Thinking like an economist… about milk

Last Friday I was watching CNN and the government shut down was a hot topic (and still is). What stood out the most were reports about how a prolonged government shutdown might affect grocery prices, particularly the price of milk. The news claimed that milk prices could double! I didn’t know if this was actually possible, a gallon of organic milk is about $4.50. Would people actually pay $9.00 for milk? It made me wonder how a rise in price might affect the choices consumers would make at the grocery store. Would people opt for milk alternatives like coconut, soy, or almond milk? Would people choose to consume more of other beverages instead? How would this affect the price of cereal?

Today my family in Puerto Rico told me that in the past few days the price of milk has risen to $8 a gallon. I wouldn’t consider milk to be a staple of the Puerto Rican diet, but a lot of popular baked goods are made with milk. So I’m curious about how a rise in milk prices will affect the price of other popular foods. But my question to the class is, how would a rise in milk prices affect your consumer choices?

3 thoughts on “Thinking like an economist… about milk

  1. I hardly have milk at the current price, and my toddler drinks soy, rice or almond milk. The one thing that I can never go without is cheese, which I still consider quite pricey. I’m sure the price of cheese and alternative milk products will increase as well if the price of milk increased. I would definitely decrease my consumption of dairy products if the price doubled, but would continue to buy alternative milk products for my son even if it cost me more… he LOVES his “milk”.

  2. Really interesting topic! There are so many forms of milk (powdered, canned, condensed, evaporated, UHT, fresh, etc.) that it makes it a really complex decision for consumers and processors on what to do if the price of milk were to double. I’m not sure about what types of milk are used to make processed foods. I expect it depends on the specific product and the relevant prices at the time.

    Also, I can’t believe how much more expensive organic milk is than regular milk. Well, I can believe it, but wow…!

    Now I’ll be dreaming of fresh milk for the rest of the day… :)

Leave a Reply