The average cost of making milk in California is $15 per hundredweight -- 100 pounds of milk -- while dairy operators are earning about $9 a hundredweight.

The federal government has stepped in and bought excess product, including 100 million pounds of nonfat dry milk since the start of the year. But it was a little too late for some.

Last year, 99 of California's 1,700 dairies went out of business. And this year, the number could reach at least 150, said Michael Marsh, CEO of the Modesto-based Western United Dairymen, whose 1,000 dairy members produce 60% of the state's milk.

Marsh's group and the dairy industry are in survival mode. They are looking at short-term and long-term solutions, including boosting domestic consumption, using government incentives to export more dairy products and creating a better safety-net program.

"There is not doubt we will see fewer dairies," Marsh said. "And we are very concerned about the financial stability of the ones who get through this."

Bruce McAbee, executive vice president at Fresno Madera Farm Credit, said he has encouraged his clients to save during good times so they can weather downturns in the economy.

"But I know a lot of dairymen who are going through all of their liquidity right now," McAbee said. "It's unfortunate, but that is what's happening."

And it will be very difficult for any lender to take on a new dairy customer.

"It will be a challenging year," McAbee said.

Cutting back

George and William Longfellow hope they can survive. But they also know they face long odds.

Sitting at a well-worn farm table in an office at their Hanford dairy, the brothers struggle to remain optimistic.

"At this point, we just don't know what will happen," said George. "We just don't know."

Dairy operators since the time they were children, the Longfellows grew up fast on their Hanford dairy. In some ways, they had no choice.

In 1963, their father, George senior, was kicked in the head by a cow and suffered permanent brain damage.

George, then 13, and brother William, then 11, took over many of the farm chores, helping their mother, Edith, run the family dairy. Up at 4 a.m., they worked for several hours before going off to school. After school, there was more work to be done.

Although they both went to college, they chose to come back to the dairy, raising their families and building a 1,700-cow herd.

They have invested several million dollars in upgrading their dairy and complying with strict air- and water-quality requirements.

The sprawling operation includes 1,500 acres of corn, alfalfa, wheat, barley and cotton.

But the dairy is losing money, more than $170,000 every month. To make matters worse, they owe about $750,000 in inheritance tax after their parents died.

"All of this can just wear you down," William said.

To stay afloat, the Longfellows are drawing equity out of their farm through a line of credit.

They have cut back on cattle feed, farm chemicals and the use of a veterinarian.

One of their farm managers told them recently there were a few bugs in their alfalfa, but William didn't spray.

"You can't spend money you don't have," he said.

They keep hoping and praying -- members of William's church provide him with spiritual support -- for the economy to rebound soon and for milk prices to start edging upward.

"We've looked at some estimates, and people say that maybe by September things will begin to change," George said. "And we will do everything we can to hang on until then."