Milk prices are expected to jump as much as 28 cents a gallon across Minnesota this week.

Saturday, October 02, 1999

Milk prices are expected to jump as much as 28 cents a gallon across Minnesota this week. The 10 percent hike could be the largest retail milk price jump ever, according to industry experts.

But the increase might not last – or even happen – if pricing patterns play out as they have in the past.

&uot;They are projecting it to go back down,&uot; said Al Weisert, store manager at Albert Lea’s Hy-Vee.

Weisert said is expecting the projected price hike to hit locally, but is unsure of the specifics.

&uot;There’s a lot of stuff that goes into it,&uot; he said.

Milk prices are adjusted every month and Weisert said the fluctuations can affect sales. &uot;It’s hard to say what will happen,&uot; he said.

Dairy suppliers are telling retailers ”to get ready for a big one,” said Richard Horvath, owner of Richard’s Market, an independent supermarket in Maplewood.

Prices for skim milk through whole milk will be pushed above $3 per gallon. ”It’s the largest one-time increase I’ve seen in 34 years in the grocery business,” said Horvath.

The country’s desire for cheese is forcing much of the increase, industry experts said. About 75 percent of all milk produced in the Upper Midwest goes to make cheese, and demand jumped over the summer.

That boosted the price paid for milk by manufacturers; federal pricing guidelines peg the price of drinking milk to those prices, and the process lags a couple of months.

A small part of the price increase in the Upper Midwest comes from the dairy industry anticipating new federal regulations, said University of Wisconsin economist Bob Cropp. These new regulations are expected to slightly raise prices for Upper Midwest farmers.

Any number of legal challenges or if Congress acts quickly to block the new USDA policies could hold it up, Cropp said, but that would only affect a small portion of the anticipated increases in retail prices for drinking milk.

The higher milk prices should last through October and then begin falling back in November, said Don Ault, a vice president and dairy analyst with Sparks Cos. in New Brighton.