AUGUSTA – Last week, Maine dairy farmers learned that industry experts were predicting further drops in milk prices. This week, lawmakers discussed how to make cuts to the state program that helps dairy farmers through such tough times.

The move to cut the subsidies paid to farmers when prices fall below a set monthly price was proposed by the Legislature’s Agriculture, Conservation and Forestry Committee to help balance Maine’s budget for this fiscal year.

The target price is based on estimated milk production costs to ensure that farmers break even and not necessarily make a profit.

The committee was split over how to distribute the cuts and was told by Appropriations Committee members to come back with a new recommendation in a few weeks.

State Sen. John Nutting, D-Leeds, chairman of the Agricultural Committee and a dairy farmer, said the committee split 6-5 between two competing plans for cuts.

One plan would cut milk subsidies – enacted in 2004 – across the board by 23 percent and cap farmers who receive them at 7 million pounds of milk. The other plan would cut the subsidies across the board by 29 percent, with no cap in place.

Nutting said his committee would schedule a public hearing on the subject in the next couple of weeks.

Farmers say the subsidy program is helpful, and they are used to the industry’s fluctuating nature.

“We never, ever were asking to be supported to make a profit; it’s just to the cost of production,” said Pete Waterman, owner and farm manager of Waterman Farms in Sabattus. “It set a floor so that you knew what you were going to be getting and it helped you plan a bit as you moved into the future.”

Waterman emphasized the importance of the program to Maine’s dairy industry.

“Any business, I don’t care if it’s widgets or what, if it costs you $24 to make a widget and you’re selling it for $12 or $14, you’re not going to be in business for long,” he said.

After about a year of historically high milk prices, dairy farmers are looking at plunging profits as prices fall. The slipping prices would put a greater strain on the state’s already tapped-out General Fund if no subsidy cuts were made.

In July, farmers were earning about $25 per 100 pounds of milk, but estimates for February are running about $10 less per hundredweight. Production costs for small farms are about $21 per hundredweight, according to a study by the University of Maine. A more recent study, still under review, puts costs even higher.

Shirley Bailey of Bailey Hill Farms in Farmington said she has worked on her farm for more than 50 years. Though the cost of producing milk keeps going up, the price does not always correspond, she said.

“It’s too bad that the state has to pay, because we should be getting our money just like everybody else does,” she said. “When you produce something, you should be getting paid. People will pay for it, if they want it. It’s pretty difficult to live without milk.”

John Hemond of Hemond Hill Farms in Minot said now is the time for dairy farmers to stick together.

“I know Sen. Nutting wants a cap, but I disagree with that,” he said. “We’re all going to get hurt. There’s no doubt about that. But I feel the dairy farmers need to stick together. We’re all the same, no matter what size.”