Got milk? Got money?

Cayman Islands consumers can expect to pay higher prices for a range of dairy products, including cheese, butter and ice cream, because of rising milk prices.

The U.S. government minimum base price for milk was 66 per cent higher in June 2007 when compared to June 2006, and it has increased 17 per cent more in the past month, according to the International Dairy Foods Association.

Foster’s Food Fair IGA has decided to absorb a portion of the milk price increases to keep milk at affordable prices for its customers, said Managing Director Woody Foster.

‘Foster’s has received three increases totalling 37 cents on the cost of a half-gallon of McArthur’s milk since January,’ he said, ‘The price on the shelf, however, has only gone up 30 cents per half-gallon.’

Mr. Foster said that early forecasts from overseas suppliers project the price of a gallon of milk increasing by a minimum of 25 cents in July, 10 cents in August and three cents in September.

‘Foster’s will continue to closely monitor the pricing situation in the U.S. and adjust its prices accordingly should prices go back down,’ Mr. Foster said.

A number of market factors have combined to affect the price of milk, said the IDFA in a press release on 25 June.

‘We’re seeing strong international demand for U.S. dairy ingredients, particularly non-fat dry milk, dry whey and lactose,’ the release stated, adding that prices for the first two items have been steadily increasing over the past six months.

Because non-fat dry milk and dry whey prices are used by the U.S. government to determine the minimum, government-regulated price that must be paid for farm milk in the federal system, as those prices have gone up, so has the price of all farm milk.

In addition, the price of feed for dairy cows has risen steadily, primarily because the cost of corn has risen sharply. Corn prices have gone up because of the increased demand for ethanol production. Ethanol producers will pay more for a bushel of corn, causing farmers to divert available corn away from livestock feed suppliers.

Lower milk prices in 2006 also resulted in a slowing of the growth of milk production, which coupled with a strong domestic and international demand for dairy products, has created a shortage of supply and higher prices, the IDFA said.

Roger Dryer, the senior manager of grocery, dairy and frozen food at Foster’s Food Fair, said it is not just the price of milk that is going up.

‘Ice cream went up 14 to 17 per cent in the last two weeks, with the exception of the higher-end Breyer’s, Edy’s and Haagen Dazs,’ he said, adding that he was confident that it was only a matter of time before the prices of those brands increased as well.

Butter, except for New Zealand butter, also had an increase of about 10 per cent a few weeks ago, Mr. Dryer said, noting, however, that he had just seen where the price of butter had decreased on the latest shipment. Large inventories could account for the decline he said.

Most brands of cheese also had recent price increases of about 10 per cent, Mr. Dryer said. However, he added that Kraft Foods, the largest cheese producer in the world, has indicated it will not raise prices this year.

Increasing cheese prices is affecting the prices of other things, like pizza. The cost of cheese is the largest component of the cost to make a pizza. In the United States, company-owned Pizza Hut restaurants have had to raise the cost of a plain cheese pizza to the same as a one-topping pizza because of the increase in the price of cheese.

Here in Cayman, Papa John’s has not had to adjust its prices yet, said restaurant manger Eric Fabinger.

‘[The restaurant’s cost of cheese] is lagging a little behind because we bulk order,’ he said. ‘Probably in the next shipment we will feel it more. After that we’re going to have to look at [pizza prices] for longer down the road.’

The rising costs of dairy products is probably here for the long term, Mr. Dryer said.

‘We’re trying to do what we can to negate some of the increases,’ he said. ‘But [high dairy prices] are likely not to go away anytime soon.’

With the rising price of milk this may be the only way kitty gets a drink in the future. Photo: File

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