Milk Pricing Fact Sheet

03/07/07 The following is being issued by the Midwest Dairy Association:

The price of milk can fluctuate due to changes in supply and demand, just like other grocery products and commodities. Farm-level milk prices are expected to go up in 2007, because the supply of milk is not keeping up with strong demand. However, dairy products are still one of the most cost- effective investments you can make for your family's health.

Background information on dairy pricing:

-- America's dairy farmers work hard every day to produce a nutritious, wholesome product. Today the high prices farmers are paying for feed and fuel are putting tremendous pressure on dairy farm families. Unlike many other businesses, dairy farms cannot directly pass on their increasing production costs. Corn prices, as well as the price of soybeans and hay, have skyrocketed because of the growth of the ethanol industry.

-- Farmers do not set the price of milk.  Wholesale and retail prices are determined by market forces of supply and demand.  There is often a huge variance in the retail price of milk from store to store, and from city to city.  This is because of differing markups by supermarkets, mass merchandisers, C-stores and drug stores.

-- While there are many factors that affect the price retailers charge for milk -- including processing, transportation and marketing costs -- farmers receive less than 30 cents of every dollar consumers spend on dairy products.

-- Dairy products remain a solid value for consumers. Penny for penny, no other food offers as much nutritional value for America's families as milk. While food budgets are tight for many people, dairy products remain an important staple ingredient for their great taste and nutrition.

-- Shoppers have stayed loyal to dairy, even during times of price fluctuations, due to dairy's excellent nutrition and great taste. Americans recognize the important role of dairy in their families'diets.  In 2004, retail prices nationwide increased an average of 19%, while fluid milk purchases declined less than 4%.  Since dairy is prevalent in almost every American home, changes in price can have an immediate impact.

-- Dairy products offer one of the best values in the supermarket. No other food offers as much great nutrition as milk -- including calcium and eight other essential nutrients -- all for just pennies per ounce.

-- For your health, it's a good time to buy more delicious, nutritious dairy products.  Be sure to consume enough dairy as recommended by the U.S. government's Dietary Guidelines for Americans.

-- The Dietary Guidelines recommends nutrient-rich foods, such as low-fat or fat-free milk or milk products, along with whole grains and fruits and vegetables, as food groups to encourage.  That means Americans need to enjoy more dairy.