Sharp price rise for milk, cheese

Market forecasters are warning of a sharp increase in dairy prices this summer.

Prices paid to farmers have increased 50% this year -- driven by higher costs of transporting milk to market and increased demand for corn to produce ethanol. U.S. retail milk prices have increased about 3%, or roughly a dime a gallon, this year, according to the U.S. Department of Agriculture.

University of Illinois dairy specialist Michael Hutjens forecasts further increases of up to 40 cents a gallon for milk over the next few months and up to 60 cents for a pound of cheese. Hutjens and others said that higher fuel prices had increased the costs of moving milk from farm to market, and that corn -- the primary feed for dairy cattle -- was being gobbled up by producers of the fuel additive ethanol.