Pizza operators plan for higher cheese prices if farm bill deal isn't reached

Dec. 10, 2013

With the new farm bill still on the table less than a week before the Congressional Christmas break, some pizza operators are wondering how much cheese prices could rise if a deal isn't reached before the New Year.

WNCT, a North Carolina TV station, interviewed Poor Boy's Pizza and Pub owner Ken Auker about the gridlock. He said if the farm bill doesn't get passed before Jan. 1, the price of milk could potentially double, which would double his monthly cheese budget and eat into his business' profits. He currently spends about $5,000 a month on cheese.

"It's a fluctuation market, price of milk goes up, price of cheese follows instantly," he told the station. "That would wipe out my bottom line. Restaurants like this run on a 2 to 3 percent net profit if you're successful, if we're looking at another $5,000 per month in cheese prices, that kills my profit."

Congress' debate stems around how much spending to cut from SNAP — or the food stamp program. If the gridlock isn't resolved by Jan. 1, a law written in 1949 will be put back into place. According to the story, the government in 1949 helped a "disorganized dairy industry by paying more than it does now." Therefore, if the old law goes back into effect, the government will be forced to buy milk at a higher price than necessary.

There has been talk of an extension of the current farm bill, but no progress has been made yet. A vote could come this week.

Read more about supply chain management.

Topics: Cheese, Equipment & Supplies, Food Cost Management, Operations Management

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