Retail Milk Prices Might Be Lowest in Nearly a Century
Readers Digest has published a brief history of milk prices, dating back to the 1930s at the start of the Great Depression. Back then, you could buy a gallon of milk for just 26¢.
But that price doesn’t tell the whole story. Adjusting for inflation using the Consumer Price Index calculator housed at the Bureau of Labor Statistics, that 26¢/cwt price jumps to $3.84/gal. in today’s value.
By 1935, as dairy herds succumbed to the Great Depression, milk had jumped to 47¢/gal at retail, or $8.72 on an inflation-adjusted basis. They peaked on an inflation-adjusted basis at $9.44 in 1940, and remained above $8/gal on an inflation-adjusted basis until the 1970s.
At $2.90/gal today, retail milk prices are at their lowest level on an inflation-adjusted basis since the 1930s. See table below.
Year Milk Price Inflation-Adjusted Price
1930 $0.26 $3.84
1935 .47 8.72
1940 .52 9.44
1945 .63 8.93
1950 .83 8.92
1955 .93 8.79
1960 1.00 8.62
1965 1.05 8.50
1970 1.32 8.82
1975 1.57 7.61
1985 2.20 5.26
1995 2.50 4.20
2005 3.20 4.24
2018 2.90 2.90
“I think an important part of this story is the amazing and persistent increases in milk yield,” notes Andy Novakovic, a dairy economist with Cornell University. “Our farmers are able to deliver a high-quality product at a favorable price for consumers because they are so good at making milk.
“Production costs are also a factor. Energy prices tripled over the ‘70s and that drove up the cost of everything. Feed prices spiked similarly [in the last decade] although have now settled closer to doubling the pre-ethanol levels. Those costs can drive milk prices, but part of the trick is whether they drive other prices more,” he says.
“My bottom line in this is two-fold: One, dairy farmers can never stop improving in a technology driven production environment. Two, consumers are the ultimate beneficiaries of the fact that the dairy industry does an amazing job, day-in and day-out, year after year, in consistently producing a high-quality product, at an affordable price” says Novakovic.