Transforming milk supplied by farmers into the dairy products
consumers buy at retail food stores requires processing, packaging,
and transportation. Costs for these and other value-adding services
also account for a substantial portion of a food's retail price.
ERS compares prices paid by consumers for selected dairy products
with those received by farmers for milk to calculate the farm share
of the retail price. Since 2000, the farm share of a gallon of
whole milk has fluctuated between 45 percent and 58 percent, with
the highest shares seen in 2007 and 2011. A sharp decrease in farm
prices pushed down the farm value of a gallon of whole milk to
$1.43 in 2009. As farm prices recovered over the next few
years, the farm value rose to $1.75 in 2010 and $2.07 in 2011. The
farm share of the retail price simultaneously rose from 46 percent
in 2009 to 54 percent in 2010 and 58 percent in 2011. More
information on ERS's farm share data can be found in the Price Spreads from Farm
to Consumer data product, updated November 14, 2012.