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Oil prices push up the cost of dairy processing

The cost of a litre of milk could be about to get dearer, as dairy processors are hit by high world oil prices.

The price of plastic milk bottles has gone up by almost 10 per cent in the past four months, due to the petro-chemicals used to make them.

And that's adding to the higher cost of freight and packaging, not to mention running irrigation pumps on pasture.

Chris Pensini, from Hastings Valley Dairy in New South Wales, says some of those costs may be passed on to shoppers, if oil goes higher.

"I'm predicting, at the moment, probably one further increase with the price of oil where it is; so I would think we would see another price rise, maybe another 4 per cent, before Christmas comes our way.

"And as I say, we'd probably have to then look at passing some of those increases on to consumers unfortunately."

Editorial Notes: Just a brief item from the ABC that shows how for a simple product like milk, there are numerous points of the production cycle which are dependant on oil. It shows the multiplier effect of increasing oil prices, instead of the single-dimension trivia of higher petrol prices which is the main focus of the media. -IL

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