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Retail and farm values track more closely for whole milk than cheddar cheese

  • by ERS
  • 10/3/2012
  • Dairy
  • Food Prices, Expenditures, and Establishments
  • Processing & Marketing
  • Retailing & Wholesaling
A chart showing retail and farm values for milk and cheddar cheese.

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Changes in the farm value and retail price of whole milk tend to track relatively closely over time. Milk moves from farms to retail outlets, via fluid milk processors, in a matter of days. Prices paid at each end of the supply chain are thus close together in time, and changes may be transmitted quickly from level to level. The relationship between the farm value and retail price is weaker for Cheddar cheese. Cheese manufacturing is a lengthier process than fluid milk processing, and cheese may pass through several intermediaries before reaching retail outlets. Prices at each end of the supply chain are thus farther apart in time, and changes at one level are not reflected as quickly at the other. This chart appears in "Retail Dairy Prices Respond Differently to Farm Milk Price Shocks" in the September 2012 issue of ERS's Amber Waves magazine.

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