Wanted: Milk Money - The low price of milk and high cost of production is killing Maine's dairy farms.

Amber Waterman/Sun Journal

John Nutting hooks a heifer up to a self-contained milking machine. The cow had been on antibiotics for an infection and her milk has to be thrown away until it tests antibiotic-free. The Maine tier program, a safety net for farmers when dairy prices plummet, is out of money, leaving milk producers nervous about making ends meet this fall.

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- Amber Waterman/Sun Journal

Amber Waterman/Sun Journal

John Nutting hooks a heifer up to a milking machine in the early-morning hours at his dairy farm in Leeds.

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- Amber Waterman/Sun Journal

Amber Waterman/Sun Journal

Tenth-generation farmers Bill and Betsy Bullard with their daughter Sydney, 3, sold all of their crop machinery because they found it was more stable to buy feed for their dairy cows rather than producing it themselves.

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- Amber Waterman/Sun Journal

Amber Waterman/Sun Journal

Jay and Sue Roebuck, at a farm in Turner where they house their replacement herd, talk about the smaller margin of profitability dairy farmers are seeing this year.

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- Amber Waterman/Sun Journal

Amber Waterman/Sun Journal

Leeds dairy farmer John Nutting steadies a four-hour-old calf after moving him to his new pen.

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- Amber Waterman/Sun Journal

LEEDS — Every morning when John Nutting opens the barn door, 50 cows wander into their individual stalls, each one with its name hanging above on a dusty white sign.

Charm. Amy. Mazda.

Every morning, after she's been fed, Madalynn digs her nose into the passing grain cart to steal an extra bite.

Every morning a cow is pregnant, and needs extra attention.

"Exactly the same things happening, exactly the same time, every time," said Nutting, 60.

Outside the barn, farmers have their own routine.

They watch milk prices go up. Then down. Up. Down.

This year, that routine is out of sorts and the state program that acts as a safety net when prices get too low is about out of money. In an average year, it might give $6 million in subsidies to dairy farmers, according to the head of the Maine Milk Commission.

In June, July and August of this year it gave nearly $9 million.

The latest money, for August milk, goes out this week.

While Congress wrestles with why farmers are being paid so little for their milk as their costs stay high, it's already looking like a long winter for the industry in Maine.

Nutting, a second-generation dairy farmer and longtime state senator, worries that 50 to 75 dairy farms might fold. Six already did this summer in Androscoggin County.

"The prices have been so low for so long their courage is not what it was," said Maine Milk Commission Executive Director Tim Drake.

Last year, milk prices swung between $24 and $18 for every hundred pounds of milk. This year, they dipped to $13, too low for even the largest, most efficient farms to cover costs.

Congress is likely to pass an aid package, and the Maine Dairy Industry Association, hat in hand, has asked for a sit-down with Gov. John Baldacci.

A governor's task force is due to recommend legislative fixes next month, but even among dairy farmers, answers aren't easy — how to proceed, who to help. Livelihood and jobs are at stake. Stress has created rifts.

Nutting's house was struck with paint balls two weeks ago. He suspects it was milk-related.

"We've got two years, at least, ahead of us of struggling times," Nutting said. "Public policy is going to affect who's going to be farming and who isn't."

‘Do I suck it in?'

In August 2000, Maine had 483 dairy farms. This August, there were 328. Last year, Maine dairy farms produced 597 million pounds of milk. A new study out of the University of Maine found small farms like Nutting's — more than half of the state's dairy farms are small — need $24.51 for every hundredweight to meet short-term expenses (feed, taxes, utilities). That doesn't include big-picture costs such as buildings and machinery.

Two summers ago, they were earning that. By the summer of 2009, the amount had dropped by almost half.

For October, the federally set minimum price that must be paid to Northeast farmers for Class I fluid milk is $15.60.

The price being federally set, influenced by factors from away, is part of the rub.

"Dairy farmers don't have any input on the price that they're receiving," said Jay Roebuck, 53, a third-generation dairy farmer with farms in Turner and Leeds. "We're really up against it."

Roebuck milks 120 head. He's used to cycles and tough times, he said. What makes this different: It comes on the heels of last year's high petroleum costs. While farmers were receiving more for their milk than today, they were also paying more for everything else, from corn (hot from the biofuel market) to trucking.

"Everything you touched had a surcharge on it," Roebuck said.

Farmers cut labor, found work off the farm and relied more than ever on Maine's Dairy Stabilization Tier Program. Since 2004, the program has made up the difference between market price and short-term expenses. (Expenses are measured by UMaine reports every three years; the latest is still waiting to be approved by the Legislature.) Processors and retailers largely fund the program through a handling fee. For instance, in September, they paid an extra 48 cents for each gallon of milk sold, Drake said.

In anticipation of low prices in 2009, this spring tier money was fronted by the state and boosted by the general fund. Of $9 million set aside for the first half of the fiscal year, $164,000 is left.

Farmers face one month with little help, then several months with none, until the new year begins.

"Once the tier program (money) goes away, we will be operating at a loss," said Bill Bullard. He and wife Betsy are the 10th generation to run her family's farm in Turner.

"You sit there and say, ‘Do I suck it in? Borrow money? Or liquidate and cash in?'" Bullard said. "I figure we'll be operating at a loss (until) June or July."

The Bullards have sold their crop equipment. They've cut back on repairs.

At Roebuck's farm, his wife, Sue, used to like how clean the barn looked with a fresh layer of shavings. Once it hit $800 a trailer load, they couldn't carry the cost. Now the barn is spread with Canadian hay.

Nutting is experimenting with feeding his cows citrus pulp, an orange juice byproduct. It's cheaper than the sugar beet pulp they are fed now. Each of his cows drinks about 400 pounds of water a day and eats 28 pounds of grain, 5 pounds of pulp and 12 pounds of hay — expenses that add up, and the last place a farmer wants to skimp.

Feed a cow less, she gives less milk.

"We don't want to turn this into, ‘Oh, poor us,' but it's a very serious issue," Roebuck said. "Things have to change and have to change soon or it's going to be very devastating for the industry and the state. ... If we don't survive, many other people don't survive."

Options on the table

Given vet and feed store bills, farm repairs and broader influences like being a tourism draw, the raising and keeping of a single cow has a $14,000 economic impact, said former state legislator Marge Kilkelly.

Now deputy director of the Eastern Regional Conference of the Council of State Governments and keeping an eye on dairy, she told the governor's Task Force on the Sustainability of the Dairy Industry that it accounts for 4,000 jobs, direct and indirect.

Dairy pays serious property taxes. Keeps space open. Acts as an "anchor tenant" to agriculture as a whole.

"Nobody plans their vacation around touring tract housing," Kilkelly said. "All of that factors into the economic impact."

Going ahead, one fix won't work — or even sit well — with every farmer, she said. "Part of my argument was, 'Let's see how many options can be kept open.'"

Kilkelly offered one from Vermont. Farmers there, like those in Maine, pay to have their milk picked up and trucked to processing plants. Vermont law would move that cost onto the processor, but it won't go into effect until two other states try the same thing.

Another option in front of the task force: Change the way Maine's tier program is paid out.

Farms currently are paid one amount for the first 2.1 million pounds of milk, a little less for the next 2.8 million and less still for anything after that. It's supposed to reflect the costs of running small, medium and large farms — costs per pound go down the larger a dairy gets, according to the UMaine study.

  Nutting, chairman of the Legislature's Agriculture, Conservation and Forestry Committee, last spring favored paying medium and large farms at the lesser-tiered rates from their very first gallon, making tier money last longer. The Legislature didn't go with his plan and kept the program as is. Nutting has been accused of pitting big farms against little, which might have led to the paint-balling.

"I've lost a lot of sleep since the end of the (legislative) session," he said. "My gut told me we'd done the wrong thing (by not making the changes). There's not a day that goes by now that I don't get a call from a small farmer: ‘You were right.'"

‘We need all farms'

The largest dairy farm in Maine is in Clinton; it received $467,742 from the tier program this past summer. The average payment to farms: roughly $27,000.

Nutting said state aid should be designed to help farms break even. He'd also like to see that benefit capped.

Even though small farms make up three-quarters of the industry, they account for one-third of the milk produced in Maine. Large farms, although many fewer in number, account for almost half of the milk production.

"Both groups have their role in the state dairy industry," said Professor George Criner, one author of the UMaine study and an agricultural economist.

Farmers who favored keeping the tier program as is say big and little farms need each other.

Large farms buy small farms' excess feed and extra cattle, Roebuck said. They keep milk processors busy and keep feed prices down for everyone.

"If you don't have large farms, many of those supply companies can't buy in volume, in bulk," Roebuck said.

"We need all farms," said Dale Cole, president of the Maine Dairy Industry Association. He's part of the group that plans to meet with Gov. Baldacci in two weeks. "It's tough to make the decision to spend (more) money; it's worth the investment, I think."

Through a spokesman, the governor lauded dairy as "an important part of our state economy."

"While I'm committed to working with the industry, it will be very challenging to find new resources," he said.

Maine's entire congressional delegation supports including a $350 million aid package in the 2010 federal agriculture budget. Already passed once in the U.S. Senate, it's due for a House vote next week. U.S. Rep. Chellie Pingree, D-Maine, a member of the Congressional Dairy Farmers Caucus, has nominated a longtime Waldo farmer for a new federal dairy advisory committee.

The tier program is slated to receive $4.4 million from the state in January, to last until July. After that runs out, there's currently nothing left in the budget for another year of support. The Maine Legislature reconvenes in January when it will likely take up the task force's ideas.

Nutting said his wife teases that he's got his barn-to-suit-and-tie transformation down to 17 minutes. Even during session, he's up at about 1 a.m. for a middle-of-the-night feeding, then 5:30 for morning milking and more feeding.

Having a routine, "that's good for cows, hard for people," he said.

kskelton@sunjournal.com