Very basic things, actually.
But the biggest force driving up milk prices is the same one that has driven up prices for conventional commodities like iron ore and copper: a roaring global economy. Rising incomes, from China and India to Latin America and the Middle East, are lifting millions of people out of poverty and into the middle class.
It turns out that, along with zippy cars and flat-panel TVs, milk is the mark of new money, a significant source of protein that factors into much of any affluent person’s diet. Milk goes into infant formulas, chocolates, ice cream and cheese. Most baked goods contain butter, and coffee chains like Starbucks sell more milk than coffee.^
Globalization is like a giant gold rush for those producing basic necessities with a tinge of luxury, meaning that they go to those with above average earning abilities. It’s interesting how this has come full cycle from high technology being most expensive, and milk being cheap. What happened was the downside of economies of scale. The more technology we made, the broader the production base became, and at the same time, our traditional farm and manufacturing sectors shrank. Now that technology has run its course, it’s back to basics for what the human population produced by this technological wealth needs.