Overview

U.S. dairy policy has a direct effect on the bottom line – of America’s families.  Each 43 cent increase in the price of milk costs families making under $25,000 nearly $1 billion, over one-third of the burden.

Background and Analysis 

In 2012, U.S. sales of fluid milk products totaled 52,897 million pounds or about 6.15 billion gallons.^[1] The average price for a gallon of milk in 2012 was $3.49, which suggests the dollar value for retail milk sales exceed $21 billion in 2012.^[2] This analysis examines the distributional effect of a persistent 43 cent increase in the retail price per gallon of milk consistent with recent historical fluctuation, which would amount to $909,123,278 on lower income consumers.[3]

Distributional data on fluid milk consumption is only available for 2010. For the purposes of this analysis, the income distribution for milk consumption is presumed to be constant.

According to the most recent data, assuming a fixed amount of consumption, the lowest income group consumes 34 percent of all fluid milk. In 2012, this would represent $7,366,262,275 in milk consumption at the average 2012 retail price of $3.49 per gallon. Assuming 2012 overall fluid milk sales, a 43 cent price increase for fluid milk would result in a $909,123,278 price increase accruing to the lowest income Americans. This amounts to an approximate increase of $30 per household annually or about 58 cents per week.^[5] For context, this is approximately the amount of total sales of the popular footwear “Crocs” in 2008, the amount of HUD rental assistance funding reductions under sequestration,or the amount of unclaimed tax refunds for 2009.^[6]