I am in a related industry, the problem is two fold at least locally in my area. One the farmers are all getting larger volume so that of course is a supply and demand thing, that particular company itself wanted to expand but could not.
Two the supply chain does not react well to price changes for a number of reasons, I am in the cheese end of it. We can purchase cheese and store it, so my company buys low and sells high as any reasonable company would do. So that is the first buffer as why the prices don’t change, I will admit milk is more time sensitive. The people we sell to are often based on contracts, so we set a price and are stuck at that price for x amount of time.
Con founders for us are foreign markets, china for instance buys a lot of cheese currently. This in of itself based on my understanding of current supply is not an issue, but what does cause problems is that most cheese producers make the cheese in an export form which is smaller sized and wrapped in plastic and placed in cardboard boxes.
Most of my machinery is designed to handle bulk sizes about 18 times the size of what the high demand is and most producers make. So we now have to pay to have people open the boxes and strip the plastic, well it all costs money and that gets passed on even though the producers adapted to the demand. That is just one example.
Another thing is that the organic market at least for cheese is crazy, the product can cost up to twice as much to process as conventional cheese for IMHO very little difference because of the special requirements that make no major difference. Non-GMO is even worse, and I think even less difference as a matter of personal opinion but that is another topic all together.
