Rising milk, food prices worrying analysts  An uptick in the price of milk is bringing added revenue to dairy farmers, but is squeezing profit margins at businesses like Wal-Mart that sell it, according to a recently published report.

U.S. dairies are currently in the midst of a record run in production as they work to keep pace with burgeoning demand for milk. Though the rise in price has helped farmers to recoup some of the losses they have absorbed over the past few years, the quick jump is boosting costs for shoppers and has directly hurt profit margins at companies like Starbucks, Bloomberg reports.

The rise in the price of milk is indicative of the overall uptick in food and energy prices, according to Reuters. Over the past few years, commodities have surged in value as global demand - especially from emerging economies like Brazil, China and India - has far eclipsed supply. Though the rise has been a boon for farmers, it worries analysts and policymakers who fear the price jumps will spur a wave of riots like those that occurred in 2008 during a similar run-up.

In fact, the Arab Spring, as the wave of revolutions that spread through the Middle East and North Africa this year has been dubbed, was partly spurred by surging food costs. According to industry watchers, unrest in Tunisia and Egypt, where both governments fell under intense pressure, was initially prompted by the steep cost of grains and other food sources.

Still, though the U.S. Department of Agriculture last week forecast that U.S. farmers will produce record amounts of milk this year, prices have surged 24 percent since the beginning of the year. What's more, the retail price of dairy products is expected to climb as much as 5.5 percent this year, which is a much faster clip than overall food costs are projected to rise.

U.S. farmers have "every incentive to keep producing and expanding supplies whenever they can," Wells Fargo economist Michael Swanson said in an interview. "With the weak dollar and growing Asian demand, we can sell all this milk that we're producing at these prices or even better."

Economists worry that the price raises will prevent consumers from opening their wallets as they have expressed tepid confidence in the nascent economic recovery. Kurt Salmon retail strategist John Long said coming price hikes at the supermarket could cause consumers to tighten their belts - and put the economic recovery on hold.

"We're already starting to see a little bit of margin pressure," Long told Reuters. "And we think that as we get into the summer and fall, when we see bigger price increases … that may cause some consumers to pull back." 
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  1. Did you watch the "Extreme Couponing" show they should have featured "Printapons" which I use and print coupons from online

  2. you forgot to mention the rising cost in corn to feed the cows , diseal fuel to plant or harvest the crops, health insurance ( if the farmer can afford) vet care , repairs on the much needed equipment.
    Farmers are lucky to get their heads above the water. Not to mention they do not have a 9 to 5 job and weekends off and paid vacations.
    i feel most consumers would rather have healthy food from here in the United States even if they have to pay more. And i feel the farmer is not getting their fair share it is the middle man.
    No one ever complains how much they pay for that bottle of beer or glass of wine. go figure.
    God Bless our American Farmer. I wish i was able to do it. Don't have the backbone. So if you complain about a farmer go spend a week with one.

  3. WOW, You r all hypocrites, Milk prices rising, so lets raise food prices. GAS AND DIESEL PRICES (ETHANOL SUBSIDIES) and thats not raising the prices of food. GO BACK AND TAKE A GOOD LOOK AT WHATS HAPPENING< A DAM REAL LOOK AT THE WHOLE PICTURE.

  4. maybe we should stop mandating and subsidizing turning food into fuel?

  5. Poorly researched and written article. Production ,on a national basis, goes up 1-3% each year so 'record production' is not new. A 24% increase after a 45% drop in revenue two and a half years ago is not even back to normal trend. The 'boon' to dairy farmers referred to in article is non-existent. It has been eaten up by higher input costs of fuel, fertilizer, and grains. Then we must look at bigger picture, not just at the dollar figure. When we have inflation it requires more dollars to purchase the same amount of goods or services. But the true value of these does not change. Because of this county's food policy, prices received at the farmgate do not reflect inflation as much as the rest of the economy. The trend line for dairy farm price lags far behind other industries. The 5.5% rise in retail prices will never make it to the farmers. It will be taken by the retailers and the processors. Dairy farmers have NO incentive to expand production beyond normal because financing is difficult at best to come by, and rising inputs combined with unsure long term farmgate prices make expansion a very risky venture. DWCovert

  6. the dairy farms are all close to bankruptcy in Idaho. The banks won't loan any money .Feed is at record prices .CME is corrupt 4%of the milk in the U S traded setting national prices.we need a milk strike

  7. the cheese factories are adding chineese powder to our clean milk and making 20%more cheesebut the powder has melamine in it and the USDA is compromised not inspecting loking the other way .

  8. milk, Milk, MILK!