The Watertown Daily Times reports higher milk prices have prevented dairy farmers from expecting the worse as feed prices continue higher.

Higher production per cow and stronger export demand allow farmers to break even and potentially make a profit early in 2011. Dairy producers aren’t as concerned about their financial situation as they were in 2009 because of the positive market situation.

The U.S. Department of Agriculture predicts higher output per cow will cause total milk production to increase to 196.1 billion pounds. Heavy demand in China and other countries will keep milk prices strong.

As the milk price is higher, industry leaders at the USDA’s annual outlook conference said feed costs could dampen 2011. Roger Hoskins, economist of the U.S. Department of Agriculture’s Economic Research Service, and others advised farmers to use forward contracts to protect themselves from higher costs for corn, soybeans and other key feed ingredients.

Hoskins predicted net cash income to decline from 2010, but expects it to remain near the highest levels since 1996. One producers at the conference shared ways he’s increased cash flow on his farm by pasturing his cows, switching to organic production and making ice cream for high-end stores and restaurants.

Source: Watertown Daily Times