Milk Prices Bad News for Chocoholics

— If you've been grocery shopping lately this will come as no surprise: Grocery prices have been sharply on the rise in recent months. Basics such as eggs, apples, and ground beef are up.

And so is milk. A gallon of milk is at a record high, costing consumers about $4 in many places.

In the Brooklyn, N.Y., kitchen of renowned chocolate maker Jacques Torres, every price increase is felt immediately, because almost half of Torres' finished chocolates start as milk.

"You will find milk and cream in every product that we do here," Torres says. "It's a lot of milk being used into the chocolate industry, from milk powder, some milk fat and a lot of cream go into that and a lot of butter."

People from small ice cream manufacturers, to those who put the cheese on the pizza, to fine chocolate makers, are struggling with the higher milk prices.

Soaring Prices

In the 3½ years he's been in business, Torres has seen milk prices double. But like other businessmen, he's been forced to absorb the extra cost because consumers are reluctant to pay more.

"From February of this year, the price went up 54 percent for milk," Torres says. "So, it's impossible to have the customer pay for those increases."

It's mostly an issue of supply and demand. Milk production has fallen sharply because dairy farmers have been quitting the business — ironically, because until recently milk prices were so low.

As the economy has improved, demand for milk, and products using it, has increased.

"Prices in 2004 are at record numbers and will probably stay at that level for the rest of the year," says Henry Beyer, a milk distributor. "However, we hope down the road, when enough supply comes back into the system that prices will fall."

And that's more bad news for Torres, whose big season starts in the fall.

"If the milk keeps increasing, and then we need to have to buy all those ingredients for Christmas, then that going to be very challenging," he says.

And inevitably, it will be more expensive for chocolate lovers.