Forget worries about $4 gas ... now it’s $4 milk

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“Certainly I think you’re gonna see it worse in places like the Southeast — in Georgia and Florida — and California,” he said.

The USDA doesn’t survey prices in California because the state sets minimum farm-level prices, skewing retail dairy prices. But those retail prices are near $4 a gallon in many cities there, too.

Von’s, one of the major chains operating in California, charged $3.99 for a gallon of whole milk at its Los Angeles-area stores on Wednesday, according to its Web site.

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Like consumers, companies that use milk, cheese and other dairy products are expecting to spend more the rest of this year.

Hershey Co., the country’s biggest candy maker, recently scaled back its earnings expectations for this year, due in part to higher dairy costs. Kraft Foods Inc. raised prices earlier this year on some dairy-based products.

Similarly, Domino’s Pizza recently said that it expects to pay more through the rest of this year for the cheese it melts on top of more than a million pizzas every day. But Domino’s says it probably won’t raise the price of a pizza because its industry is too competitive, spokesman Tim McIntyre said.

“Margins get squeezed when prices go up, but everything goes in cycles,” he said in an e-mailed statement. “We plan for this and ride the wave.”

Competition might be the best guard against rapid increases in retail dairy prices, too, said the Milk Producers Federation’s Galen.

Mass-market retailers such as Wal-Mart, Target and Costco, he said, often sell milk at cost to pull in customers, then make their money elsewhere. That tends to limit how high grocers can raise their prices for milk.

The last dramatic dairy-price increases were in 2004, when — following a period of low prices — production fell and many farmers left the business, Galen said. The increase was sharp, he said.