It wasn't that long ago that we were all paying about two dollars for a gallon of milk. Now, my local grocery store is charging $4.09 for a jug of whole milk, and about 40 cents less for skim. Higher milk and butterfat prices are also jacking up ice cream prices. Higher cheese prices are getting passed along to pizza buyers. Even Starbucks has been forced to jack up prices even higher than it already charges because of its high cost of milk. That's the cost of doing business when you make a lotta latte.
Now, we hear that popcorn prices are heading skyward, too. They've gone up roughly 40% per pound over the past year, and consumers are starting to feel the hit. Some movie theaters are already raising their already-expensive prices, but most of us make our popcorn at home. The reason for the popcorn price hike, according to most experts, is the growing demand for corn to make ethanol. There's only so much corn out there - and more people want it to fill the cars instead of fill our tummies. Simple supply and demand, say the experts. And as usual, it's all tied in to the soaring price of oil.
While many farmers say that sky-high milk prices are also supply-and-demand issue, they argue that we shouldn't blame the corn crisis on the high prices. Farmers say they can't pass along higher feed costs to consumers because mercantile exchanges set milk prices. They're enjoying the benefits of higher prices this year, but they're also coming off a year where milk prices were unusually low. (At least for them - I remember paying roughly three bucks a gallon for the milk we bought last year).
I guess the lesson here is the volatility of markets, particularly in the global economy. You can't ever assume that something like popcorn, which seems to have always been cheap, will stay that way. Milk prices may hit peak prices so high that families will consider alternatives. (Ever had cereal dry? It's not that bad). If there's any consolation it's that high prices usually bring more people into the business, creating greater supply and eventually lower prices.
We'll just have to bite our tongues until that happens.
Jeff Field
NBC Action News Executive Producer
P.S. Gas prices have actually been falling the past few days. Did you notice?