The Merced Sun-Star reports milk prices are recovering this year, but high corn prices threaten the dairy business.

Rising corn prices have made feeding the herd more expensive. Corn has increased from $176 per ton in July to $276 per ton this month according to Joel Karlin, a market analyst for Western Milling in Goshen in Tulare County, California.

The primary reason for corn’s price increase is the ethanol subsidies provided by the government.

Corn is one of the key ingredients in feed along with alfalfa hay, corn silage and protein meal. Prices for all of the ingredients have increased, leading dairy farmers to look for new feed sources and reconfigure feed rations to maintain high milk production.

Michael Marsh, chief executive officer of Modesto-based Western United Dairymen says the higher corn prices makes U.S. livestock production less competitive in the global marketplace. Unless Congress helps reduce the deficit and keeps livestock production in the United States, Marsh believes Americans will start buying milk from China, instead of the other way around.

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