published Saturday, August 20th, 2011

Got milk? Got money?

Grace Clark picks out some milk from the refrigerator unit at Bi-Lo on Friday. Milk and dairy products await customers in cold storage at the Signal Mountain Road Bi-Lo on Friday morning.
Grace Clark picks out some milk from the refrigerator unit at Bi-Lo on Friday. Milk and dairy products await customers in cold storage at the Signal Mountain Road Bi-Lo on Friday morning.
Photo by Jake Daniels.
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Bobby Baughn bought milk in Chattanooga for his 85-year-old mother Friday and was struck by the high price for the staple product

"This is ridiculous," he said, noting the $3.92 price for a half-gallon of premium milk at the Walmart on Signal Mountain Road.

Milk prices this high, he said, hurt seniors.

"She's on a limited income," Baughn said about his mother.

Store prices for milk in the region are up 34 percent from last year and nearly 40 percent over two years, government figures show. Higher costs for fuel and corn along with export demand are creating what one industry expert calls "a perfect storm."

"We try our best to be inexpensive," said Scottie Mayfield, president of Mayfield Dairy Farms in Athens, Tenn. "We don't control how stores price it."

A check of milk prices in Chattanooga on Friday showed they vary widely by store and brand. Aldi on Highway 153 was selling milk for $2.99 a gallon, while the highest price at Walmart for a premium selection was well over $6 per gallon.

Phillip Brooks, part owner of Brooks Dairy in Ooltewah, said milk producers are getting a little more for milk, but "nobody is making a killing."

He said producer costs diesel fuel, insurance and corn for feed are higher.

"Corn is going through the barn roof," Brooks said. "I hate that prices have gone up in the store for consumers."

  • photo
    Rick Bryson checks the stocks of dairy products in a refrigerator unit at Bi-Lo on Friday. Milk and dairy products await customers in cold storage at the Signal Mountain Road Bi-Lo on Friday morning.
    Photo by Jake Daniels /Chattanooga Times Free Press.

Boyd Brady, an extension dairy specialist at Auburn University, said corn prices have probably tripled as heat and drought stress farms. Brady also said the commodity is used in ethanol production.

"When corn goes up, everything seems to follow," he said.

Brady said other products such as switchgrass and pine trees can be used for ethanol. If government made the decision to use those for ethanol, corn prices would go down and other goods would follow, he said.

Kip Faulhaber, Bi-Lo's vice president of sales, marketing, advertising and pricing, said when milk prices rise, the grocer tries to negotiate with its vendors to soften increases.

Also, he said, Bi-Lo tries to find more effective ways to get milk from processors to its stores.

For example, the company recently decided to make the delivery of perishables at night.

"So trucks are moving through the system faster," he said. "Therefore, that puts less cost into the system."

Mayfield said milk prices could go up a little more in September. Then, he said, projections are for milk to come back down.

But, he said, exports of milk to China and other countries are "driving things pretty strong."

Mayfield said ice cream prices are a little more affected by the price of key ingredient butter fat. Still, he added, butter fat prices are the highest they've been this year.

Brooks said dairymen have a tendency to overproduce when prices are high, causing those to moderate.

But, he recalled that just a few years ago when the recession hit, he was selling milk for the price it was when he was in middle school.

"It killed us," Brooks said.

About nine months later, prices began picking up, he said.

"The American public doesn't realize how cheaply they eat," Brooks said. "The farmer gets the short end of the stick."

Mayfield said that fluid milk sales are down nationally from a year ago as some buyers balk at paying higher prices.

"There's no question that's happening," he said.

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about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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Astropig said...

I work in the Cincinnati metro area during the week and commute back here for weekends and milk is crazy cheap there. At Aldi last week, I paid $2.59 for a gallon of 2%. At Meijer it was $2.49 for all grades (skim/1%/2%/Whole) .

Paying Mayfield prices is nuts-o. They are not even owned by the Mayfields anymore. They are part of Dean Foods.The milk they sell could be from just about anywhere.

August 20, 2011 at 7:48 a.m.
moon4kat said...

Where's the copy editor? The 85-year-old is Mr. Baughn's mother (para. 1), or his grandmother (para. 4)? Which is it? And, is the writer comparing 1/2 gallons or gallons? Switching between the two makes the story confusing.

August 20, 2011 at 8:11 a.m.
KWVeteran said...

The good old democrats are responsible for the run-away inflation; so it follows that BO and his liberal minions can be rightfully blamed for the high price of milk (and gasoline and everything else). Tough to admit, isn't it, liberals?

August 20, 2011 at 8:21 a.m.
grandmastaj said...

Blame the black man and democrats for everything. Last I checked, it was the teabaggers and that misanthrope Grover Norquist holding the economy hostage for some pledge that keeps the fat cat one percenters rich and the rest of us scraping some change together to buy milk.

August 20, 2011 at 8:51 a.m.
JustAHobbit said...

$6.66 a gallon @Walmart in Athens - where the Mayfields dairy is freaking located - Piggly Wiggly in Etowah is $5.69. We found out just yesterday the culprit is WALMART, that since they contracted with Mayfield to supply Walmart-branded milk they jacked the price up on Mayfield gallons. I'm told that Mayfield is putting out more 'white jugs' than yellow. Talk to the folks who are in delivery, they know what is up.

August 20, 2011 at 9:14 a.m.
GreenKepi said...

Come on now "grandmastaj"...why blame the "evil teabaggers"? Do you not realize that the 'so-called' Tea Party is made up of just normal Americans who most of them have never been involved in politics at all other than voting. They're just fed up with spending and what some are doing to this great country!

You are trying to paint the Tea Party as though it is an actual organized party…and its not…those, who hate people with old fashioned values, all know full well what the Tea Party is, and that's why it scares you.

They're fed up with the expansion of government, they're fed up with the disrespect being shown the traditions and institutions that have defined this country's greatness, and they're standing up and they're saying, "No more," pure and simple.

They are as opposed to Republicans who are socialists as they are Democrats. There's no way to capture, in a poll, how big or how small the Tea Party is. It's not possible.

Many in this country, like you, want us to believe the “Tea-Baggers” are just a bunch of rednecks and crazies.

The Tea Party is for getting rid of whoever it is standing in the way of reducing the size and reach of this government. The Tea Party is continuing to expand in number, they are expanding in energy, and they are expanding in influence.

You and the Democrats know this and the media knows it. It's precisely why there are all these bogus stories and comments about who and what they stand for....

August 20, 2011 at 9:26 a.m.
rolando said...

The amount of corn used to make alcohol for blending with gasoline has now exceeded its use as food.

And that alcohol use will rise along with the cost of everything.

Still like all those new regulations and prohibitions against drilling for our own oil? Gee, that would be a way to actually cut down on our import of oil from all those Muslim countries, wouldn't it? To the tune of billions of dollars staying home instead of flowing to them. Can't have that...nosireebob. Not in today's economy.


Milk has been a dollar or more per gallon higher here in Tennessee over the cost in Ohio. It sure isn't because of supply and demand...pure profit motive.

According to an NPR report in 2009, Dean Foods provides and controls about 80% of the Tennessee milk supply.

Dean Foods [DF] most, if not all, of its milk wholesale from the Dairy Farmers of America [DFA] -- a milk cooperative that buys its milk from about 18,000 member farmers -- that supplies about one-third of America's milk.

Seems we have a bit of a monopoly going here -- 80% of Tennessee's milk is supplied from one wholesaler -- DF, who gets its milk from DFA.

Both DFA and DF are concerned with one thing and one thing only -- buy as cheap as possible and sell dearly, to whatever the market will bear.

DFA, in many, if not most, cases pays the dairy farmer just above, at, or sometimes below what it cost to get the milk from the cows.

DF again, buys cheap and sells dear -- an excellent business practice, perhaps, but from a consumers viewpoint, highway robbery.

Reason Magazine perhaps said it best. [http://reason.com/archives/1998/02/01/milk-money] In part,

"Milk price controls and marketing orders, which date back to the New Deal, illustrate what happens when the pragmatic, reform-minded spirit of progressivism hits the trading floor where political favors are exchanged for cash. The logic or ideology behind federal milk policy is expressed only in the vague language of "fair prices." In this context, that means whatever prices keep the greatest number of cartelized farmers solvent.

"This concept of fairness implies that every American deserves whatever can be squeezed out of his fellow citizens via the government. As tax consumers, most Americans doubtless believe this; as taxpayers, they don't. But the cost in terms of higher milk prices and bureaucratic payroll is so diffused that it's nobody's prime political concern."

(continued)

August 20, 2011 at 9:28 a.m.
rolando said...

(quote continued from prior)

"In the wake of Judge Doty's [Nov 1997] decision, the Department of Agriculture begged for a stay as it scrambled to meet a year-end deadline to reconfigure the milk pricing system. Huge milk cooperatives are merging into even huger ones for economies of scale. And various multi-state cartels are forming, trying to emulate the new Northeast Interstate Dairy Compact in locking out extraregional milk and guaranteeing that even absent the federal rules, regional consumers will pay more for milk than is necessary or sensible. [Emphasis added.]

"Dairy price supports will be phased out by 2000, thanks to the 1996 farm bill. But throwing programs that were ill-conceived and illegitimate to begin with out of the federal realm and into regionalized cartels is no improvement. As states and localities step forward to shoulder formerly federal burdens, they need to ask not just who should manage a given program but whether it should exist at all. For now, regional cartels seem prepared to make sure that famous milk moustache continues to hide the sly grin of agribusiness as it milks the public."

August 20, 2011 at 9:28 a.m.
rolando said...

Most excellent posting, GreenKepi. Concise and spot-on accurate.

If they are In and don't approve of our traditional values, they are Out. As it went in 2010, so it goes in 2012.

August 20, 2011 at 9:38 a.m.
terrybham said...

If you don't like the price of milk-let it spoil on the shelves and stop your whimpering.

August 20, 2011 at 10:03 a.m.
sd said...

Food stuffs should never be used as fuel stuffs. If you want to make biofuels, fine. Use something people don't eat. Food-based biofuels are terribly misguided.

They started making fuel out of cassava root and--SURPRISE--the cost of cassava is going up. It's a food staple in the Philippines, Cambodia, and throughout Africa, but in countries like China, where it isn't a food staple, they are using cassava specifically because cassava prices won't affect them as much as corn prices.

The whole thing is so backwards. We cannot ignore the fact that energy crops clearly compete with food crops. Food should always be the highest priority. "Food comes first."

August 20, 2011 at 10:15 a.m.
knivesout said...

RichardS - cows do eat corn now, primarily, because that's what they're fed in the industrialized food system. Of course, cows aren't mean to eat corn, and so they get sick feeding on it, so they're injected with all sorts of anti-biotics and drugs to keep them alive to produce meat and milk...and the meat and milk are infected with the drugs. Bon appetit!

August 20, 2011 at 10:24 a.m.
primitive said...
  1. City of Chattanooga: Do away with your bogus animal and livestock laws. Citizens, for heaven's sake, purchase a milking cow and raise your family on its milk if you have a bit of land.

  2. Share with your neighbors. Practice this self-sufficiency and release yourself from retailers. Support local farmers.

  3. Food costs will continue to rise. Corrupt bankers and wall street gamblers are purchasing farm land by the thousands of acres because the price of corn, wheat, etc. continues to rise. Yet, what are you eating? What are you consuming? Break away from junk and processed foods and take care of your body and family. Grow your own. Eat wholesome foods and have meals with family and friends.

  4. Why is there so much fallow land in our area? Get up off the couch and dig in it. Stop relying on federal reserve notes to obtain goods.

  5. Learn from the primitives who are satisfied with what has been given to them from their creator. Resist living beyond your means which leads to the worship of mammon.

August 20, 2011 at 1:37 p.m.
rolando said...

terrybham -- Sounds like you might be part of agribusiness there, terry... The public gets screwed at both ends -- the farmer barely meets costs and the public pays out that kazoo.


It will only get worse...alcohol-from-corn production is so ineffective it is embarrassing; paying a subsidy is outrageous. Including the trucking, it consumes more energy in the making than in the burning. Our government at work.

August 20, 2011 at 1:40 p.m.
rolando said...

"Share with your neighbors. Practice this self-sufficiency and release yourself from retailers. Support local farmers."

Selling/giving/sharing that milk with your neighbor will put you in jail, The FDA, CDC, and probably the EPA [they control everything] will be on your case like stink on...well, you know. Giving away/selling non-pasteurized milk is a criminal offense. I think personal/family use is OK.

I and my two brothers grew up on the pure, unadulterated stuff during WW2 -- in Los Angeles. Filtered through cheesecloth, if memory serves, otherwise drank straight. Our cow was a Jersey and gave very high cream content milk. Dad's only gripe was she insisted on expensive Lancaster [Calif] alfalfa...no cheap hay for her.

August 20, 2011 at 1:52 p.m.
primitive said...

Well if we have to do things legally...At least in TN, an owner or "partial" owner can consume raw milk. Essentially, one would gather interested neighbors and sign them up as partial owners. No pasteurization!

August 20, 2011 at 2:28 p.m.
joneses said...

As long as this fool we have as a president continues to allow the printing of money inflation will continue. Hussien Obama's goal is to destroy America.

August 20, 2011 at 4:37 p.m.
rolando said...

One dollar makes the sale legal. Good idea. I will file that one away.

They never miss a beat though, business-wise -- license, contract, etc. -- so it may be best to just stay under the radar.

August 20, 2011 at 6:57 p.m.
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