US dairies on the west coast have one BIG advantage over their Pacific Rim (namely, Japan) counterparts: Strong milk prices. The graph below indicates a 2007 surge in milk prices that far exceeded hay prices. In fact, notice how US milk prices nearly doubled in one year from the Summer of 2006 to 2007.  Strong milk prices allowed US dairies to remain competitive and produce abundant dairy products, which probably explains why milk prices are now leveling off.  Pacific Rim dairymen need a similar surge in milk prices so they may continue to operate without losing money.