SALEM, N.H. — Democratic presidential candidate Barack Obama sees relief in the future for local dairy farmers struggling with rising operating costs.

The price of feed, corn and other grains has been driven up by recent investment in ethanol, a gas additive usually made from corn, local agriculture officials have said.

Obama, the junior Democratic senator from Illinois, supports ethanol production in large part because it reduces greenhouse gas emissions and American dependence on foreign oil.

"I think this is a short-term problem," Obama said Monday of rising feed prices, adding that higher prices will encourage more people to grow more corn, eventually bringing prices down.

Obama spoke during a two-day trip to the state that brought him through seven New Hampshire communities, including Derry and Salem.

At a house party in Salem Monday, Obama drew about 120 people, according to a campaign estimate. About 350 people attended the town hall-style forum at Derry's McGregor Park, according to the Obama campaign.

In an interview with The Eagle-Tribune, Obama said he was sensitive to the difficulties small, local dairy farmers face.

Aside from a slight uptick in the number of Granite State farms in the last five years, the number of farms here has declined since the mid-1980s.

In 1985, New Hampshire had 3,400 farms, according to U.S. Department of Agriculture statistics. By 1990, that number dropped to 2,700, where it would hover until 2002, the USDA reported.

Today, there are about 2,800 farms, according to the Agriculture Department.

To help small farmers, Obama said, the federal government should invest in cellulosic ethanol | which is made from wood chips or other organic materials | and encourage farmers to produce more corn.

"I do think it's crucial to encourage the ethanol industry as a way of building up infrastructure," he said.

An eventual drop in operating costs would be welcome news to Gordon Gray, a dairy farmer and the owner of Graymist Farms Dairy in Groveton.

"The way the grain market is, it's crazy," Gray said.

Last summer, Gray paid $210 per ton for feed. After several ethanol plants in the Midwest came on line, prices spiked to $270 per ton, he said.

The Groveton farmer buys some 30 tons of grain each month to feed 93 milking cows, he said.

Gray's experience is typical, according to Stephen Taylor, New Hampshire's commissioner of agriculture.

"These farm state senators have been running around touting ethanol as the greatest thing going," Taylor said.

But supporting production of the gas additive has wreaked havoc on the dairy industry, Taylor said in an earlier interview.

Monday, though, Obama said he would support small farmers not only by encouraging increased supply in the ethanol market, but by supporting key changes to farm subsidies.

Referring to an address he made in Tama, Iowa, on Friday, the Democratic candidate said he wanted to see subsidies directed away from large corporations and toward small farmers.

By capping an individual subsidy at $250,000, Obama said, the government would be able to offer money to many more, and much smaller, farms.

"Part of the thing we need to do is see that farmers are getting a fair price for their products," he said.



Gordon Fraser writes for The Eagle-Tribune of North Andover, Mass.