Consumer Reports
Consumer Reports
January, 2000 Vol. 65, No. 1; Pg. 34
MILK. REPORT. Milk. New questions for an old staple
Volatile prices and more choices than ever mean that buying milk isn’t so simple anymore.)
Why does milk cost so much?
Have you been confused by milk lately? Prices shot through the roof early last year - topping $ 4.20 a gallon in California - only to fall in the spring. Now they’re rising again. Meanwhile, the cost of a gallon of milk can vary a lot from city to city - cheapest in Dallas last October, nearly a dollar a gallon more in Denver and Los Angeles. What’s more places you’d think would offer the best milk prices, such as your supermarket, sometimes charge almost 60 percent more than small grocers, according to surveys by Consumers Union.
MORE VOLATILE PRICES
The federal government has spent much of the last century trying to regulate milk prices. In the 1950s Congress hit on the idea of price supports - buying surplus milk in its less perishable forms of cheese, butter, and powder and warehousing it to keep oversupplies from depressing prices.
But the support program encouraged overproduction and drove up consumer prices. By the early 1980s federal officials were spending $ 2 billion a year on surplus milk, and goverment warehouses were bulging with 14 billion pounds of cheese and butter.
Soon after, Congress began ratcheting down the support price until it fell below the free-market price of milk. That was the start of retail price fluctuations.
By 1996 Congress had virtually stopped buying surplus milk. Those cheese and butter warehouses are nearly empty now, the food given away to the poor and to school lunch programs. Now both programs and American consumers must buy milk at market prices.
“We’re entering an era of greater price volatility,” says Robin Schmahl, a commodities broker in Elkhart Lake, Wis. “Milk prices will range from superhigh one year or in one region to unusually low in the next.”
In 1998, for example, El Nino rains caused cows to produce less milk fat, forcing cheese processors to buy more gallons of milk to squeeze out the same amount of fat. Without stockpiles to draw on, dairy-food processors had to get the fat from current milk output, which forced prices up. But at the same time consumer demand for cheese and full-fat ice cream rose, boosting prices higher still. Then last spring, as milk fat production recovered, consumer resistance to high prices pushed them back down.
The ride may be bumpy, but “Consumers will end up with a lower average price for milk in a free market than in a regulated one,” says Mark Stephenson, a senior extension associate in Cornell University’s program on dairy markets and policy. Indeed, while prices have edged up recently, they’re actually lower than at the peak of price supports, when figures are adjusted for inflation. Free-market milk prices also influence the price of cheese, ice cream, and other products, but to a lesser extent because of those products’ longer shelf lives.
FINDING THE CHEAPEST MILK
You may think supermarkets use milk as a loss leader, charging less for it than small grocery stores. Not in California, the No. 1 milk-producing state (Wisconsin is No. 2). Consumers Union found that supermarkets there often charge prices that range from the middle to the highest in town.
Last January, 15 of 29 mom-and-pop stores surveyed in Sacramento were charging 10 to 80 cents less per gallon of whole milk than the lowest prices charged by the big supermarket chains.
According to the General Accounting Office, consumers in Sacramento and San Diego pay more for milk than people in most of 30 other markets studied. “This is just avariciousness,” says Arline Mathews, a Chatsworth, Calif., retiree who says she pays $ 2.50 per half-gallon of skim milk.
Unlike in other regions of the country, where milk processing is controlled by cooperatives or independent bottlers, in California, bottling plants that process 60 percent of the state’s milk are owned by supermarkets. “That enables them to control the price and tends to make milk much more profitable,” says David Bishop, a food industry analyst at Willard Bishop Consulting in Chicago. The net profit margin on milk is 27.5 percent, compared with 1 to 3 percent for the rest of the store, says Bishop.
Also, California law forbids the sale of milk at or below cost. That’s not the case in states such as Washington, Arizona, Oregon, and Texas. So significant price competition among the big chains - where 93 percent of drinking milk is sold - and a per-gallon price below $ 2 are rare in California, while price wars in Dallas last summer had milk going for as little as 99 cents a gallon.
SAVING FAMILY FARMS?
Dairy farmers in the East have also hiked prices through the New England Dairy Compact. “Something needed to be done to preserve the family-farm heritage of New England,” says Kenneth Becker, executive director of the compact.
That something was a milk “tax” on consumers, temporarily authorized by Congress, which artificially raised retail prices 5 to 11 percent per gallon beginning in June 1997. So far New Englanders have paid the compact an extra $ 58 million.
Jerry Kozak, chief executive officer of the National Milk Producers Federation, says the compact will “keep dairy farmers from going out of business.”
But dairy closures in New England rose to 5.8 percent in 1998 under the compact, compared with 4.2 percent in each of the previous two years. Nationwide, despite decades of price supports, 3.5 million dairies have closed since 1950. Becker concedes that since many factors influence whether a dairy farm survives, “Price floors may not be enough to keep a family farm in business.”
Five states want to join the New England compact, while dairies in the Southeast want a compact of their own. But the New England compact’s fate is now caught between the expiration of its congressional authorization last October and a federal restraining order that temporarily keeps it alive. The compacts, which Consumers Union opposes, were being debated in Congress in late fall.
Which milk for you?
You can buy more kinds of milk than ever because of consumer demands and the greater technological ability to add, subtract, and reblend milk’s specific components. But if you’ve ever wondered how “skim” compares with “low fat” or what “protein fortified” means, this glossary is for you.
In general, organic milk is the priciest of the lot, and protein-fortified milk also costs more. Except as noted, a cup of each variety offers about 30 percent of the recommended daily value of calcium.
Fat-free (also known as nonfat or skim) milk. Per cup; 90 calories; 0 grams of fat; 0 grams of saturated fat; 5 milligrams of cholesterol. Has a light body that whole-milk drinkers consider watery. But after a few grimaces, many people get used to this variety, which Consumer Reports recommends because it provides healthful nutrients without the saturated fat.
Certified organic nonfat milk. Per cup: 90 calories; 0 grams of fat; 0 grams of saturated fat; 5 milligrams of cholesterol. Tastes just like nonorganic nonfat milk.
UHT (ultrahigh temperature) “boxed” nonfat milk. Per cup: 90 calories; 0 grams of fat; 0 grams of saturated fat; 5 milligrams of cholesterol. Medium-bodied with a cooked and very slight malty taste. Advantage: You can store it unopened for months without refrigeration.
Fortified fat-free milk. Per cup: 110 calories; 0 grams of fat; 0 grams of saturated fat; 5 milligrams of cholesterol; 40 percent daily value of calcium. Added nonfat milk solids (protein and calcium) give this a heavier body than fat-free milk, with a rather sweetish, cooked taste.
Nonfat dry milk. Per prepared cup: 80 calories; 0 grams of fat; 0 grams of saturated fat; 5 milligrams of cholesterol. Medium-bodied; tastes slightly cooked and a bit malty. You have to mix the powder with water, which can impart its own flavors on the final mixture.
100% lactose-reduced nonfat milk. Per cup: 90 calories; 0 grams of fat; 0 grams of saturated fat; 5 milligrams of cholesterol. A noticeably sweet taste with medium body. The lactose has been changed to glucose and galactose for people who suffer from lactose intolerance.
Low-fat (also known as 1%, or 99% fat-free) milk. Per cup: 100 calories; 25 grams of fat; 1.5 grams of saturated fat; 10 milligrams of cholesterol. Has the light body and taste of nonfat milk, but the give-away that it isn’t fat-free is the light white film of milk fat left on the glass.
Reduced fat (also known as 2%, or 98% fat-free) milk. Per cup: 130 colories; 5 grams of fat; 3 grams of saturated fat; 20 milligrams of cholesterol. The medium body and slightly fuller flavor come from the higher milk fat. But don’t be fooled into thinking that you have significantly cut fat intake; whole milk is already 96.8 percent fat-free.
Whole milk. Per cup: 150 calories; 8 grams of fat; 5 grams of saturated fat; 35 milligrams of cholesterol. Medium body, fuller flavor, and enough fat to leave a filmy aftertaste in the mouth. If you’re used to nonfat milk, whole milk can taste like cream.
Half and half. Per cup: 320 calories; 28 grams of fat; 16 grams of saturated fat; 120 milligrams of cholesterol. Heavy body; full, rich dairy-fat flavor and aroma. No one drinks this by the cup, but its fat content should give you pause if you liberally splash your coffee with this stuff.
Heavy cream. Per cup: 800 calories; 80 grams of fat; 56 grams of saturated fat; 320 milligrams of cholesterol; 0 percent calcium. This is nearly all fat. Very heavy body that leaves a thick film in your mouth. Buttery taste and smell, like ice cream without the sugar. Use sparingly.
Milk: Rad? Cool? Sexy?
Miss Dairyland is out. Milk mustaches and those sharp-edged “Got Milk?” ads are in. But for all the excitement, clever ads haven’t convinced consumers to guzzle more milk. A new idea may change that.
Regular and flavored milks in flashy soda-style containers are selling like popsicles in July, thanks to a new design by Dean Foods, one of the nation’s biggest milk processors. One big problem with milk, it seems, is the traditional boxy waxboard container.
Those square containers don’t fit into the round hole of automobile drink holders - prime real estate in the beverage industry battle for “share of stomach” - but the new milk bottle does. In the new container’s first six months. Dean says, its milk sales have jumped 100 to 200 percent, and in some cases 500 percent.
Of course, milk has a long way to go to catch up with soft drinks. Americans now drink 12 percent less milk and 48 percent more soda per person than in 1980. And unlike soda, even unopened milk drinks may spoil if you leave them in the car for a few hours. Then again, flavored milk is more healthful than soda, especially when it comes to calcium.
PepsiCo seems to be hedging its bets. In a joint venture with the Dairy Farmers of America and Starbucks Coffee, three years ago PepsiCo launched bottled Starbucks Frappuccinos, which are 22 percent milk.
“Milk is good for you,” says Dave DeCecco, a spokesman for PepsiCo. It’s good for sales, too. In 1998, Starbucks says, consumers bought more than $ 250 million worth of its bottled Frappuccinos.
Is organic milk worth the price?
Walk to the back of Molly Stone’s supermarket in Greenbrae, Calif., and you’ll think you’ve stumbled into a political rally. The dairy shelves are a sea of organic milk containers that look like miniature protest placards, proclaiming “No hormones.”
The disclosures are an effort to address consumer concerns about a growth hormone injected into cows to increase milk production by 10 to 15 percent. It’s called recombinant bovine somatotropin (rbST), and it has given a huge boost to the product category of organic milk.
“Our sales really took off in 1992, when the FDA approved bovine growth hormone,” says Amy Barr, spokeswoman for Horizon Organic Dairy, which had $ 49 million in revenues in 1998. Horizon’s sales have grown an average 127 percent per year since 1993. “Our No. 1 market is parents concerned about their children’s health.”
Even at a pricey $ 2.50 to $ 3.00 per half-gallon, organic milk is flying off mainstream supermarket shelves, from health-conscious California to health-cynical New York. Sales are now near $ 200 million a year, according to the Organic Trade Association.
There are many reasons consumers may choose to buy organic milk. But should they fear serving regular milk to their kids? No.
MILK AND HORMONES
Organic dairies differ from regular dairies in several ways. For one thing, organic dairies have to sign affidavits attesting that they don’t use rbST.
Human-health questions about rbST use focus on a hormone called insulin-like growth factor 1, found naturally in milk, including human breast milk. The average IGF-1 level in milk from hormone-treated cows is somewhat higher than that in milk from untreated cows. IGF-1 is a hormone that regulates a variety of growth processes. A high level of IGF-1 in blood - not milk - has been associated with elevated risk for several kinds of cancer.
U.S. officials have concluded that milk from hormone-treated cows is safe to drink. The Food and Drug Administration approved rbST use in 1993 and has repeatedly reaffirmed that decision when critics have questioned it. Sixteen other countries, such as Brazil, Korea, and Mexico, also allow the hormone to be used. Meanwhile, the Food and Agricultural Organization/World Health Organization Joint Expert Committee on Food Additives, and Health Canada, have concluded that milk from hormone-treated cows poses no appreciable risk to humans.
However, animal welfare concerns are another issue. Canada refused to approve rbST because of side effects in cows. Injected cows tend to get more udder infections and need more antibiotics. (That, in turn, has fueled a different concern, involving whether such antibiotics could be speeding the growing resistance of germs to drugs.)
This fall the European Commission proposed banning the hormone for reasons similar to Canada’s, and said it intended to pursue “significant gaps” in the scientific knowledge concerning the hormone and public health.
The Consumer Policy Institute, an advocacy arm of Consumers Union, urges long-term human health studies of rbST use and has expressed concern over antibiotic resistance.
THE ORGANIC OPTION
Besides avoiding rbST, organic dairies also must pledge that their animal feed is grown on land that hasn’t had pesticides or synthetic fertilizers applied for at least three years. Horizon Organic Dairy labels, for example, promise that “No dangerous pesticides or chemicals are ever used.” However, that “doesn’t mean ‘pesticide-free,’ because residues will be around forever,” says Barr.
And these dairies limit antibiotic use to help stem germ resistance. All cows - organic or otherwise - get antibiotics if they need them, and they’re taken out of production while being treated. Some organic dairies, however, permanently remove a cow from the herd if it needs antibiotics and replace it with a cow that’s never received them. But other organic dairies return a cow to the herd after antibiotic treatment, though cows producing organic milk in California are kept offline twice as long as those in nonorganic herds, says Ray Green, the state’s organic program manager.
There are no federal standards for organic food, although they’re in the works. Now state standards are mainly set and monitored by private certifying agencies.
PLAIN WHITE
It’s not as easy to tell whether regular milk comes from cows treated with rbST. One-third of the nation’s 9 million dairy cows are in herds that receive this hormone, made by Monsanto under the Posilac brand name, the manufacturer says.
Some conventional dairies avoid the hormone and label their milk as such. But many consumers can’t tell whether they’re drinking milk from treated cows or not. Consumers Union has long advocated that such milk be labeled - accurately. Last year, Vermont fined two dairies $ 25,000 each for selling 184 loads of milk labeled hormone-free but not fully documented as coming from rbST-free cows.
As for antibiotics and pesticides, standards for regular milk differ from those for organic milk, but they’re still high.
All milk is tested for the presence of antibiotics; if levels exceed tolerances measured in parts per billion, the milk is dumped. Testing by California officials shows no antibiotics in organic milk and only trace levels in nonorganic milk.
And pesticides? Extensive tests by the federal government have found virtually no pesticide residues in any milk. In California regular random sampling has yielded the same result. “We’re just not seeing anything at all,” says Lee Jenson, acting chief of the milk and daily foods branch of the California Department of Food and Agriculture.
If you want to avoid milk from hormone-treated cows, look first for regular milk labeled as such. If that’s not available, you can buy organic milk - but realize you’ll pay a lot more. Organic milk may also be for you if you want to support organic farming principles. But we see no reason to buy it for fear that regular milk is unsafe to drink.
RECOMMENDATIONS
Milk is not a budget-buster for most people, but you can save money.
- Before buying at the supermarket, check prices at small grocery stores and even at convenience stores. Our survey of more than 120 supermarkets and grocers in New Haven, Conn., and Orlando, Fla., also found that the price at Sam’s Club and BJ’s Wholesale Club was the lowest, or nearly the lowest, in town.
- Buy in bulk if you can drink it all in a week; two-gallon packs are a true bargain. Purchase the store brand, which is typically less expensive than name-brand milk.
- Develop a taste for ordinary fat-free milk, which can cost slightly less and is a lot more healthful than whole milk. Regular nonfat milk can also be less expensive than fortified or “plus” fat-free milk made creamier with added nonfat milk solids.
GRAPHIC: Photograph, best for you. Fat-free (nonfat) milk may take getting used to, but it’s the most nutritious; Photograph, makeover. Milk isn’t nearly as popular as soda, but spiffy ads, new products, and containers that fit into the cup holders of cars are aimed at giving the white stuff a new image; 2 non-captioned photographs; 1 non-captioned graph; 1 table.