Related

Photo by Jared Soares | The Roanoke Times

Bob Buckley, owner of Java the Hutt drive-throughs and coffee shop Coda, experiments with milky drinks Tuesday.

How much does it cost?

A sampling of prices for a gallon of 2 percent milk at area grocery stores

• Kroger: $3.79
• Tinnell's Finer Foods: $3.89
• Super Wal-Mart: $3.93
• Ukrop's: $3.99
• Food Lion: $4.09

Swapping 2 percent milk for whole milk won't work for coffee shop owner Bob Buckley.

As an experiment, he recently mixed a latte for himself, substituting milk with a fat content of 2 percent for the more expensive whole milk. Buckley owns the Roanoke Valley Java the Hutt coffee drive-throughs and Coda, a coffee and food shop on Grandin Road.

One sip of the latte and, "I knew it wouldn't fly," he said. Customers would taste the difference and complain, he figures.

Buckley has tried other ways to cut costs at his coffee shops, such as purchasing cheaper cups. But milk prices seem to increase each time the dairy delivery truck arrives.

Buckley's business is one of many in the Roanoke Valley and across the nation that are feeling the heat of high food prices on a number of products, particularly milk and beef.

Buckley hasn't raised prices for his drinks that contain milk, but he likely will soon.

"I'm not sure when it's going to happen, but it is inevitable," he said. "It's like the price of gas. We'll never see it at $2 a gallon again."

Food and beverage prices jumped 3.9 percent in May, the largest increase in three years, according to the U.S. Department of Labor.

And in the Roanoke Valley, the ripple effects are appearing in the grocery aisles of Food Lion and the shiny tables at Famous Anthony's.

And worse yet, milk costs could jump even higher this month, based on data from Virginia's State Milk Commission. In a breakdown for Western Virginia, which includes the Roanoke Valley, the commission's report shows that the price paid to farmers for 100 pounds of raw milk will rise 2.5 percent in July.

That likely will reach down to retailers, though the commission has not yet calculated June or July retail prices.

"Every time I've seen producer prices rise, I've seen a rise in retail prices [of milk]," said Tony Banks, assistant director of the commodity marketing department at the Virginia Farm Bureau Federation in Richmond.

In May, the average price for a gallon of 2 percent milk in Western Virginia was $3.25, according to the commission. But that price is lower than what consumers will find in some Roanoke Valley grocery stores, where prices already have jumped as high as $4.09 for a gallon of 2 percent milk.

Some grocers treat milk as a loss leader, meaning that they slap on low prices to draw people into their stores, said Amber DuMont, a spokeswoman for the Maryland & Virginia Milk Producers Cooperative Association.

That's a reason for the wide milk price discrepancies across Roanoke Valley grocery stores.

Whole milk generally is more expensive, because it has a higher butterfat content, though some retailers may price it differently, industry experts said.

Whole milk's fat content is 3.25 percent, and the average price for a gallon in Western Virginia was $3.36 in May, according to the State Milk Commission.

Although industry experts don't single out a main reason for higher dairy costs, there are some likely suspects. Among them is stronger demand from certain countries, such as China.

And a drought in Australia, a large dairy exporter, has crippled that country's production of butter and dry milk, said David Stallings, an agricultural economist with the U.S. Department of Agriculture.

That's coupled with a heavy demand nationally for corn to make ethanol as an alternative to oil. This demand is pushing prices for corn higher. Corn is an ingredient in feed for some beef and dairy cattle, Stallings said.

The cycle creates higher farm prices that are passed down to suppliers and now are hitting retailers and consumers.

In Virginia, however, many dairy farmers grow their own corn to feed cattle, Banks said. They probably are more affected by higher costs for certain feed supplements, such as cottonseed.

Banks further attributed higher retail milk prices to ever-rising fuel and transportation costs. He said it's also not unusual for milk prices to jump in the summer. That's because cattle's milk production is lower because of hotter temperatures.

Demand for beef also tends to be higher in the summer, with many people grilling outdoors, Stallings said.

In any case, consumers can't look forward to much relief. "It's difficult to see dairy prices coming down," Stallings said.

Darlene Deacon pushed a cartload of groceries out of Wal-Mart beside Valley View Mall recently. Her purchases included a half-gallon of 1 percent milk for $1.99. Deacon, of Botetourt County, said she has noticed a price increase for milk. She buys 1 percent milk only for her grandchildren, because she and her husband drink soy milk.

"You have to have milk, so what do you do?" she said.

Food Lion's costs to pay milk suppliers and vendors have gone up about 14 percent in the past year. And the North Carolina-based grocer with 13 Roanoke Valley stores has raised its prices for a gallon of milk, though not as high as prices that it pays to suppliers, spokeswoman Karen Peterson said.

Peterson said she couldn't give the overall Food Lion price increase for milk because it can vary from store to store.

Rett Ward, the owner of Tinnell's Finer Foods in South Roanoke, is holding his breath about this month, when his supplier told him to expect milk prices to jump another 30 cents a gallon. In the past several months, they have risen about 20 cents higher at the grocery store, Ward said.

"It's awful. Your paycheck doesn't go up, but everything else does," said Marilyn Desorcy of Roanoke County, who complained recently about the price of milk and beef.

Several Roanoke-area restaurants may soon slap higher prices onto their menus for certain higher-cost foods.

Famous Anthony's, a Roanoke-area restaurant chain, already has created several inexpensive meal deals to control costs. Prices are higher for a variety of foods, but the restaurant company hasn't adjusted its menu prices yet, said Tony Triplette, chief executive officer for Famous Anthony's.

Instead, it has tried to make some meals cheaper. Famous Anthony's is offering several breakfast specials for $3.99, and lunch and dinner items for $4.50. They're new meal combinations that are priced lower than the items would be separately.

"We tried to make a really good meal for a lesser price," Triplette said.

High milk and beef costs are a growing concern at the Fried Pickle, a 1950s-style restaurant in Botetourt County known for its half-pound and 1-pound hamburgers and its milkshakes.

Manager Art Pursel said the restaurant's food prices have jumped at least 10 percent to 15 percent in the past two months.

"If it keeps going up, then obviously we'll have to look at it [raising menu prices]," he said.

Still, Buckley bristles at the idea of a customer's vanilla latte costing more than $4 when it typically is $3.89.

"You don't want your customers to re-evaluate their morning purchase," he said.

On the other hand, price increases of milk are coming every week, some as high as 13 to 14 cents.

"You can't treat it [milk] like a loss leader," Buckley said. "When we're out of milk, we're out of business."