Sour times for dairy farmers

CARLISLE -- So far, Mark Duffy is holding onto his 130 cows, but just this winter he saw two more friends sell their stock as economic shifts deepened the woes of the Massachusetts dairy farmer.

Duffy, 52, has been milking cows for 28 years, the last 20 at Great Brook State Farm, where he leases 100 acres. Some years, he ekes out a living. Other years, he amasses debt.

This is looking like another of the bad years.

Along with the state's other remaining dairy farmers, Duffy was relieved to hear last week that Governor Deval Patrick had filed a supplemental budget for this fiscal year, which will end June 30, that includes $3.6 million to subsidize local farms in the short term.

In the supplemental spending request, the governor also proposed creating a task force to develop strategies for strengthening the Massachusetts dairy industry. Farmers and some lawmakers say long-term legislation is needed if the state's dairy producers are to survive.

"Beyond the supplemental appropriation, we need to come up with long-term ways to stabilize the dairy industry," said Representative Stephen Kulik, a Democrat from Worthington. "Otherwise, they will suffer with costs that are higher than the cost of producing the milk."

Duffy and others say one way of helping the Massachusetts farmer for the long haul is to replicate a law passed in Maine in 2005 that adds a fee to the retail price of milk. If the market price of milk falls below a certain threshold, the fee still ensures an adequate return for the Maine dairy producer.

"That would go a long way toward solving the problem in Massachusetts, if some type of fee can go toward sustaining the dairy farmers," Kulik said.

The Massachusetts dairy farmer is becoming a rare breed. In 1980, there were nearly 830 dairy farmers in the Bay State. Today, there are 167, according to the state Department of Agricultural Resources .

Towns such as Dracut, Dunstable, Littleton, and Pepperell still have surviving farms, but many are barely hanging on as they face new economic realities.

One new challenge is the escalating price of corn, deluxe nutrition for cows, which increasingly is being converted into ethanol, the so-called clean alternative to petroleum.

The increased demand for corn, combined with lower production levels this seasonal year, has driven up the per-bushel price of the grain from about $2 in 2005-2006 to $3.20 in 2006-2007.

But there's no way to cut corners with feedstock. At Duffy's farm, the cows consume more than 2,000 pounds of grain a day. "The cows get taken care of, no matter what," he said.

The economics of the Massachusetts dairy farmer's dilemma is simple: Milk brings in less money than what it costs to produce it; last year, for example, a gallon of raw milk cost about $1.60 to produce, but yielded only $1.14 for the farmer.

The Massachusetts farmer's position in this highly regulated industry has to do with a complicated formula that sets the market prices for milk across the country.

The bottom line, Duffy and others say, is that a farmer in a Western state, where the climate does not require the animals to be sheltered, can more easily add stock and produce a greater volume of milk to compensate for falling prices.

But the increased volume depresses the price even more, and this vicious cycle hits the Massachusetts farmer harder because of the higher overhead, which includes the costs of energy, insurance, feed, and labor.

Market prices set by the federal government plummeted almost 90 cents per gallon between May 2004 and May 2006, putting farmers behind the eight-ball. Though prices are edging up, area farmers say they are playing catch-up on their bills.

"This is an extremely stressful time," Duffy said. "I've already told my landlord that in order to continue to operate Great Brook State Farm, I have to be economically viable."

Many Massachusetts dairy farmers have joined Agri-Mark, a dairy cooperative based in Methuen with about 1,300 Northeastern members. The farmers send their milk to plants in West Springfield, Vermont, and northern New York, where cheese, yogurt, and butter are manufactured.

The cooperative has helped, but dairy farmers are giving up at a rapid pace. Duffy said this winter a friend in Newbury sold all his milking cows, and another in Middleborough became ill and was forced to sell.

The short-term subsidy is supported by Kulik and state Representative Daniel E. Bosley of North Adams and Senator Stephen M. Brewer of Barre, both Democrats.

The farmers, who had hoped to get $12 million, have agreed to divide whatever money they get based on the quantities of milk they produce each year. Under the supplemental budget submitted by Patrick, Duffy would get about $20,000 -- not quite enough to ensure his survival in the long run, he said.

"We very much appreciate it," he said of the proposed appropriation, "and we view that as a short-term program to get us to a long-term solution."

Duffy and other farmers say they fear dairy farms in the West will continue to grow in number and size, while Massachusetts will lose more food producers.

Warren Shaw, who owns a dairy farm in Dracut and produces ice cream, said there are benefits to local farms beyond their supply of milk.

Centralizing agricultural production in large industrial farms out West, he said, leaves the nation's food supply vulnerable.

"The question remains: Do the people who are responsible for the character and quality of life in New England care enough about locally produced food to help it survive?"

Providing subsidies to local dairy farmers, though, is not an efficient way of propping up a declining industry, said Dan Lass, a professor in the Department of Resource Economics at the University of Massachusetts at Amherst.

"Subsidies keep farmers in business who might not otherwise survive in a perfectly competitive market," he said.

Nonetheless, Lass voiced support for maintaining farms in the state.

"We don't really have to have dairy farmers in this state," he said. But "they provide other benefits beyond just a fresh supply of milk."

Ask Duffy and other farmers, and they will list preservation of open space and water quality among the benefits.

But those don't help pay the bills.

Duffy estimated that he owes about $160,000 in short- and long-term debt. His capital expenses include farm equipment and maintenance costs for buildings, as well as corn silage and concentrated grain for feeding the cows.

Labor, too, is an overhead challenge. One recent Friday morning, two farmhands were milking cows and storing grass and feedstock in the trench silos. But missing was the herdsman, who left his job in January.

"There's no way to replace him," Duffy said. "It's springtime, and we're flat out."

So Duffy's wife, Tamma, puts in about 70 hours a week helping on the farm and running the ice cream stand in front of the farmhouse, and Duffy works around the clock. The couple has two teenage sons and a daughter in college, who all help out.

On this Friday, about 70 Holsteins were lined up in two rows inside Duffy's barn as machines emptied their swollen udders and channeled it through pipes to a glass tank in the next room.

The jar funneled it to a 2,000-gallon, stainless-steel cooling and storage tank, ready for delivery.

Five heifers and a bull calf were penned in separate hutches to keep them from nursing one another.

Yellow tags with numbers extended from the females' ears, but the male had no such appendage because he'll soon be sold.

The heifers are the farm's future, as are the 13 pregnant cows behind the barn and the two newborns inside.

Standing among the black-and-white animals around which half his life has centered, Duffy spoke his heart.

"I have no intention of giving up."

Joyce Pellino Crane can be reached at crane@globe.com.