Milk Prices at Record Highs
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Updated: 4:39 AM Aug 16, 2007
Milk Prices at Record Highs
Right now it is not uncommon to see milk prices hovering around the $4.00 mark, but why is it so high?
Posted: 11:20 PM Aug 15, 2007
Reporter: Phil Dinges
Email Address: phil.dinges@weau.com
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If you have been to the grocery store lately, you may have noticed a gallon of milk costs more than a gallon of gas. A gallon of whole milk can be as much as $4.39 which right now is beneficial for farmers but some farmers tell us it's fickle, and it can quickly go from profit to plummeting prices.

Holsteins are proving to be a cash cow. At Five Star Dairy there are 900 of them, but Lee Jensen, the general manager and one of the owners says demand is at a record high and foreign countries are behind it.

"European, China, all these things are putting more demand on whey products and cheese products and so that's been driving up the prices" says Jensen.

Jensen says for prices to go down supply would have to go up, but many farmers can’t afford to add more cows.

"It doesn't force them to, they could get by with less cattle but prices go higher, people would rather milk a few more cows and capitalize on that a little bit. So it depends on how full your facility is, where you are in your career on if you want to expand" says Jensen.

He says the boom in energy drinks is a big reason for the price hike. Whey is a protein used in many drinks but before, whey was just seen as a bi-product.

Jensen says "we really didn't see that it was going to be this high this year. Last year the milk prices were very low.

He says fertilizer, fuel and flat out production costs are up for farmers, so the high milk prices help even things out on his farm's bottom line.

Jensen says "any time something gets too high its going to come down. Consumers will back off a little bit.”

And that's just what some shoppers are doing...

One shopper at a local grocery store said "we have three kids at home so I just buy it. Try to just limit to what they can drink on a regular basis."

Five Star Dairy contracts out its raw milk, which means it won't see the big profits some dairy farmers may make. Jensen says if they are playing their cards right, some dairy operations could double profits with these prices.