But increasing costs for feed and the high price of oil are expected to make 2007 a challenging year. In November, such factors as lower dairy inventories and strong holiday demand lifted the blended price processors paid to area farmers to $14.21 a hundredweight, Cornell Cooperative Extension Educator Mariane Kiraly said. The price had been $12.66 in June and is expected to average $13.57 for 2006, Cornell University senior Extension Associate Mark Stephenson said in his 2007 "Outlook" on the dairy industry.

Prices are expected to average $14.88 in 2007, he said.

With feed prices rising as the result of the 2006 flood and the growing demand for corn in ethanol production, farmers could remain in the resulting "cost/price squeeze" in 2007, Kiraly said.

Historically, corn, which has cost about $2.50 a bushel, could be as much as $4 by spring, she said.

Two area farmers agreed that rising costs of production cloud what they are expecting in the year ahead.

Source: The Daily Star