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Consumers may be happy spending less for milk these days, but dairy farmers aren't.

At a time when some Maryland farmers are thriving and some are just getting by, the state's dairy industry "is the worst it has been in 31 years," according to Colby Ferguson, an agricultural business development specialist with the Frederick County Office of Economic Development.

"It's like the Great Depression," he said of the dairy industry, which is centered in Carroll, Frederick and Washington counties. Profits have been "pretty bad" for farmers, who were losing about $200 per cow as of last year.

"Prices did rebound a little over the winter and the first quarter of this year, but prices are forecast to drop again over the summer," Ferguson said.

The current price for a gallon of whole milk is $3.42 in Baltimore and $3.66 in Washington, D.C., according to the U.S. Department of Agriculture.

That is down from the same time last year, when prices were $3.58 and $3.56, respectively.

The problem for many dairy farmers is that any higher sales prices don't necessarily filter down to them, Ferguson said.

"As the retail price increased, it is not proportionate in the price given to the farmer," he said, with most of the increase going to processors and retailers.

To turn a profit, farmers need to receive $1.50 to $1.66 per gallon, according to Ferguson. But on average last year they received only $1.09 per gallon, or about 30 percent of the retail price.

However, farmers who bottle their own milk and make their own cheese "are doing OK," he said.

Statewide, farming ‘slightly improving'

Unlike other sectors such as information technology and biotechnology, it is more difficult to define the state of Maryland's agriculture industry, Ferguson said.

"Certain facets are doing well and certain ones are struggling," he said. "It is not a defined, one-type thing. It's not just farming and producing a crop."

The agriculture industry comprises several elements, such as retail, wholesale and direct marketing, production of ethanol and biodiesel fuel and using agriculture in biopharmaceutical research, Ferguson said.

Overall, crops in Maryland are doing "fairly well," according to a statement from Earl F. Hance, the state's secretary of agriculture.

Sales at Maryland nurseries were up slightly through the spring from last year, he said. The livestock market is seeing "slight improvements," Hance added, and grain markets are holding up "very well despite being very dependent on the weather."

Hance said he expects the state's agriculture industry to "level out" for the remainder of 2010.

"We are trying to get back in line and are on a trend line to having profitability for most agriculture sectors," he said.

Total income for Maryland farms was almost $2 billion in 2008, according to the most recent figures available.

The poultry industry accounted for the most, with $790 million in receipts, followed by corn and soybeans with $336 million combined, nurseries with $220 million and milk and dairy with $194 million.

There were about 2.05 million acres of farmland in Maryland in 2009, according to U.S. Department of Agriculture information, down only slightly from 2.052 million acres in 2007. But that was a significant drop from 2.193 million in 1997.

Ferguson described the industry as "static to slightly improving" and that while the dairy industry is struggling mightily, the grain industry is "doing very well" because of "outstanding" prices for corn and soybeans.

However, the state's livestock industry has also taken a hit because of the grain industry's success, Ferguson said.

"When the grain industry is doing well, livestock struggles because of the high cost of production," he said, although some dairy farmers grow their own grain to help cut feed costs.

Turkey production in Frederick County, historically the state leader, has fallen, too, Ferguson said.

Maryland raised 740,000 turkeys in 2007 at a production value of $7 million, according to the most recent federal data.

That was down from 750,000 turkeys in 2005 but up from the 730,000 in 2006.

‘Threatens your whole way of life'

The drop in milk prices "makes you wonder if you want to stay in business," said Judy Iager, co-owner of Maple Lawn Farm in Fulton. In addition to dairying, Iager also raises turkeys and crops such as corn, wheat, soybeans and hay.

Iager's farm has 350 cows, which she said are "losing money" due to the drop in milk prices. Iager and her husband have had to dip into their savings to keep the farm operating, she said.

"It threatens your whole way of life, but we're holding on," she said.

Iager's farm also has two full-time employees and she said the farm's turkey and crop production has helped them get by.

Charles Fry said he had to lay off employees and cut costs at his 1,500-acre Rocky Point Farm in Point of Rocks. Fry, who has 170 cows, said some farmers are losing 50 percent of their income, and that farming is his sole livelihood.

"I don't have another job to substitute income," said Fry, who is also vice president of the Maryland Farm Bureau.

The bureau has worked to pass some state legislation, including allocating $5 million in emergency funds for the state's dairy industry. But the state's budget crunch has prevented the money from being disbursed, Fry said.

Other new laws are designed to help farmers, including measures that define the terms "locally grown" and "local" for agricultural product sales, reduce regulations for farmers who sell at farmers markets and create more opportunities for landowners to preserve their land.

State agriculture officials are pushing the "Buy Local" program, which encourages residents to buy locally grown products, said Sue DuPont, spokeswoman for the state Department of Agriculture, in an e-mail.

The department is also working to expand its conservation efforts, she said.

The Maryland Farm Bureau is teaming up with the Chesapeake Bay Foundation to retain agriculture and regain lost farming jobs, Fry said. The organization is also collaborating with the National Milk Producers Federation to curb excess milk production.

Maryland's small size and cost of living have always made it difficult for dairy farmers, he said.

"We're getting paid the same as Midwestern farmers but the price of a house here isn't the same as there," Fry said. "Maryland farmers need a fair price for our product."

Based on historical cycles, milk prices should climb back up over the next two years before "crashing down again," said Stanley W. Fultz, a dairy science extension agent with the University of Maryland Extension's Frederick County office.

"A couple of percentage [point] change in milk use worldwide can change the price," Fultz said, adding that demand fell during the recession.

"Farmers were hemorrhaging money last year."

To cut costs, Ron Holter of Holterholm Farms in Jefferson has turned to management-intensive, or "rotational," grazing, in which his 120 cows are pastured rather than fed with grains.

Holter said his farm has been hanging in there, but acknowledged that business has been tough for others.

"I can't complain," said Holter, who also sells produce and eggs. "I'm excited about the future."

‘Eternal optimists'

Some of Allen Styles' fellow dairy farmers must decide which bills to pay and which to put off, said the co-owner of Spring Valley Farm near Westminster.

Styles said his revenues do not cover his costs, and farms similar in size to his 250-acre, 150-cow operation "have to develop some kind of niche."

While he has started marketing his cows as show cattle, Styles believes the outlook for the state's dairy farmers "doesn't look like it will get too much better."

Despite Styles' pessimism, most other farmers "are the eternal optimists," said Jeremy Criss, manager of the Montgomery County Agricultural Reserve.

"They hope the forces they are subject to will work in their favor," said Criss, who shared Ferguson's belief that the grain industry is doing well and said he is seeing an increase in capital investments by grain farmers for expansion."It shows symptoms of a strong market."

However, Criss also agreed that livestock producers are suffering but said many beef producers are putting their cows out to pasture to help cut costs.

The biggest unknown for farmers right now is energy costs, according to Criss. While there has been no major price increase recently, he said, that could change.

There is "huge concern" about the Gulf of Mexico oil spill, he said