Why the Price of Milk is Set to Double

Yet another indicator of a tough economy, experts are predicting that the price of milk will double. And we’re not just talking about organic, ultrapasteurized milk.

A gallon of ordinary milk at the grocery store is expected to double, and the cost of other dairy products could rise dramatically as well, just as dairy farmers are preparing to slaughter 103,000 cows.

The slaughtering, which The National Milk Producers Federation will provide dairy farmers with incentives for in the next few months, is expected to help cut the cost of dairy production and shift costs to consumers.

As a result of higher feed costs and a milk surplus, it currently costs about $17 to produce $10 worth of milk, according to a Bloomberg report.

The price of milk is one component used in calculating the Consumer Price Index (http://www.bls.gov/cpi/cpifaq.htm), a benchmark for inflation.

In addition to milk prices doubling, the average retail butter price could exceed the record high of $3.94 a pound and cheddar cheese prices could reach or exceed $5.10 a pound in 2010 as milk production falls, Bloomberg says.

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Related Links:

•    Grocery Green: How are Food Prices Set?

•    Economic Indicators: A Primer

•    6 Sites To Help Cut Food Prices

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