Why is there such price variation for milk in the US?

[Ginevra]

Possibly too complex a question. A food group I’m in on FB had people talking about how their milk prices just recently “jumped” to $2/gallon from recently being just .98. Ninety-eight cent milk is completely unimaginable to me! I think I’m making out like a bandit when I can sometimes get $2 milk at Aldi. (I think the person with .98 milk was in the mid west.)

Why is there so much discrepancy on milk prices on the US mainland? I also thought milk was usually subsidized at least some by the federal govt. Is it subsidized at all? Is the price range having to do with how far one is from where the milk is produced? Is it simply based on COL in any particular area? 

Just curious. 

[alisoncooks]

I pay just under $2/gallon, and that's the cheap/generic at Harris Teeter.

[Laura Corin]

Local competition, with milk used as a loss leader? Here bananas are used to lure people in.

[shinyhappypeople]

I have no idea.  I live almost within sniffing distance of lots of dairies and milk averages around $2.25 a gallon at Costco, which is the cheapest I've seen.

[Arcadia]

No idea. California has plenty of dairy farms yet we pay more than $5 per gallon

From CA Dept of Food & Agriculture https://www.cdfa.ca.gov/dairy/Milk_Pricing_Works.html#regulated

“5. What are the different regulated classes of milk?

Dairy products are grouped into classes based on similar manufacturing processes and/or product make-up.

• Class 1 - fluid milk.
• Class 2 (cultured products) - yogurt, sour cream, cottage cheese, buttermilk, and egg nog.
• Class 3 (frozen products) - ice cream and frozen dairy desserts.
• Class 4a - butter and dried milk powders.
• Class 4b - cheese and whey protein powders.

 

6. Why are different classes of milk priced differently?

This depends on the type of product. Fresh, perishable dairy products such as fluid milk, sour cream, yogurt, cottage cheese, and whipping cream do not have a long shelf life. As a result, manufacturers of these products tend to require specific amounts of high quality milk to meet the current demand for their products. As a result, milk used for these products (classes 1 and 2) tend to carry a relatively higher price that reflects the manufacturing requirements and immediate consumer demand. 

Other dairy products such as butter, cheese, and dried milk products have a longer shelf life and are storable for longer time periods. When the fluid milk supply exceeds demand, excess milk (classes 4A and 4B) is used to manufacture these storable products. This dynamic drives these milk prices lower.

7. Why are California prices different than other parts of the U.S.?

Prices usually differ because of supply and demand for milk and manufactured milk products. If producers provide less milk than required by processors to meet demand for these products, competition develops among processors, resulting in higher milk prices. If milk production outpaces the demand for milk and higher valued finished dairy products, much of the milk ends up in lower value ones like butter, nonfat dried milk powders and cheese, with producers receiving a correspondingly lower price for their milk. As demand fluctuates within states and regions, milk prices vary as well.”

[Noreen Claire]

It's $2+ per gallon, supermarket brand, around me in the northeast.

We pay $3.25/half gallon for nearly-organic local milk, delivered every Tuesday, plus delivery fee. I do end up having to buy another gallon every weekend to get us through to delivery day, and usually spent about $3 for a brand name gallon. My fridge isn't big enough for all the milk my family goes through. 😕

[Selkie]

We don't buy milk, but I just checked the price at our local Walmart and it is $3.15/gallon for store brand and $3.78/gallon for the other brand they carry. We're in the midwest and dairy farms are plentiful around here. 

[katilac]

I know that some states have price protections in place. I know this because mine is one of them 🙁

For a while, we couldn't even get free or low-priced ice cream specials! Luckily, that has changed and we can now buy Baskin Robbins at bargain rates on the 31st. 

 

[prairiewindmomma]

You might find this interesting: https://www.ams.usda.gov/market-news/dairy

And this will provide some more info as an explanation. If you only have time to read one link, read this one: https://www.cato.org/publications/commentary/madness-american-milk-prices

 

[prairiewindmomma]

September 2018 prices by state: https://ballotpedia.org/Milk_prices_by_state,_2018

[Lawyer&Mom]

Gas prices are similar.  The prices people complain about are usually way below what we pay. 

[fairfarmhand]

Depends on lots of things, but I think how close to the dairy you are makes a difference. And weather patterns. If the farmer gets more hay/grass due to rain, it stands to reason that his milk is cheaper to produce. 

[AmandaVT]

Wow - regular milk is on sale for $3.99/gallon here (Hood). I don't buy milk often, but last time I did, a half gallon was around $5. We have a Hood plant about 5 minutes from that particular grocery store and a LOT of cows in this state. I don't think proximity is an issue here.

[MEmama]

I’m not sure what kind of price protections there are for US producers.  Where we lived in Canada, milk (like gas) was the same throughout the entire province. As I recall, we had only one or two brands that all the local diaries sold to. 8years ago or so we paid $6.00 or more a gallon; I would imagine it’s higher now. Cheese prices were astronomical (to us) and “frozen dessert” instead of ice cream was the norm. But farmers were paid well and pretty much guaranteed a decent living; it's just a different set up than in the US. 

Gas was the same in that the price didn’t vary between gas stations (with a minor exception of they were super far from the refinery, IIRC). The price changes occurred on Thursday, province wide. 

[historically accurate]

I've wondered about this recently - I thought our milk prices were pretty good - around $2.25 - $2.75 for Walmart or Aldi brand. But then I had a conversation with a friend of mine who lives in a northern suburb (I live in a southern suburb), and she was saying she had started making all of her own dairy products since her milk was always 99 cents at Aldi and Walmart. Talking longer about it, her milk has been at 99 cents for at least 9 months; my price just dropped from $3.00. We are literally 35 minutes away from each other. Both of our areas are right on the outskirts of rural farm areas - mine might be slightly more rural. Only differences? Her suburb has a higher income level than mine, and she is closer to the Wisconsin state line. 

[mom2scouts]

A gallon of milk here is $2.49 and I can practically walk to dairy farms. There doesn't seem to be any method to milk prices. I should add that our news has recently had stories about crying dairy farmers who are giving up the cows and shutting down farms that have been in their family for generations because they can no longer make a living.

[mommyoffive]

5 hours ago, Selkie said:

We don't buy milk, but I just checked the price at our local Walmart and it is $3.15/gallon for store brand and $3.78/gallon for the other brand they carry. We're in the midwest and dairy farms are plentiful around here. 

 

Same. We have a dairy farm about 5 mins from our house.  How can we not have super cheap milk? 

Lowest priced gallon at Walmart their brand is 2.79

I would move for .45 cent milk.  Where is that?

[Katy]

I always figured it had more to do with climate and the price to run refrigerated trucks than the proximity to the dairies.  After all,  during summer fresh greens that haven't wilted during transport  (other than collard greens and beans) are also practically impossible to get at all in a hot state.  I remember getting really exicited after I discovered Bountiful Baskets (a co-op) when i was in Oklahoma in the winter.  It was better than Whole Foods quality at Aldi prices (down to the quarter, I got so curious I made a price book).  All of that changed about mid-May when suddenly almost everything was rotten.  I learned to only buy from them from November- early May down there.  Everything else got ruined in shipping. 

[Guest]

14 hours ago, katilac said:

I know that some states have price protections in place. I know this because mine is one of them 🙁

For a while, we couldn't even get free or low-priced ice cream specials! Luckily, that has changed and we can now buy Baskin Robbins at bargain rates on the 31st. 

 

What does this mean exactly? Like, the government requires that a gallon of milk can never be sold for less than $2? 

Sorry; I don’t know much at all about macro economics. 

[Guest]

15 hours ago, prairiewindmomma said:

You might find this interesting: https://www.ams.usda.gov/market-news/dairy

And this will provide some more info as an explanation. If you only have time to read one link, read this one: https://www.cato.org/publications/commentary/madness-american-milk-prices

 

That article is very interesting. The part about the entrepreneurial dairy underselling milk and being crushed out of business for doing so is stunning. 

[Guest]

13 hours ago, MEmama said:

I’m not sure what kind of price protections there are for US producers.  Where we lived in Canada, milk (like gas) was the same throughout the entire province. As I recall, we had only one or two brands that all the local diaries sold to. 8years ago or so we paid $6.00 or more a gallon; I would imagine it’s higher now. Cheese prices were astronomical (to us) and “frozen dessert” instead of ice cream was the norm. But farmers were paid well and pretty much guaranteed a decent living; it's just a different set up than in the US. 

Gas was the same in that the price didn’t vary between gas stations (with a minor exception of they were super far from the refinery, IIRC). The price changes occurred on Thursday, province wide. 

Yes, milk does seem to follow a pattern similar to gasoline, at least in anecdotal ways. 

I remember post-Katrina when gas prices absolutely soared. Milk prices soared as well. It was difficult to find gas lower than $4/gallon, and it was the same with milk; it was in the upper $3 at the cheapest milk locations (usually Costco at the time.) 

I never did really understand why gasoline “needed” to increase exponentially, either.  Some people said it was due to refineries in the Gulf of Mexico going offline after Katrina, but that doesn’t seem to match other disasters, like when the underwater pipe ruptured (was that called Deep Water Horizon? I have forgotten...) 

[Carrie12345]

Before this thread, I had no idea that there was any such thing as cheap milk!

Does this have as wide an impact on milk-based products?  I’ve always wondered about people who claim to save money by making their own yogurt, cheese, etc.  Superior product I can understand. I’ve just never seen any cost savings from my attempts.  (PA, one of the highest milk prices.)

[moonflower]

Walmart has by far and away the best prices locally on soymilk.  You can get the unsweetened WestSoy half gallon, organic, shelf-stable (they don't put gums in it which is why I like shelf stable), for like $3.50.  At any other store, the 32 oz one (1/4 gallon) is $3.  

[Laura Corin]

I just worked it out for here.  A standard price for a US-gallon-volume of semi-skimmed milk (at a UK-wide supermarket chain) is £1.82.  That translates to US$2.24.

[Serenade]

Where I live in central NC, Milk is often $3.29 - $3.69 at regular grocery stores, and maybe $2.69 to $2.99 at Aldi.  A couple of months ago we were in Winston Salem, and we stopped at an Aldi while there.  The milk was .99 a gallon!  My husband said it was the same price at Walmart in Winston Salem.  So I did some googling, and it appears the Lidl effect is in place.  There is a Lidl in the area, and when there is a Lidl, the price on many groceries items drops.  If interested, google the Lidl Effect. 

[Pen]

I think there’s a lot of price variation for other things like fruits and vegetables, meats, ...   also

 

[katilac]

3 hours ago, Quill said:

What does this mean exactly? Like, the government requires that a gallon of milk can never be sold for less than $2? 

Sorry; I don’t know much at all about macro economics. 

Correct, although I believe that it's based on a minimum markup rather than a dollar value. 

It affects promotions in addition to pricing of milk. If a store wants to run a special like 'buy XYZ and get a gallon of milk free!' they will probably be allowed to do so (as long as the total paid equals the minimum price of the milk) but they have to request approval ahead of time. They will not get approval for a special that includes milk while costing less than the regulated price of the milk. 

[athena1277]

A local news station did a story about milk prices in our area (N AL).  Just comparing Walmarts, they found milk over $3 a gallon on one side of town and $1.20 on the other side.  They gave the reason as greater competition in the area with cheaper milk.  The one with cheaper milk has a Target, Kroger, and Andi  within a few miles that sold cheaper milk.  Without being from here, you might think one area was more ritzy than the other, but that’s not the case.  They are very similar.  Interestingly, the new Publix that opened half a mile from the cheaper Walmart several months ago is still selling milk for over $3 a gallon.  It’s the closest grocery store to me and I refuse to shop there.  We go through 4 gallons a week.  I’m not paying that much.

[Crimson Wife]

Labor costs will get passed through. Walmart/Target/etc. sell for cheaper than traditional supermarkets because the workforce isn't unionized. So milk will be $2.99/gal at Target but $3.49 at the grocery store. CA has a minimum wage of $12/hr so our milk is going to be more expensive than areas with similar wholesale prices but lower wages.

[Suzanne in ABQ]

I buy organic.

The brand in the red carton costs $4.95 / half-gallon

The store brand costs $2.29 / half-gallon

[kiwik]

On 9/7/2019 at 10:46 AM, MEmama said:

I’m not sure what kind of price protections there are for US producers.  Where we lived in Canada, milk (like gas) was the same throughout the entire province. As I recall, we had only one or two brands that all the local diaries sold to. 8years ago or so we paid $6.00 or more a gallon; I would imagine it’s higher now. Cheese prices were astronomical (to us) and “frozen dessert” instead of ice cream was the norm. But farmers were paid well and pretty much guaranteed a decent living; it's just a different set up than in the US. 

Gas was the same in that the price didn’t vary between gas stations (with a minor exception of they were super far from the refinery, IIRC). The price changes occurred on Thursday, province wide. 

NZ is more like this.  Petrol varies a little depending on demand but since a large part of the price is tax it is not huge.  Milk is set by export price but there are some places that sell cheaper as loss leader or short dated- the cheapest is supermarket brand which I think is about $3.60 for 2 litres ($7.20 a gallon).  Bear in mind we live in the dairy capital of the world.  But isn't massive variation the norm in the US?

[RootAnn]

Y'all have some cheap milk!! I pay $4/gallon or more. It is almost never on sale unless we drive 30 minutes to the next (bigger size) town where Walgreens (not a grocery store) sometimes uses it as a loss leader.

One of my friends carries coolers in her truck for when she's visiting her family there so she can pick up milk when it is on sale there. But she also drives 1 1/2 hrs to Costco to shop every couple of weeks.

[barnwife]

4 hours ago, kiwik said:

NZ is more like this.  Petrol varies a little depending on demand but since a large part of the price is tax it is not huge.  Milk is set by export price but there are some places that sell cheaper as loss leader or short dated- the cheapest is supermarket brand which I think is about $3.60 for 2 litres ($7.20 a gallon).  Bear in mind we live in the dairy capital of the world.  But isn't massive variation the norm in the US?

Is that $7.20 NZ dollar or American?  Even if it's $4.50 American, that's high considering NZ's dairy industry. 

Anything under $2 in the US is extremely competitively priced, but profitable for large scale sellers.  Most of the prices that are lower are loss leaders in my opinion.  The hundredweight price has been roughly $16 this year, $12/hundredweight is roughly $1 gallon, and farmers get some bonuses on top of that price, add trucking, pasteurization, bottling, trucking and more trucking, $2 seems cheap.  I'm thinking whole or 2%.  1% or skim, the price could be a bit lower because the cream is worth more than the milk, and has been skimmed off.

Interesting article from Cato, about what you'd expect.  The milk policy is in line with other food security policy.  Do they realize that wool is subsidized for national security reasons?  Would they prefer milk fluctuate between $1-$10?  That would be the price I'd expect with a free market policy. 

 

Edited September 9, 2019 by barnwife

[Farrar]

We usually buy a half gallon and it's $2.50ish for the store brand and $3.00ish for the good brand. I usually splurge on the better milk. I can taste the difference and it has a significantly longer expiration.

This is really interesting. I can't imagine paying so little. But it's across the board really. We went to Food Lion in small town NC off the highway to pick up food for our family trip. It was our job to get snacks. They had things like regular sized chips and pretzels for $1. We also had to get a few random produce items. So much cheaper. You forget how much it adds up.

[vonfirmath]

On 9/7/2019 at 8:44 AM, Serenade said:

Where I live in central NC, Milk is often $3.29 - $3.69 at regular grocery stores, and maybe $2.69 to $2.99 at Aldi.  A couple of months ago we were in Winston Salem, and we stopped at an Aldi while there.  The milk was .99 a gallon!  My husband said it was the same price at Walmart in Winston Salem.  So I did some googling, and it appears the Lidl effect is in place.  There is a Lidl in the area, and when there is a Lidl, the price on many groceries items drops.  If interested, google the Lidl Effect. 

 

I was at a different Wal-mart than I usually shop at last night and noticed they had a "Manager's special" on milk for just $1.39. it's been a LONG time since I saw milk that cheap.

But I just realized it is across the street from an Aldi.

 

[Targhee]

I’m not sure what causes the price variables from place to place, but it’s pretty messed up when milk (which comes from cows which eat plants which can be renewed) is still more expensive per gallon than gas!

ETA our local gas is currently around $3.05/gal and our milk is around $4/gal

Edited September 9, 2019 by Targhee

[kiwik]

8 hours ago, barnwife said:

Is that $7.20 NZ dollar or American?  Even if it's $4.50 American, that's high considering NZ's dairy industry. 

Anything under $2 in the US is extremely competitively priced, but profitable for large scale sellers.  Most of the prices that are lower are loss leaders in my opinion.  The hundredweight price has been roughly $16 this year, $12/hundredweight is roughly $1 gallon, and farmers get some bonuses on top of that price, add trucking, pasteurization, bottling, trucking and more trucking, $2 seems cheap.  I'm thinking whole or 2%.  1% or skim, the price could be a bit lower because the cream is worth more than the milk, and has been skimmed off.

Interesting article from Cato, about what you'd expect.  The milk policy is in line with other food security policy.  Do they realize that wool is subsidized for national security reasons?  Would they prefer milk fluctuate between $1-$10?  That would be the price I'd expect with a free market policy. 

 

NZ $.  The exchange rate varies but at the moment the NZ $ is weak.  We are told this is a good thing but not when you want to buy books or courses from the US.  Apparently NZ Lamb is cheaper in the UK than NZ.  The argument is we have to pay at least the export rate or it is not worth them selling to us.  Funnily when the milk and meat prices drop overseas this very rarely results in a drop in NZ Prices.  Apparently then we are supposed to do our bit to support farmers by paying higher prices.  We don't drink much milk or eat huge amounts of meat though.

[Arcadia]

1 hour ago, Æthelthryth the Texan said:

I thought of this thread just now. I'm ordering a pick up order from Walmart and the milk prices range from $2.07 (Walmart brand) for gallon of whole milk, to $4.00 (random Dairy I've never heard of whole milk) to $6.98 for Horizon Organic gallon of milk!!! 

 

Half a gallon of Horizon Organic high protein milk is $2.49 at Grocery Outlet here.

Safeway house brand per gallon non-organic is $2.99, organic is $5.99.

[PeterPan]

Our non-organic milk price just DOUBLED, from $1.19 to $2.39, so that was a total bummer. Dh drinks cow milk like a thirsty toddler, and I stopped paying the price of organic for him.

But yeah, it doubled recently and I don't know why. 

[Mbelle]

We don't drink milk, but the other day I was at Wal-Mart with ds and since he's learning measurements right now in math I was showing him pints, quarts and gallons. Because of this thread I took a peek at Wal-Mart gallon of milk.  It is $2.29 right now. 

I know a few years ago, the raw milk market was doing so well, that a bill was proposed that "pet milk" woud have to have food dye added to it.  It did not pass, but the market obviously causing a competition.  The neighboring state has legal raw milk for human consumption, so it would be stupid for our state to make this law.  

[mom2scouts]

One of our local news stations just aired another story with a sobbing dairy farmer selling off all his cows at auction. The farm has been in operation since 1894, but the family says they just can't make enough profit anymore. The news says that 25% of all dairy farms in the state have shut down in the past two years!

Edited September 28, 2019 by mom2scouts

[RootAnn]

I thought of this thread the other day. Local grocery store had milk as a loss leader: $1.99/gallon for most milk. I'm gonna top off on Monday while it is still on sale. Normally $4.29 according to the receipt.

[Serenade]

2 hours ago, RootAnn said:

I thought of this thread the other day. Local grocery store had milk as a loss leader: $1.99/gallon for most milk. I'm gonna top off on Monday while it is still on sale. Normally $4.29 according to the receipt.

 

That is definitely a good deal.  I just paid $3.69 at Walmart. 

[Condessa]

Wow, those are some crazy low prices.  I thought milk was amazingly cheap here, at $1.68/gallon.  We used to get milk for about $3.60 to $3.80 in our old town.  When we went to the city 3.5 hours away where I could get milk for just under $2.50/gallon, I would buy 16 gallons and wrap them up with ice under blankets for the drive home to put in the freezer.

[Ausmumof3]

Hmm zombie thread ...

although I have to wonder if you all ever figured out what caused the price variation