Nevadans bracing for milk prices to top $4

Jennifer Shubinski

Wednesday, April 28, 2004 | 10:44 a.m.

While gasoline prices are inching up in penny increments, another daily commodity for many is expected to take jumps in dollar amounts.

An increase in the price of raw milk will push up the retail price of milk and other dairy-based products such as cheese, ice cream and butter. The retail price of milk is expected to reach and exceed $4 a gallon in many parts of the country.

A combination of factors, including lower production, high feed costs, the closed Canadian border because of mad cow disease and sluggish sales over the past couple years that are just now starting to increase, are all playing into the increase prices, said Mike Compston, executive director of the Nevada State Dairy Commission.

Federal regulators set the cost of raw milk, but the retail price varies across the country and from store to store based on where the milk was produced and on the type of milk sold, whether it is whole, 2 percent, 1 percent, or skim.

"It is strictly a supply and demand situation," Compston said. "We will see significant increases in the price of milk. May is when we're going to see the big jump."

Exactly how much is hard to say, but some analysts have predicted milk could go up to $4.59 a gallon.

Those high prices are hard to swallow for milk-buyer Jennifer Gentry, who buys up to three gallons a week for her 2-year-old daughter.

"We would try to cut it down, but we don't want to. It's good for her" Gentry said. "It's ridiculous that is would go up that high."

The average price for a gallon of milk in Southern Nevada during April 14 to April 16 was about $2.80, according to a price survey by the state dairy commission. Whole milk was the most expensive averaging out at $3.04, up 20 cents from March, the commission reported. The price of whole milk at some stores in the valley was $3.89 during the same time period, the commission reported.

Some stores are putting up signs on dairy cooler doors to explain to customers why they will be seeing or have already seen large price increases.

Smith's Food & Drug is in the process of putting up signs throughout the Las Vegas Valley, said Marsha Gilford, Smith's spokeswoman.

"We are paying much more for the milk that we are purchasing and unfortunately consumers will see an increase in their milk products," Gilford said. "We hope to get back to more comfortable pricing as soon as we can."

Costco Wholesale also has posted signs in its stores on the West Coast, said Steve Pimentel, assistant general merchandise manager for corporate foods at Costco. He was not sure whether signs would be posted in the Las Vegas-area.

"There's nothing we can do to change the cost of milk," he said. "You can't hedge it, you can't contract it, you can't forward buy it."

Despite the price increases, Pimentel said Costco tries to deliver the best possible price for its customers.

Anderson Dairy, which has a processing plant in Las Vegas, has experienced an increase in production costs, said Dave Coon, vice president of sales.

"Our costs are based on the raw product we're buying from suppliers," he said. "There's been a huge spike now in the cost of the raw product itself."

In Nevada, the price for raw milk was $13.34 per 100 pounds of milk in March -- there are about 11.6 gallons of milk in 100 pounds of milk. That price went up to $15.04 in April and is scheduled to increase to $21.26, according to the commission.

Despite the predicted increase in prices, Compston doesn't expect the demand to slack off.

"There hasn't been a lot of elasticity in the past," Compston said. "The consumer doesn't quit buying it (despite heightened prices)."

Compston said milk buyers should shop around for the best deal because prices can vary widely from store to store.