What’s Goin On With The Price Of Milk??

April 3rd, 2009

Alan Reed Answers Your Most Burning Question:
“What Is Going On With The Price Of Milk?”

Over the past few days I have received a couple of letters asking why the price of milk has come down in the grocery store and Reed’s milk has stayed the same price.  It is a good question!
This past fall the price of milk in the grocery stores bolted higher than anyone had ever seen.  At Reed’s we also had to increase the price of our milk.
What Caused This?  The Cause Is Different For Reed’s Than The Grocery Stores.
Our price increased because the price of hay and grain went up drastically as well as all of our supplies.  We paid the most for hay and grain than we had ever paid; over double the normal cost.  This forced us to raise the price of milk so we could keep our bills paid.  We calculated our feed cost and the margin we needed, then raised the price of milk accordingly.
The grocery stores kept raising their prices because there was a shortage of milk in the United States  and the milk processing plants were paying a very high price for milk from the dairymen that produce milk for them.  The shortage was caused because there were lots of dairy products being shipped overseas and a lot of cheese being sold in the U.S.  This strong market created a shortage of milk in the U.S. and drove the price way up.
Then all of a sudden the economy went bad here and overseas.  Foreign countries stopped buying dairy products from the U.S. and sales of cheese in the States dropped, causing a surplus of milk and driving the price of milk down because of the surplus.  Consequently, the price that dairy farmers are being paid right now for milk is really low.  So low, a national economist said, “dairymen are losing $100.00 to $150.00 per month on every cow they milk.”  For us that means over $25,000.00 every month.  If milk were priced in the grocery store according to what it truly cost the farmer to produce that milk the price for a gallon of milk would be much higher than it currently is.  It is really a strange and crazy circumstance.
Why Is Reed’s Milk More Than The Grocery Store
One reason is because it cost us more to produce milk than most dairies.  The extent we go to in taking care of our milk cows.  We do not inject our cows with the artificial hormone that increases milk production.  The other reason is we are still feeding our cows last year’s hay which we paid a very high price to purchase.  We do not have any other choice but to keep the price of our milk up, otherwise we would be doomed to go out of business.
What About The Price Of Milk In The Future?
Right now we are still feeding last year’s hay that we purchase for a very high price.  We know the price of hay will be less this year starting with the new crop in July.  Until then it is very difficult for us to reduce the price of our milk.  We will continue to closely monitor all of our cost and when we start feeding new hay our hope is to be able to lower the price.  The benefit to you, for drinking Reed’s milk is drinking locally produced, wholesome, all natural milk that is the best milk for your family.
All of us at Reed’s Dairy will provide you and your family with the most wholesome, all natural milk you can buy.  It will never be the cheapest milk because you always get what you pay for when buying a dairy product.  We are half the cost of organic milk, yet you get all of the benefits of all natural milk.  At Reeds we truly are the Local Farmers Market for Milk in our area.  As you consider these things, it is easy to understand why Reed’s Milk is the best milk you can purchase for your family.
The local news channels and news papers have reported numerous times about the dairy farmers losing money because of the low price they are being paid.  DJ Dave from Phoenix Arizona interviewed me the other day about the price of milk.

Click the “play” button below to listen to that interview.

or click here to download the interview (mp3)

1 Comment »

  1. Darrell Charlton says

    A quick note to let you know how much I have appreciated Reed’s Dairy.
    I have been a Reeds Dairy customer for the 30 plus years that I’ve called Idaho my home. The end of this month (May) I will be relocating to Texas and was considering that Reed’s Dairy is one of the few things I will miss after my move. All these years I have felt secure knowing that Reed’s Dairy products are the best that $$$ can purchase and there have been no hormones used on the dairy herd. I am grateful to have been able to purchase my milk in returnable containers as something that helps make a difference environmentally.

    As an ‘equine addict’ I can relate to the cost of feed this past year so I can fully appreciate the rise in Reed’s Dairy’s operating costs and the need to charge more for a quality product. I have had absolutely ZERO issues paying more knowing that I’m getting the best and freshest dairy products possible. Whenever I’ve had visitors I’ve extolled the quality of Reed’s Dairy products. The gourmet chocolate milk is incomparable and my guests have commented they’ve NEVER had chocolate milk that compares.

    My hope is that local consumers continue to appreciate the blessing of a small, local dairy that produces the finest dairy products money can buy regardless of price. May Reed’s Dairy enjoy MANY more years of success in their business endeavors!

    Kind Regards,
    Darrell R Charlton, Jr
    Arco, Idaho

    May 8th, 2009 | #

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