Confused about supply shortages? Consider the odd economics of milk and sawdust.

As with the cost for pretty much everything, more goes into the cost of milk than meets the eye.

Source: (kbwillis/Getty Images)

Most folks at the grocery store probably see expensive milk and think, “Are you f*cking serious, cows?”

But truth is, as with the cost for pretty much everything, more goes into the cost of milk than meets the eye.

Case in point

In 2008, something odd happened as new house construction numbers began to plummet: The price of milk shot up. Huh?

That connection — explained below — is just one of an infinite number of nuanced relationships that impact prices, and serves as a good reminder of how complex our supply chain is.

Back to milk

In the new edition of his book, public policy expert Steven E. Rhoads explained that cows produce more milk the less they’re on their feet, and farmers use sawdust to keep cows comfortable lying down.

In 2008, as house construction went way down, lumber production also went way down. Hence, less sawdust. Hence, uncomfortable cows that produce less milk.

While surely sawdust isn’t the only financial burden on dairy farmers, one 2008 story found they were paying $1.2k for a truckload of sawdust, up from $600 a year before.

So the next time you see expensive milk — or deal with any other shortage, for that matter — take a moment to consider the uncomfortable cows.

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