Connecticut dairy farmers are worried they will soon go out of business . They are getting less money for milk than they are spending to produce it .

Currently , local farmers are losing almost a dollar a gallon . In today’s market , a gallon of milk brings the producer only $ 1 , while the cost of production is $ 1 . 90 , according to a press release by Connecticut Farmers Bureau Association , based in Windsor .

This price disparity exists because the federal government fixes the milk price nationwide , taking into consideration the larger dairy farming states , such as Idaho and Wisconsin that produce at a lower cost .

The predetermined milk price is adversely affecting local farmers , small or big , because the cost of production in this part of the country runs much higher . For Matt Peckman , a small dairy farmer in Woodstock , it takes about $ 40 , 000 a month to keep his farm of 130 cows running . But with prices so low , he says he is not even meeting the cost , let alone making any profit .

“ We are looking at a disaster , ” said Peckman , 31 , father of three youngchildren . Peckman , who inherited the farm from his grandfather , is worried that he may soon have to abandon the business his family has been in for generations . “ We’re basically losing 50 percent of our income . A family with three small kids can’t absorb a loss like that , ” said Peckman .

In Connecticut , dairy farming is a billion dollar industry , which provides over 4 , 000 jobs , according to a report published by the Department of Economic and Community Development and the Department of Agriculture . The study says that the fall of this industry would have an impact on several other related services , as well .

“ It is important to note that the dairy industry is not just farms and open space ; it is transportation , heavy machinery , jobs in food production , manufacturing , construction and sales , ” the report noted .

To keep this industry from fading out , dairy farmers are asking legislators in Hartford to create a system to protect them during dire economic times .

“ We’re asking our government to recognize regional differences , in terms of cost of production , ” said Peter Orr , a dairy farmer in Thompson and a member of the Connecticut Farm Bureau .

Some states with viable dairy industry , such as Massachusetts and South Carolina , provide tax credits to farmers whenever the price that farmers receive for milk falls below the cost of production , according to the DECD report .

Another Woodstock farmer , Paul Miller , owner of Fairvue Farm , says that he is losing about $ 10 , 000 a month . “ We would like to be able to get our cost of production , ” said Miller .

But when the state government itself is fighting an economic downturn , legislators in support of the farmers are looking at different avenues to keep this industry going .

One such proposition comes from Brian Hurlburt , a Democratic state representative and vice-chair of the Environmental Committee . He is proposing a bill to increase the retail license fee , which is currently a flat rate of $ 30 , to $ 500 and reaching up to $ 3 , 000 , depending on the volume of milk sold daily .

“ We have to find a revenue stream , ” said Rep . Hurlburt , who says that the small stores that sell less volume of milk will have to pay less than larger supermarkets . Hurlburt argues that the retailers have a mark-up price of $ 2 per gallon and hence they will be able to offset the increased fee without affecting the price to the consumer .

However , retailers are not too happy with such a proposition . They say that this kind of hike is going to add to the cost of doing business . “ We are empathetic to the dairy farmers , but an increase of this magnitude is unjustified and exorbitant , ” said Stan Sorkin , president of the Connecticut Food Association . Sorkin said that retailers are ready to accept an increase in license fee , but only up to $ 150 .

The DECD study suggests various alternatives such as fuel tax exemption , reduction in transportation cost , incentives , tax credits , and so on . But time is running out for the farmers . Neither does the federal stimulus package offer any help for dairy agriculture , nor has the state government made any significant move .

Farmers such as Peckman and Miller , who don’t have any say about the price of their own products , are in a fix . They want something to be done , sooner than later . “ If we don’t take the step now to protect the dairy industry , the whole issue of keeping low prices for milk will go out the window because there will be no local farmers and we’ll have to import [ milk ] , ” said Peckman .