Just about every time dairy farmers milk their cows these days, they're losing money.

They face growing pressures from all sides: weak demand, a declining export market and low milk prices.

Many have made the difficult decision to give up their life's work. Others are at the crossroads -- hanging on in hopes one of the worst dairy crises in recent years improves soon.

At stake is the future of an industry central to the central San Joaquin Valley's economy. The Valley leads the nation in milk production.

"A lot will depend on how long people can hold their breath," said Leslie Butler, a dairy economist at the University of California at Davis. "People will use all the resources they have, but there will be many who say they just can't make it anymore."

Fred Machado of Easton, a veteran dairyman, is among those who grew weary of losing money. He lost $70,000 a month over the past six months.

"I was going to end up with nothing, unless I got out," said the 77-year-old Machado. "I started this dairy from scratch, but I couldn't see the light at the end of the tunnel."

Machado sold his 900 cows as part of an industry-funded program aimed to cut milk production. This year, 103,000 dairy cows across the country have been sold to beef processors. Another round -- the eighth since 2003 -- is expected.

Of the 388 farms participating in the program this year, 80% are from the southwest and western U.S., including the dairy-rich San Joaquin Valley.

"Right now, it is safe to say that a vast majority of producers are having a difficult time of it," said Jim Tillison, CEO of the Virginia-based Cooperatives Working Together, the organization operating the cow-cull program. "And we're not done yet."

Machado, a farmer for more than 50 years, will continue in agriculture. He has 800 acres of almonds, grapes and corn. But it was the dairy where he devoted most of his time.

At one time, he was milking more than 1,500 cows. Now, the dairy stalls and barns are empty.

"I do miss it," Machado said. "But so much has changed in this business. And I don't think anyone thought things would get this bad."

In survival mode

Milk pricing has long been cyclical, like much of agriculture. But dairy operators have been hit by a combination of factors, including high operating costs, a weak economy and a declining export market.

When times were good -- and it wasn't that long ago -- the money and milk were flowing.

A shortfall in worldwide dairy products provided an open door for U.S. producers. They seized the opportunity, ramping up milk production. Last year, U.S. dairy exports reached $3.82 billion, a 25% increase over 2007.

But a global recession hit, shrinking the U.S. dairy industry's exports. In the first five months of this year, exports were down 53% compared to the same period in 2008, according to the U.S. Department of Agriculture.

The problem was that the cows kept producing. And without a brisk demand, supplies continued to build and prices plummeted.

Machado and others in the industry could see the problem developing.

"People built these huge dairies with no plans to market the milk, only plans to produce," Machado said. "Some of us have tried to keep growth down, but it hasn't really worked."

Talk of curbing production have been renewed of late. Members of the state's five dairy cooperatives are trying to reduce production by 5%, hoping the move will help boost prices that have fallen below the cost of production.

But many observers believe the dairy industry is not structured to give producers a sufficient incentive to control milk-production levels. The industry leaves itself vulnerable to the price pressures that come with declining demand, they say.