California's pricing system for milk gives cheese makers the lowest price for milk -- a holdover from the Depression era, when making cheese was a way to use up surplus milk. But now cheese makers are dairies' biggest customers, and still get the low price.
Many dairy farmers culled their herds because of high feed prices caused by the drought, reducing the supply of milk. Price increases will flow through many food products beyond a carton of milk.
As the costs of running a farm rise, farmers are getting paid less for their milk. That's forcing some farmers to get bigger or auction off their cows.