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The Honolulu Advertiser
Posted on: Monday, April 21, 2008

Milk prices could rise to cover higher costs

Associated Press

Got money? The cost of a gallon of milk may soon be going up in Hawai'i.

The state's two remaining dairies are seeking a 20 percent hike in milk prices because of the rising costs of feed and fuel.

Tomorrow the Board of Agriculture will consider the request by Clover Leaf Dairy and Island Dairy to increase the minimum paid to milk producers by 52 cents a gallon to $3.05.

If approved, the proposed increase will go before a public hearing on the Big Island. Some of the increase could be absorbed by milk processors, wholesalers and retailers. It's likely that consumers will pay for some of the price hike as companies also face higher fuel, transportation and energy costs.

The proposed increase follows an increase of nearly 26 cents a gallon that went into effect last year, which followed a 25 cents-per-gallon increase in 2005.

Clover Leaf Dairy on the Big Island has 800 cows and produces about 3,300 gallons of milk daily. Owner Ed Boteilho said his operation has been "bamboozled" by the higher costs.

Milk is the only commodity in the state under regulatory price controls. Dairy owners say the regulations have made it difficult to survive financially.

Pacific Dairy in Wai'anae Valley shut down early this year, leaving only two dairies in Hawai'i. Island Dairy is also on the Big Island.

In the past eight years, four O'ahu dairies and three on the Big Island have shut down. Up until the 1980s, Hawai'i had nearly two dozen diaries, which produced all the state's milk.

A study by the University of Hawai'i's C.N. Lee, whom the agriculture board contracted to do a pricing study, found that Hawai'i dairies have been challenged by the price of ultra-pasteurized milk from the Mainland.