By Rick Oltman, April 19, 2017
The cost of milk is going to skyrocket if President Trump keeps deporting illegal aliens. The price of milk could climb to $8 per gallon, warns Jaime Casteneda, Senior V.P. for Strategic Initiatives and Trade Policy at the National Milk Producers Federation.
Baloney. This is just a repeat of the usual scare tactic by end-users of illegal aliens who benefit from paying them low wages, threatening that, “If the law is enforced, prices will go up!”
Well, maybe, but by 100% or more? Not likely.
The current average price for a gallon of milk in America is $3.31 per gallon ($2.49 at Costco; $3.79 at Trader Joe’s) reports the Bureau of Labor Statistics Average CPI-Price Data. According to their report, for a ten-year period from January of 2007 to March of 2017, the price of a gallon of milk has not dropped below $3.00 per gallon, nor has it exceeded $4.00 per gallon. Almost nine years since sub-prime mortgage meltdown and the ensuing recession, gasoline prices fluctuated between $2.229 and $3.91per gallon, over $4.00 per gallon for some in the country, and the price of milk has been relatively stable.
Now, I want American businesses to be competitive and profitable. The costs of goods and services should be set at the price dictated by consumer demand. That is the whole basis of the “demand economy.” The customer, more or less, determines the price by his willingness to purchase the item. And, I have always supported a well-regulated Guest Worker Program for businesses if they really need the workers … but with the caveat that they actually prove they need the workers, which they have never done.
But, even the Guest Worker Program, which worked well in the past, and with proper regulation, would work well again, is rejected by the United Food and Commercial Workers (UFCW) according to the Tri-State Livestock News (what ranchers read). Angel Gonzalez, campaign coordinator, Civil Rights Department, says that the UFCW opposes guest worker programs because farm workers “should be a permanent part of the society” rather than “shipped home” when it is not convenient for employers to retain them. The workers who are currently in the United States should be able to regularize their status, Gonzalez said.
A guest worker program that allows workers to legally enter the country (just the workers, not their families) and houses them in clean, safe accommodations, taxes their wages while possibly exempting the Social Security and Medicare (FICA tax), and then has them return home with their money once the harvest is complete, can work well for everyone involved, including the consumer. Except that Mr. Gonzalez thinks not.
The cost of farm labor is about 8% of the total cost of putting the product on the shelf at the supermarket. The other costs include equipment costs, transportation costs (wages, fuel, equipment), storage, packaging, and advertising. Where it sits on the shelf in the supermarket even figures into the price. The “end caps” cost the seller more than if the item is on the shelf down the aisle.
Dairy production has many more costs than harvested crops. According to the Bureau of Labor Statistics, the median hourly wage for dairy farm labor is $11.26 per hour, which is by far the lowest pay in the industry.
To keep the math simple, let’s say the cost of dairy farm labor was 10% of the total price of delivering that milk to market.
If you gave those workers a 50% pay raise to $16.89 an hour (still low compared to most of the other jobs in dairy), that would add, theoretically, only 5 cents per dollar to the cost, if the seller chose to pass that increased cost along to the consumer, and if the consumer chose to pay the increased cost. And, they would get more citizens to do those jobs.
With the spread of milk prices between Costco and Trader Joe’s being 26 times that nickel per dollar cost increase, I don’t think it would matter at all.
If the milk lobbyist is right, and deporting illegals will result in $8 per gallon, then we should all buy futures in milk!
Or, we could just say that the $8 per gallon prediction is, well, a lot of horse feathers!
You have enemies? Good. That means you’ve stood up for something, sometime in your life. [Winston Churchill.]
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