Business Notes DAIRY PRODUCTS

Consumers who like to drown their morning cornflakes may soon be merely moistening them. Because of a decline in U.S. dairy production, milk prices are jumping over the moon. After churning out a record 146 billion lbs. of milk in 1988, suppliers are producing about 2% less this year. Reasons: lower federal dairy subsidies, a drought-related decline in feed crops and a falling milk-cow population. As a result, some customers are finding milk in short supply. Even the U.S. Agriculture Department is having trouble buying enough to supply Government nutrition programs.

In New York State, where the number of milk cows has hit a 60-year low, prices at the dairy-farm level are up 11% over last year, to $1.40 per gal. Chicago-area producer prices have risen 13%, to $1.25 per gal. Dairy experts believe the shortages and price increases will continue through the winter, when consumption is highest. For relief, major dairy-product buyers are urging the Government to lift restrictions against milk imports.