Why Does Whole Milk Cost More?

When I lived in Baltimore, I would go to the store, generally Safeway, and buy milk.  It did not matter if it was whole milk, skim milk, or some variation of lowfat milk, it was all the same price.  Now, over the past few years that price got higher and higher, which is also upsetting, but that is really the subject for a different rant.  Despite the fact that in 2005 I could get generally get milk on sale for $2.50 a gallon, and when I moved in 2010 it was about $4, at least it was all the same price!

Now that I live in Vermont, for some reason, the milk here is priced on a bizarre fattening pyramid.  It costs less overall, which is nice, but the whole milk is more expensive than the other milk.  This, to me, makes no sense.  So today at Hannaford’s, whole milk was $2.89, 2% milk was $2.79, 1% milk was $2.69 and skim milk was $2.59.  But shouldn’t the whole milk cost less?

As far as I know, whole milk just means “milk.”  As in, they didn’t do anything too weird to it.  Lowfat or skim milk means that they had to process it in some way to get the fat out, which ought to make it costlier to produce lower fat milk than whole milk, right?  Not only that, but if they are removing something from the milk, then doesn’t it follow that it would take more straight up milk to make a gallon of skim than a gallon of whole?  i.e. one gallon of whole milk = one gallon of whole milk, but maybe 1.1 gallons of whole milk = one gallon of skim, plus .1 gallons of fat?  Obviously I don’t know the ratios, but do you see what I’m saying?  I googled all of this of course, and did not find much, hence the blog.

My thoughts are this:

1) Supply and Demand – Maybe they just sell more skim milk, so they can charge less for it?  But it seems odd that they would sell mostly skim, then 1%, then 2% and then whole, in tidy 10 cent increments.  I don’t think this is the answer, but maybe.

2) The Premium Effect – You know when you walk into a store and see two nearly identical products, but one costs a lot more?  You just assume the more expensive one is nicer, unless you have a read a lot of Consumer Reports.  Maybe they want whole milk to be the “premium” type of milk, and thus charge a little more for it?  I don’t know.  That sounds a little silly.

3) They Are Just Messing With Us – Maybe they just do it because they can.  Maybe there are a bunch of guys sitting in a room somewhere, smoking cigars and laughing at all of us idiots paying thirty cents more for plain old milk.  This seems the most plausible explanation so far…

4) What They Take Out Is Worth More Than What It Costs to Take It Out – They only thing I can think of that really makes sense to me at this point, is that when they take the fat out of the milk, that fat is worth something to those guys.  I’m no dairy farmer, but maybe they use it for butter, or something else that they can sell, and so the whole milk costs more because they can’t harvest any of its delicious fat.

Either way, it still does not explain why all milk costs the same in Baltimore and it is oddly priced in Vermont.  Does anyone actually know the answer to this question?  It’s really annoying me today, so if you know the answer, please, the comments section is all yours.

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Posted in Milk, Rant.

6 Comments

  1. Well, here’s a theory. Statistics tend to show that low-income folks often struggle more with weight issues, at least partially because “cheap” food is often high in the carbs and fat that make lower-cost ingredients taste good. Soooo, are they trying to provide an incentive to purchase lower fat dairy?

  2. Whole milk has 5 – 7% butterfat, skim has 1% or less, 2% has 2%. The butterfat is removed and used for (surprise) butter, and other dairy products. So, the more butterfat removed, the cheaper the milk. Although in many places they tend to price all milk the same (using either the highest price treating all milk as whole.) Vermont’s dairy laws must just be more strict regarding sale.

  3. I’ve noticed it varies from store to store in the cities I’ve lived in. Sam’s Club prices based on %, while the normal grocery stores charge a flat fee. I’ve always assume it was the fat was more valuable than milk. It’s used in sour cream, half and half, whipping cream, butter and so many other products. And I assume they can charge more for these products, so the fat is more valuable than milk. Just my thoughts.

    (I’m Chris Hartwell’s wife.)

  4. Yeah, I’ve been asking myself the same question… Glad you posted this. And I like everyone’s theories – I’ve been thinking along the same lines. You are getting fewer calories per unit weight with fat-free milk… so it should cost less.. because after all, we food is meant to provide sustenance..but the processing itself costs money. But I also I like the idea of incentive for “healthier foods” – totally something that you might find in VT.

  5. As others above have said, they’re selling the fat they processed out of your 2% milk to other people as butter, cream, etc.

    They’re not so much processing whole milk to turn it into 2% as they are simply selling you the byproducts of making butter and cream as lowfat milk. 2% milk is like lumber scraps being sold out of a woodmill as firewood. They’re less expensive than their “base product” (2x4s) because the alternative is to just throw them away.

  6. The reason why normal milk costs more is simple: they formerly removed fat is being re-added to the low fat milk, resulting in “normal” milk. This additional processing results in higher costs and hence prices (at least here in Germany – learned that during a project in a milk processing company)

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