Dairy hike to drive up cost of pizza

Pizza prices are set to rise up to $1 as higher cheese costs bite.

And a coffee and croissant could soon be up to 50c extra, a dairy industry expert warns.

Some shops will also be under pressure to increase the cost of milk, yoghurt, cream and ice cream as bigger wholesale charges are applied in coming weeks and months.

Key dairy processors are reviewing prices following a lift in farmer payments for raw milk.

The cost of imported dairy goods such as cheese and milk powders is also tipped to rise due to the weakening Australian dollar.

United Dairy Power general manager Darryl Cardona said wholesale prices for its mozzarella, bulk cheese and bulk butter would rise about 10 per cent from September 1.

Dairy giant Fonterra will charge distributors 5 to 7 per cent extra from August 1 for milk, cream and yoghurt that is then sold to cafes, milk bars and convenience stores.

Its brands include Riverina fresh milk, Ski yoghurt and CalciYum flavoured milks.

"It will be up to distributors to decide whether they pass on any or all of the higher cost," spokesman Nicholas Lembo said.

Mr Cardona said UDP's change was the first in 18 months, and would help cover a 15 per cent rise in payments to struggling farmers this season compared with last year.

However, many financially squeezed farmers in Victoria's southwest say they are still paid less than production costs.

While supermarkets typically absorb most wholesale dairy cost rises because they can afford to, smaller retailers usually pass them on.

UDP's Caboolture cheese brand is used by 250 pizza shops across Melbourne and national chains La Porchetta and Crust pizza.

Its butter is a major ingredient for croissants at several bakery chains.

Michael Masri, owner of Sofia Restaurant in Croydon, said a 10 per cent wholesale cheese cost rise would likely increase the retail pizza price by 50c-$1.

"It is a beautiful cheese and the main ingredient, and it is Australian made, so we will keep using it," Mr Masri said.

Source: CourierMail, 11 July 2013