Milk Prices Expected to Rise 9 Percent

2% milk is sits in its crate in the cooler before being shipped at Harrisburg Dairies in Harrisburg, Pa., Wednesday, March 28, 2007. Dairy economists predict the retail price of milk could rise as much as 30 cents per gallon, a 9 percent increase, by fall. The rising prices will be spurred in large part by increasing fuel and feed costs incurred by dairy farmers and a growing global demand for milk products, the economists say.(AP Photo/Carolyn Kaster) (Carolyn Kaster - AP)

Bower said he now pays about $180 a ton to feed his 500 dairy cows, up from $115 a ton a year ago, an increase of more than 50 percent.

There is also a growing demand for products like skim milk powder, dry whey and whey protein concentrates, which are exported for feeding programs in areas including the Middle East, Asia and Cuba, Bailey said. Whey powder is used in animal livestock feed.

"The result is that domestic supplies of these milk protein products are limited and global market prices are rising," he said. "That feeds back to the farm price of milk."

Federal legislators recently have drawn up bills seeking relief.

Sen. Bob Casey, D-Pa., earlier this week introduced an amendment that would pay Pennsylvania dairy farmers a subsidy for milk produced over the past six months.

Casey said the amendment would provide about $125 million in aid to help dairy farmers deal with higher energy, feed and other production costs.

"Without relief, more dairy farms may join the 250 to 350 dairy farms that go out of business every year in Pennsylvania," he said in a statement.

But Phoebe Bitler, vice president of Pennsylvania Dairy Stakeholders, an industry group that includes farmers, producers and grocery stores, said the price of milk should not be so dependent on subsidies for farmers so consumers get an accurate gauge of costs.

"We've made it so that the farmer has to produce it cheaper and cheaper all the time," said Bitler. "The real price needs to be paid for the product, rather than a subsidy price."