Wednesday, September 5, 2007

Thirst for Milk:

It looks like all the milk mustache ads are starting to pay dividends for milk producers. The NY Times has a story about global milk prices.

“Driven by a combination of climate change, trade policies and competition for cattle feed from biofuel producers, global milk prices have doubled over the last two years. In parts of the United States, milk is more expensive than gasoline. There are reports of cows being stolen from Wisconsin dairy farms.

“There’s a world shortage of milk,” said Philip Goode, manager of international policy at Dairy Australia in Canberra.

But the biggest force driving up milk prices is the same one that has driven up prices for conventional commodities like iron ore and copper: a roaring global economy. Rising incomes in emerging economies from China and India to Latin America and the Middle East are lifting millions of people out of poverty and into the middle class.

It turns out that, along with zippy cars and flat-panel TVs, milk is the mark of new money, a significant source of protein that factors into much of any affluent person’s diet.”

How does this affect you Mr. and Mrs. America? I picked up pizza last night and the proprietor Frank asked me “Joe you’re a consultant what is happening to the price of cheese. It went up early this year and it hasn’t come down. When do you think it will come down?” I answered “Frank there are a couple of dynamics at work, one there appears to be a growing demand for milk, two we are following misguided priorities if we start to use food for fuel. If farmland and dairyland production is being converted into biofuels rather bread and butter, we have a problem. The yahoos running the show are totally out of touch”. Frank responds ”cheese prices are killing my margin”, as he points to my pizza. “I can’t sell pizza at this price if cheese does not come down soon”.

Yes, milk is popular again and this time there is a global Thirst for Milk!