Originally created 04/28/04

Milk prices edge toward $4 per gallon



NEW YORK -- An increase in the base price of milk is pushing the retail price of the staple to nearly $4 per gallon, causing some consumers to cut back, switch brands or seek out wholesalers.

"I stopped buying organic milk because it was so expensive," said Ashley Wotiz, a designer, as she bought a pint of store brand milk for $1.15 at a grocery store on the east side in Manhattan. Now, Wotiz is cringing at the price of what was once the cheapest milk on the shelf.

The rise in prices comes after the U.S. Agriculture Department announced Friday that it would raise the minimum price paid to dairy farmers by 50 cents - taking the price to a record high of $1.69 per gallon. That doesn't include packaging, distribution and other costs.

As a result, the retail price per gallon of milk is set to reach more than $4 per gallon - its highest levels ever - in at least some areas, not adjusting for inflation.

Jim Rogers, president of the Albany-based Food Industry Alliance of New York State, said the state approved an increase in the maximum price retailers can charge to $4.18 per gallon, the first time it crossed the $4 mark.

Prices can vary from the national average based on the region where the milk is produced and the type of milk sold, such as skim or whole.

On Monday, stores in New York were selling milk at least 20 cents higher than last week. At D'Agostino Supermarkets, a gallon was priced at $3.69 while at The Food Emporium, a division of The Great Atlantic and Pacific Tea Company, it was listed at $3.84.

At Costco branches throughout the country, milk was selling at about $2 a gallon but this will change next week, said Judith Logan, the general merchandise manager for the wholesaler. "Dairy farmers may be able to hold prices for a week but after that, based on the industry news I have, prices will go up."

"We have to pass the increase on to the customer otherwise we can't pay our bills," said John Catsimatidis, chairman and CEO of Gristede's Foods Inc., a grocery superstore chain in New York.

The average price of milk at Gristede's this week is $3.79 and will cross $4 next week, he said.

Shweta Sinha of Winston-Salem, N.C., who shops at Wal-Mart for milk and says consumption at her household will remain unchanged because milk is an essential item on the family's grocery list.

"I hate the price but milk is an important product," said Hugh Chatelain, loading a gallon into his cart at Food Emporium. "I'm shocked but I don't care. I'll still drink it."