Why is Cheese So Expensive?

As a guest host of Saturday Night Live, Kevin Hart completed the trio of “Bushwick Boys” whose 4-minute corner chat about changing neighborhood dynamics included, among other things, gluten-free muffins, $8 artisanal mayonnaise and cheese and wine pairings. If you haven’t seen it, do yourself a favor.

I was pleased, if somewhat surprised, to note that mayo had become the new reference point for overpriced “gourmet” food. For the last decade it’s been “artisanal cheese.”

Why, people ask me, is cheese so expensive? And, why does local cheese often cost more than cheese from Europe? Until today my answer has been limited to a helpful if somewhat spiritless explanation that a pound of cheese is actually a lot of food—an appropriate amount for feeding 8-16 people (assuming they each eat 1-2 ounces). Most of the time we’re shopping for 4-6, so we’re not buying a $30 pound. We’re buying, say, a $10 third-pound.  

While guidelines about quantity may lessen sticker shock at the cheese counter they don’t get to the heart of my real answer, which is that cheese (and the milk from which it is made) is actually too cheap. Or, put differently, the price tag of smaller production cheeses is reflective of the actual cost of milk production, rather than the heavily subsidized commodity that is fluid milk in the U.S.

The true cost of making food is often far greater than the price tag on supermarket shelves. This doesn’t make cheese hideously overpriced—it makes cheese reflective of the true cost of milking an animal and turning that milk into a value-added food.

The Cost of Milk

All cheese begins with milk. Milk is a commodity—its price is part market-determined and part publicly-administered through a wide variety of pricing regulations. While milk prices fluctuate, it is not uncommon for the price of milk (what a dairy farmer can sell their milk for) to be less than the cost of producing that milk. This differential is especially devastating for small family farms lacking the cash reserves to ride out market fluctuations. Between 1998 and 2007, NY state dairy farms (the country’s third leading producer of dairy products) plummeted 27%. In the past 20 years the state has lost half of its dairy farms, with the trend toward fewer and larger farms. Our cost of milk is not typically representative of what a dairy farmer requires to run a sustainable operation.

From the beginning, then, where a maker buys his milk and the cost he pays may or may not reflect this commodified, subsidized and unsustainable system of pricing. A cheesemaker buying commodity milk on the open market, regardless of size, scale or efficiency, pays the same set price per hundredweight. Many smaller production cheesemakers choose to pay their milk suppliers a premium price for better milk. Better milk might mean cleaner milk, milk with higher fat and protein content, milk from a particular (less efficient) breed of cow, milk that is grass-based or milk that is organic. Or, more simply, a maker may choose to pay their supplier a premium price because that premium is required to keep their dairy farmer in business.

Cheesemakers who produce their own milk (farmstead producers) begin with a raw material of full and true expense. Andy Hatch, co-owner and cheesemaker of Dodgeville Wisconsin’s Uplands Cheese gave this example:

Uplands’ produces milk of cheese seasonally, only when the cows are outside eating grass. Their breeds of choice were selected for their abilities to walk, eat grass, and produce exceptionally flavorful milk. Compared with a modern Holstein dairy cow, confined to a barn and eating a grain-based energy intensive diet, Uplands gets 50 pounds of milk, per cow, per day. The modern Holstein will give you double that—100 pounds per cow per day. Before a drop of milk hits the cheesemaking vat, Uplands’ raw material is twice as expensive as commodity milk because there is half as much.

The Cost of Transformation

The cost of turning milk into cheese is driven by efficiencies of scale. The standard cheesemaking vat at a Wisconsin cheese plant holds 40,000 pounds of milk. Uplands’ vat holds 9,000 pounds. Most handmade cheeses I know are produced in vats less than half Uplands’ size. The time and labor to move and manipulate milk by hand decreases efficiency and output compared with cheesemaking operations run by machine and calibrated to maximize production facilities. The real additional cost, though, comes with the aging of cheese.

The Cost of Time

Many small production dairies launch their cheese production with a fresh or briefly aged cheese. Milk it, make it, sell it and collect cash immediately. Aging cheese is expensive. For every day a cheese sits and matures, a cheesemaker pays for the cash tied up in that wheel or block. But the type of aging makes a particular difference. The cheapest cheeses you can find—rindless blocks of cheddar or jack--- are made, packaged in airtight plastic cryovac and put away in refrigerated warehouses. The costs of aging these cheeses are typically 3 cents/pound—the cost of electricity. “Cave aged” “cellar ripened” or “natural rinded” cheeses must age in open air conditions. They are turned, flipped, brushed, and possibly washed. They are handled. And, they may lose up to 10-12% of their weight during aging. To age a cheese like Uplands’ award-winning Pleasant Ridge Reserve costs three times what a block of mild cheddar requires.  A ten-pound wheel of Pleasant Ridge loses $3/month in carrying costs. 

As Andy says, “We don’t ripen it that way because it’s nostalgic or good for marketing. It’s the best way we know to develop that kind of flavor complexity.” 

Supporting Tradition

Like Uplands, many American cheesemakers choose traditional methods in their quest for great flavor complexity. It’s worth knowing, however that those (European) traditions are financially supported by the E.U. in ways they are not by the U.S.  When I was in Switzerland last summer, and admired the meticulously maintained open pastures surrounding remote alpage Gruyere producers, it was casually mentioned that the Swiss government paid a subsidy per acre to farmers to maintain that land. American makers apprenticing in Europe have worked with cheesemakers there  receiving up to 40% of their income as a direct subsidy from the E.U. This may be paid by animal or by acre, but in all cases there is an understanding that traditional farming is important to maintain, and small farmers require financial assistance to compete in the world market.

The Supply Chain

Finally, there is the cost of getting a cheese to market. After it leaves a maker, it typically goes to a distributor who in turn sells it to a retailer. Together, these links in the chain add a gross margin of 45-70% on top of the cost paid to the cheesemaker. It is not unusual that you will pay $30/pound for a cheese whose maker received $12/pound.