Walter Fletcher sat at his kitchen table, its surface crowded with paperwork as he calculated how much it costs him to produce milk at his 160-cow dairy farm in Pittsfield. It was snowing outside and his heart was heavy. The figures revealed the cost at $14.90 per hundredweight of milk.

His wife, Edna, walked over from the computer – the printout in her hand showing the latest price the farm would be paid for milk produced in December. It’s not enough.

Their base January milk check will reflect payment of less than $14 per hundredweight, nearly a dollar per hundredweight less than it costs them to produce the milk.

“We need $15 to hold our own. This is not going to be what I’d call a good year,” Walter Fletcher said sarcastically. And yet Fletcher said he is one of the lucky producers.

“Our butterfat and protein components were really good this month,” he said, a condition that earns him a bonus payment. “If not for that, if we had average components, we would have lost another 60 cents [per hundredweight].”

When Congress failed to reauthorize the Northeast Dairy Compact last fall, farmers like the Fletchers lost their safety net, a pricing system that provided subsidies to help them weather a fluctuating milk market.

A unique program that involved no taxpayer dollars, the compact payments from milk processors balanced out milk price fluctuations and guaranteed a minimum price per hundredweight of just under $17.

Milk prices have steadily – and predictably – been dropping since September, taking farm profits and some farms with them. The blend price for a hundredweight of milk in September was $17.76. By December, it was $13.72. That equates to 33 cents less per gallon in the farmer’s pocket although the price at the grocery store has remained the same for consumers.

The Sept. 11 terrorist attacks severely curtailed dairy consumption at restaurants and food services. Then milk consumption slowed even more after the holidays as it traditionally does.

While farmers would have been buffered by the compact, milk processors are now keeping the profits that otherwise would have been funneled to farmers through the compact.

When Maine’s dairy farmers opened their milk checks Friday, they learned that milk prices have continued to plummet.

Individual farmers are receiving an average of $5,000 to $6,000 less in income per month because of the loss of the compact. The price received by an individual dairy farmer varies depending on how the quality of the farm’s milk differs from established industry benchmarks and on how far the milk has to be transported to be processed.

At the Fletchers’ Snakeroot Road farm, the impact was felt last fall when they looked ahead and decided against hiring an extra full-time milker.

It was felt again this winter when Walter Fletcher decided against upgrading his milking parlor, a $90,000 commitment.

“I don’t know where it is going to go from here,” said Stan Millay, director of the Maine Milk Commission, earlier this week. “We are hoping this is the bottom and we’ll go up. There is no doubt that our farmers are struggling and some are not going to succeed. They just can’t stand that huge a loss.”

Bob Wellington, a dairy economist at Agri-Mark, a Massachusetts-based milk cooperative, said of the compact: “We found a way to take the bottom out for farmers and now that is gone.”

Maine dairy farmers predicted last year that without the safety net of the compact, as soon as milk prices began dropping, farmers would quit farming. That frightening prediction is coming true.

“Lots of farmers are saying they are going out,” said Millay. “Some really mean it.”

Even though Maine dairy farmers are getting 33 cents per gallon less for their milk than they did in September, prices have not changed at the grocery store. “Maine consumers pay about the same for milk as the rest of the country,” said Millay.

When it comes to efficiency, Maine farmers surpass the rest of the country, said Wellington. “Each cow in Maine produces about 20,000 pounds of milk a year,” he said. That means that an average small operation of 80 cows satisfies the dairy needs of 5,000 Maine consumers.

“That is absolutely amazing,” said Wellington.

But he just as quickly admitted that farming in Maine is harder and more expensive than nearly anywhere else in the country. Just the size of farms proves that: In Maine, 200 cows equals a large farm. In the west, it takes 10,000 cows to be considered a large farm.

“Out west, the dairy farms have subsidized water and cheap feed. They don’t have to house their cows in winter,” said Wellington.

When milk prices paid to farmers drop 25 percent as they have here since September, Wellington said that crippling cut “goes right to the family farm income.”

“No matter what milk prices are, Maine cows eat the same amount of feed,” he said, “and electrical costs are the same. Labor costs are the same. The barn is taxed at the same rate. If a businessman, for example, took a 25 percent salary cut, that person would begin cutting expenses. Maine farmers can’t do that.”

Wellington said selling off cows to decrease expenses also decreases revenue. “Meanwhile, farmers don’t have the income to do vehicle and equipment repairs, call a veterinarian, buy quality feed, and debt starts to accumulate.”

Fletcher said Maine dairy farms took a triple hit during the past year with the failure of the compact, the invasion of army worms and a severe drought.

“I think everybody was just starting to feel good,” said Fletcher, referring to high milk prices at the start of last summer. “It will take another few months to really sort out the impact. I think everyone is taking a wait-and-see approach.”

Maine Agriculture Commissioner Robert Spear said the number of dairy farms in the state has eroded.

“We’re down from 450 two years ago to 425 now,” Spear said this week, shaking his head. “No compact, army worms and drought. How much more can they take?”

“Farmers go out of business every month,” said Wellington. That number ranges throughout New England from several to a dozen.

“At least a few go out each month in Maine,” he said. “This latest crisis will, of course, push that figure higher.”

Should the state experience an exodus of family dairy operations, the impact on Maine’s consumers would be swift, said Wellington. Prices paid at the store for milk, butter, cheese and ice cream would begin to rise dramatically.

“When you look at the total dairy needs of the state, Maine is a deficit state,” said Wellington. Between 50 percent and 75 percent of all the milk produced in Maine is processed in Maine and consumed in Maine. Ice cream, cheese and butter, however, are processed out of state and imported.

“As more and more milk is purchased outside the state and more processing is required out of state, costs will rise,” assessed Wellington.

The only hope, he said, is the work being done on the federal farm bill by Maine’s congressional delegation. The House, with the help of U.S. Rep. John Baldacci, already has passed a version of the bill, which now is mired in the Senate.

Wellington had high praise for Maine’s senators, Susan Collins and Olympia Snowe, and their hard work on behalf of including a compact provision in the farm bill. He said including farmer compacts in the bill when Congress reconvenes will be a priority.

“The battle is far from over,” he said.