Dairy farmers recently lost an important financial cushion protecting them from an imbalance in milk prices and production expenses.
The termination of the federal farm bill at the end of September due to Congressional inaction also ceased the Milk Income Loss Contract program, which paid farmers when prices fell below a certain level.
"You lose a little bit of the safety net," said Paul Fetter, whose family milks 70 dairy cattle at their farm near Lake Winola. "A lot of months, you are kind of looking for the check. Sometimes, it's at the point where it's just enough to scrape by."
The MILC program was created by Congress in 2008 to help protect dairy farmers from sharp price declines. Pennsylvania dairy farmers collected $30 million in MILC payments from October 2011 through September, the Associated Press reported.
Regional dairy farmers who had a poor harvest in 2011 resulting from wet weather and flooding found themselves battered by high fuel and feed costs this year. A drought parching much of the Midwest and South drove corn and other agricultural commodity prices to near-record highs this summer.
Milk prices slumped in the spring and early summer but rebounded in August and September.
Feed costs, though, are up at least 30 percent from January 2011, said James Dunn, Ph.D., an agricultural economist at Penn State University. The average income-over-feed margin at Pennsylvania dairy farms is the lowest since 2009 - when the industry was in crisis from a price collapse, Dr. Dunn said.
"The feed cost is lurking out there in secret fashion," he said. "The net effect is that (MILC) money is pretty important."
Arden Tewksbury, a Meshoppen lobbyist for dairy farmers, said even though milk prices have rebounded, high expenses make the loss of the MILC subsidy more troublesome.
"All this summer, the sale of 100 pounds of milk would not buy 100 pounds of feed," he said. "That is unthinkable."
When Mr. Fetter began dairy farming in the mid-1980s, he was paid about $13 for every 100 pounds of milk produced - a standard industry measure equivalent to 11.6 gallons. Diesel fuel then cost 48 cents a gallon and cornmeal for feed sold for $85 a ton, he said.
Last month, Mr. Fetter received $22 for every 100 pounds of milk produced, he said, but off-road diesel fuel cost $3.81 a gallon and corn meal was priced at $340 a ton.
"Every expense has gone up so much," Mr. Fetter said. "A lot of farmers are frustrated with the whole pricing situation."
Manning Farm Dairy in North Abington Twp. grows crops for much of its herd's feed, owner Paul Manning said, but high production expenses continue to cut into margins.
Seed corn for planting now sells for about $300 a bag, enough to plant three acres, Mr. Manning said. Last year, the same volume of seed corn cost about $125.
The MILC program helped bridge the difference for many small dairy farms, Mr. Manning said.
"We try to roll with it," he said. "The whole situation could be a lot rosier than what it is."
Contact the writer: jhaggerty@timesshamrock.com