While it has been only a short seven months since I last addressed this topic, many in the dairy industry continue to cite the myth that retail fluid milk prices do not change when farm milk prices do. Just this week, a press release by the National Milk Producers Federation said, “Consumers really should be asking if the price they pay at retail for dairy products have dropped by the same amount. The answer is, retail prices haven’t changed, even as the farm price this year has reflected the fact that supply has raced ahead of demand.”
NMPF is entitled to their own opinions but not their own facts. Simply put, the available data does not support that statement or any other statement claiming there is no correlation between farm and retail milk prices over time. The facts are that, over the last three years, average retail prices have risen less than farm milk prices.
Each month the U.S. Department of Agriculture publishes the average minimum price for the Class I use of farm milk, and the products included in Class I are fluid milks like whole, reduced-fat, low-fat and nonfat milk. The USDA also publishes the average premium amount above this minimum regulated price that dairy cooperatives charge processors. The combination of the two average prices represents the cost of farm milk to fluid milk processors.
The U.S. Bureau of Labor Statistics (BLS) publishes monthly data on average retail prices for a number of products, but the only fluid milk product is whole white milk in gallons. This data appears in Figure 1 below.
To read the rest of the story, please go to: International Dairy Foods Association