Once Again, Milk Is A Cash Cow

As a middleman in the milk business, Stephen Schwartz saw it first.

"The price of milk is going up astronomically!" he told CBS News Correspondent Anthony Mason.

Schwartz owns Meadowbrook Farms, a milk processing company.

"Are these the highest prices you've seen," Mason asked.

"Yes! Yes! And it's scary," Schwartz replied. "I can't believe I'm gonna be seeing milk selling for over $4 a gallon in the supermarkets over the summer."

A year ago, farmers were getting 95 cents a gallon for their raw milk. By this summer, that's expected to double. What's happening?

"What we really have here is a sandwich of different factors, all layered together, that are taking a big bite out of milk production," said Chris Galen, National Milk Producers Federation.

Last year when milk prices were near record lows, some dairy farmers went under. Some sold off parts of their herds.

"Because those cows frankly were worth more for their beef value than they were for their milk production," Galen explained.

Now suddenly there's not enough milk to meet the demand.

But however you stack it up, it's gonna mean higher milk prices. And it's not just milk you're going to be paying more for. It's going to effect every dairy product on your kitchen table."

Like ice cream, butter, and cheese. On the Chicago Mercantile Exchange, where cheese futures are traded, the price hit a record high today -- more than double last spring.

"And they're skyrocketing. They're going up even more this month," said Paula Lambert, who runs "The Mozzarella Company" in Dallas.

Lambert says she couldn't hold out any longer. She's started raising her prices.

"It's certainly been an impact on our bottom line, when you see the price of your raw ingredients increase 70 percent over a period of four months," she said.

So expect some sticker shock in the dairy case soon.

"And its gonna last for awhile," said Schwartz. "I don't see an end to this happening at least for a year or so."

Because for the farmers at least, milk has become a cash cow again.