Each June the dairy industry celebrates Dairy Month and promotes the importance of milk production, the nutritional value of dairy products, and the economic impact of the $110 billion dairy industry to the United States.

"Dairy managers will be challenged in 2011-2012 to remain economically viable as feed and fuel prices increase," said Mike Hutjens, University of Illinois professor of animal sciences emeritus. "They will need to find ways to produce milk at an economical price for consumers while maintaining the highest quality milk possible."

Hutjens said dairy managers are continuing to play catch-up after an economically disastrous 2009 and 2010 business year with milk prices down 40 percent. 

Illinois dairy managers need $17 per 100 pounds or $1.45 per gallon of milk sold to cover feed, variable, fix, and labor costs with a return on assets.

Although current milk prices have been favorable, Hutjens said three factors will impact the price of milk and dairy farm profit margins this year.

"First, milk prices depend on supply and demand with more than 13 percent of current U.S. milk solids being exported," he said. "World demand may be impacted by the financial status in Europe and unrest in the Mideast areas."