Bought Milk?

PURD — Hitting a record high of $20 per hundredweight, or roughly $2 per gallon, raw-milk prices paid to farmers likely will peak this month and then drop again, dairy economists say.
calendar icon 10 August 2007
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Consumers, though, will continue to pay more per gallon of milk. “We are the beneficiaries now after suffering some horrible, horrible years the last two or three years when we were paid less for milk than we were 30 years ago,” said Purdy, Mo., dairy farmer Larry Purdom.

Purdom, who is chairman of the Missouri Dairy Association, said that compared with fuel or bottled water, milk remains inexpensive.

“Milk is still a good buy compared to everything else you buy,” he said. “A lot of the cost is simply in movement.”

Retail prices

According to a U.S. Department of Agriculture dairy market report, the cost for a gallon of milk at grocery stores will continue to climb through 2007.

The USDA forecast predicts an increase in raw-milk prices into the fall, an indicator that the retail price of milk also will rise. The national retail price for a gallon of whole milk rose from $3.29 in January to $3.80.

Last July, Missouri dairymen received $1.30 per gallon of milk, compared with $2 this July, said Joe Horner, dairy economist with University of Missouri Extension. Most observers believe raw-milk prices will peak this month and remain robust through early 2008, he said.

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