Year three of the dairy crisis has begun, leaving many farmers wondering just when this business will turn a profit again.

The prices they get for their milk have increased, but so, too, has the cost of corn, alfalfa and other feed.

"It's real simple," Lodi area farmer John Kaehler said. "For dairymen in 2011, it's going to be survival of the fittest."

healthy dairy industry could help nourish a Northern San Joaquin Valley economy stricken by the downturn in housing, retail and other sectors.

In 2007, when milk prices were strong, the product brought an estimated $2.26 billion in gross income to farmers in the region, according to county crop reports.

Prices plunged near the start of 2009, as the recession reduced demand, especially for exports. That year, farmers grossed an estimated $1.38 billion in Stanislaus, San Joaquin and Merced counties.

For the first half of 2009, the average farm price hovered at 85 cents per gallon, according to one measure used by regulators. That was far less than the cost of producing the milk.

The price has bounced back to about $1.20 a gallon, but increased feed costs keep many farmers in the red.

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