It's the classic business scenario... Cheese has a COGS + margin, same as any other product. Part of that COGS is the raw materials cost, which is variable. The raw material is primarily milk. On the milk side, our COGS include feed, housing, energy, etc. But as Sailor said, the biggest is feed. Feed costs are very high, and that variable cost passes through to the final end product.
There's also the subsidy issue and market pricing of milk, but that's a whole other story. Short version is that dairy people at times are forced to sell below COGS because pricing is fixed.