Milk seems to be the next hot thing after gasoline.
Yesterday, at our local SAM’s club, milk was priced at $3.49 a gallon … and gasoline was at $2.55.
Anyways, did you know that milk prices are rising globally because affluent people in emerging economies are drinking more milk? Here is what the NY Times has to say about it:
But the biggest force driving up milk prices is the same one that has driven up prices for conventional commodities like iron ore and copper: a roaring global economy. Rising incomes in emerging economies from China and India to Latin America and the Middle East are lifting millions of people out of poverty and into the middle class.
It turns out that, along with zippy cars and flat-panel TVs, milk is the mark of new money, a significant source of protein that factors into much of any affluent personâ€™s diet.
Great, earlier I thought only olive oil is a mark of economic prosperity.
The article goes on to say that:
… The average person in China now consumes more than six gallons of milk a year, up from more than two gallons in 2000.
[OK, that gives me some kind of a complex - our annual milk consumption, for a family of two, is about 30 gallons! - well, holy cow!]
As an aside on the emerging economies issue, are we getting into an habit of attributing every market phenomenon to how much people consume in emerging economies? Sometimes, it makes sense, but often, it seems as if people are dying to make a connection to China, India, Brazil, Argentina, etc… in order to explain domestic market effects in the US [with no regards to how the consumers in US are using up resources].
By the way, some smart people are already making hay of the milk situation by stealing cows.
Driven by a combination of climate change, trade policies and competition for cattle feed from biofuel producers, global milk prices have doubled over the last two years. In parts of the United States, milk is more expensive than gasoline. There are reports of cows being stolen from Wisconsin dairy farms.
Ironically, just yesterday, we were discussing about how burglars are not smart people. So, stealing a cow might go against the grain - that would mean a burglar with a lot of foresight.
A whole new meaning to the term “cash cow”, eh?
For serious people with an economic inclination, here is a great writeup [pdf file] on how milk is priced in the US.