“That's one of the challenges,” said Dr. Ken Bailey, representing Penn State University's agricultural sciences department. Bailey served as the morning guest speaker with his speech entitled “Dairy Outlook.”

“Farmers are looking at feed costs compared to milk prices.”

To makes matters more complicated, the federal government has pushed for the future of ethanol as a fuel, using corn to produce that energy. Corn is an agricultural commodity as feed for not only livestock but also for human consumption. Bailey predicts that not only farmers will see an increase in feed but also the consumer will also realize higher costs at the market.

“It's simply a classic case of supply and demand. This year we are feeding the corn to ethanol plants,” said Bailey. “You have to take all that into consideration in determining what milk prices will be. Many farmers are wondering ‘Am I going to make money this year because feed keeps going up'?”

Even though the ethanol has raised feed prices, the overall projection for this year's dairy farmer is better than last year, said Bailey.

He reported that the exportation of American dairy products, especially whey and protein, remain strong.

“The global demand for protein is very good right now and the world is turning to the United States for skim milk powder,” Bailey said. “Our inventories of whey products are low because we are shipping it out the door and for the farmer, that's good because the milk prices are going up. Everyone in the world is turning to the U.S. for protein.”

Source: Daily American