Falling Dairy Prices Bad For Farms, Good For Pizza Parlors

MINNEAPOLIS (WCCO) - Good news for your next grocery trip: Dairy prices are lower than they've been in years.

Over the past month, the average price you'll pay for a pound of cheddar cheese dropped from $2.03 to $1.64. The price for a gallon of milk over the past few weeks went from $3.40 to $3.15.

Dairy is of course big business in this part of the country. Wisconsin and Minnesota are both among the top dairy producing states though most of the milk produced in those states is not, surprisingly, used to make cheese.

Agrimoney.com credits the December plunge in prices to the fact that China and Russia aren't buying as much dairy from western countries.

In Elmwood, Wisconsin, on the Fetzer Farm, Paul Fetzer is feeling the price drop.

"We can't cover some capital costs like we need to some upkeep thing, yeah we eat it," he said.

His milk goes to make hard Italian cheeses. He said he'll make it work financially, but he may have to cut back on capital improvements.

But what's bad news for some is good for others.

Tom Reinardy buys a lot of cheese. He runs Spiral Pizza.

"Cost, as far as product, cheese is by far No. 1," he said.

He said the diving dairy prices have perked up his profits

"I can definitely tell on my bottom line the fluctuation," he said. "Like, last summer, it was $2.50's per pound. Today it was $1.98."

He's cautiously optimistic for his business.

"You could do a little building repair or something like that that you'd put off," he said. "You don't want to get too crazy on something because you don't know when it's going to go up."

With economics, as with pizza, you don't know which way your dough is going to go .

To keep an eye on the reports on the USDA's website.