MU Ag Economist Forecasts Higher Milk Prices for U.S. Consumers

June 6, 2007

Story Contact:  Bryan Daniels, 573-882-9144, DanielsBC@missouri.edu

COLUMBIA, Mo. — In the months ahead, U.S. consumers can expect to pay more for milk, according to an agriculture economist at the University of Missouri-Columbia.

“If you look at a U.S. retail average and what consumers face today, we're running at about $3.10 a gallon,” said Scott Brown, research assistant professor in the College of Agriculture, Food and Natural Resources and program director of livestock and dairy with the Food and Agricultural Policy Research Institute (FAPRI). “When we look over the next two or three months, we're easily talking about adding another $1 to $1.50 to that price.”

Brown, along with dairy market forecasters nationwide, said a “very strong global demand for U.S. dairy products” is the driving force behind the price increase. He said the international demand focuses on dairy items such as dry milk, whey products, cheese and butter — which ultimately affect the cost of milk.

“Why that's translating into higher prices for consumers is because of the way we price milk in the United States,” he said. “It's very complex.”

Brown said consumers will begin seeing higher prices this month. He expects for prices to peak in August but remains somewhat unsure about September. Brown said prices will stabilize later in the year.

“As analysts, we know there are increases coming,” he said. “We feel certain about this run up. I'd say right now, during summer months, milk prices will remain quite strong. It's pretty easy to say $4.25 to $4.50 a gallon by late summer. By fall, we should start to see prices move back down. I think we'll move back into the $3.50 range.”

Brown also said he expects for consumers to be "caught off guard" by the increases, although in his opinion most people today already think milk prices are too high.”

Brown has been a MU faculty member since 1987. As program director of FAPRI, he provides Congress with analysis of livestock and dairy policy changes and has testified before House and Senate Agriculture committees.

To view or download video clips of Brown visit this site. Additional soundbites and b-roll are available on tape by contacting Kent Faddis at (573) 882-5361 or FaddisK@missouri.edu.