin Brown said there is a limit for how much he'll spend on the frozen treat.

"I am very cheap when it comes to my ice cream," the 17-year-old Tokay High student said, noting $4 is his limit for a cup.

That sentiment isn't shared by Brown's classmate and friend, Lauren Leffler, and perhaps many more once the mercury reaches triple digits.

"I choose not to think too much about my food because you can't change it," she said, finishing a small bowl of chocolate ice cream with rainbow sprinkles.

Leffler then revised her thoughts on how much she considers dairy prices.

"If it's my own money, yes," she added. "If it's my dad's money, no."

Contact reporter Chris Nichols at chrisn@lodinews.com.

Reader Feedback

Sara wrote on Jul 10, 2007 7:39 AM:

" Raking in the profits off dairy farming? Ha! If the one submitting this comment had any clue how much money goes out every month in feed costs, electricity, vet bills, labor, taxes, fixing equipment, checkoff dollars, and on and on, his head would swim! And it's a 365-day a year job "on call" 24 hours a day. How many careers except parenting demand that type of committed work ethic? Again, another example of how far the world has ventured from its rural roots and having an understanding of where the world's food comes from - how sad. "

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Mark wrote on Jul 9, 2007 6:47 AM:

" Bernice, the dairymen don't work nearly as hard as the cows do. Are they compensated? No. They're killed. Salud! "

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No Math To Do wrote on Jul 9, 2007 6:32 AM:

" Since the government sets the milk price, I dont see how the dairy farmers can be price goughing. I didnt see anyone complaining when the dairy farmer was only getting half of what the are now. How about if your company took half of your paycheck from you and you still had the exact same expenses if not more do to increased costs in feed, fuel and pretty much anything else "

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Oscar wrote on Jul 8, 2007 4:11 PM:

" Aunt Bernice, I agree with you on this one. Milk prices have been static for years. I only hope the dairy farmers are finally getting their due. Perhaps they will be able to get rid of the government subsidies. "

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13,000 gallons a day? wrote on Jul 8, 2007 3:16 PM:

" Hmmmm! that equals 39,000 gallons of milk a month! Dairy people are raking the money in and just want more! That is plain to see! And you think the price is gonna EVER go DOWN? Not a chance! It's all about profit Aunt Bernice! Just like the price of gas, folks are gonna drink milk no matter what the price and dairy milkers are milking our wallets! "

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Aunt Bernice wrote on Jul 7, 2007 4:25 PM:

" Cousins of mine are dairymen. They work extremely hard and are far from "rolling in dough." They deserve every penny they receive. "

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Do The Math! wrote on Jul 7, 2007 4:12 PM:

" Either the dairy farmers are price goughing on their end or the RETAIL store is Price goughing US! Either way someone is making too much profit and Each of us know it! "

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