DENVER (AP)--Here is the good news about rising prices for milk: Dairy farmers are on the verge of turning years of losses into profits.

Low supply and strong demand are pushing milk prices sharply higher, helping producers recover from a depression that decimated the dairy industry in Colorado and the rest of the nation.

"We've had the lowest prices I've seen in 25 years during the past couple of years," dairy farmer Tom Camerlo of Florence, Colo., said. "It's driven a lot of people out of business. Now we're going to get prices that might help farmers."

Prices paid by milk processors to Colorado dairy farmers reached about $16 per 100 pounds of milk this month and may climb to $20 or higher next month. That would be the highest price on record and double the $10 per hundredweight that producers received a year ago.

The U.S. Department of Agriculture has forecast that increased raw milk prices will cause a 4 percent to 6 percent increase in retail prices for dairy products this year.

"We'll choose to price things to put our best foot forward," said Safeway spokesman Jeff Stroh. "Sometimes that means absorbing cost increases or not passing the full amount on to customers."

For milk producers, problems began two years ago when prices began plummeting because of a supply glut. But higher beef prices led dairy farmers to sell some of their herds for meat production, and the domestic mad cow disease scare limited the ability of U.S. producers to increase dairy herds.

Drought has also lowered the nutrient value of cattle feed, resulting in less milk production.

Some dairy farmers have been forced into bankruptcy over the past two years, said Greg Yando, deputy commissioner of the Colorado Department of Agriculture and a former dairy farmer.

"A lot of them got caught in a timing issue," he said. "They might have just expanded their operations or increased their debt, and then when milk prices went south, it was devastating."

Aside from the impact of plunging prices, Colorado dairy farmers have consolidated, reducing their numbers from about 600 in the 1970s to 162 today.

Nationally, the number of dairy farms has dropped in recent years to about 80,000.

"When you can fit every dairy farmer in the U.S. in a football stadium, that's getting pretty scary," Yando said. "But for the ones who have survived, the forecast is very bright."

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