Pricey milk one more fact of life in post-Katrina New Orleans

NEW ORLEANS – High milk prices have left a sour taste in Gary Danos’ mouth.
“I just can’t believe the price on it,” he said this week, as he perused the dairy case at a Mid City grocery store, where gallons of milk were as high as $4.79 apiece. “It’s disgusting.”
Since Katrina, the average price of a gallon of whole or 2-percent milk in New Orleans has been at or near the top of a federal list of prices for about 30 major metro areas. The price, based on surveys of outlets of a city’s two biggest grocery chains and its largest convenience store, rose from an average of $3.76 in 2004 for the most common milk brand to $4.19 last April and May, settling at $3.99 in February and March, according to the Agricultural Marketing Service. (Estimates were used for the last four months of 2005 due to the hurricane, the agency said.)
Fort Lee, N.J., had the second-highest March average for 2 percent, $3.62 a gallon, while Chicago had it for whole milk, at $3.72 a gallon, the agency said.
Economists say the higher cost of living in New Orleans and a decline in the state’s dairy industry are likely reasons for the sharp rise.
Since the August 2005 storm, which devastated New Orleans’ housing stock and shuttered many businesses, costs for such basics as apartments or insurance have risen, in some cases, sharply.
Not all grocery stores have reopened since Katrina. Some neighborhoods still don’t have one and those that have must offer higher pay to compete for workers, economist Janet Speyrer said.
As of March, employment in the food and beverage industries in a seven-parish area was 71 percent of pre-Katrina levels, in spite of better pay or bonuses. This compared to overall employment of 81 percent of pre-storm levels, resulting, in some cases, in markets having limited work shifts and store hours, she said.
“I believe there still is a substantial premium for the lowest-level workers, and that has to do with the high cost of living and whether there’s affordable housing,” she said.
There are also increased insurance costs for reopened retailers and fuel prices for bringing milk to market, she said.
Already, up to 65 percent of milk sold in the state is from outside Louisiana, where the number of dairy cattle has steadily fallen in the last decade, to 30,000 head this year. The state’s share could fall further if more farmers cash in on high land prices or otherwise leave the business, agriculture experts said.
On average, farmers get 30 cents of each dollar a consumer spends on dairy products, and retailers charge what the market will bear, said Chris Galen, a spokesman for the National Milk Producers Federation.
He expects production will slow this year, in part due to the demand for corn and higher cattle feed prices, and for milk and dairy prices to rise nationally. It’s beginning to happen already, he said.
The milk producers federation, in its latest market report, shows the U.S. average city retail price for a gallon of whole milk for February at $3.08 up 2 cents from January though still 14 cents cheaper than a year earlier.
This week, a gallon of whole milk at Matassa’s Market in the French Quarter sold for $4.65. That doesn’t bother Cosimo Matassa, who said price swings for milk, vegetables and other perishables are normal, and his overall sales volume has risen 40 percent since Katrina.
At the Mid City grocery where Danos shopped this week, Yvonne Clayton grabbed two gallon jugs of 2-percent without paying attention to the price, $3.69 each.
“The kids love cereal,” said Clayton, who works at a boys’ home, “and you can’t put broccoli in cereal.”