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The dairy industry has been hit hard by the recession. Falling milk prices have forced some long-time dairy farmers to shut down and sell their herds for slaughter. The crisis is especially acute in California - the nation's number one milk-producing state.

Sasha Khokha of member station KQED has this story.

SASHA KHOKHA: It's an iconic California landscape. Cows graze amid meadows bursting with yellow lupine. In the distance, the wind swept cliffs of Point Reyes plunge into the Pacific.

Mr. JOEY MENDOZA (Dairy Farm Owner, San Francisco): It looks pretty now. But you ought to see when it's real green. And those black Holsteins with the green grass and the ocean in the background - wow.

KHOKHA: That's Joey Mendoza. His grandfather came from the Azors and started this dairy North of San Francisco almost a century ago. Mendoza still lives in the family's historic farmhouse.

Unidentified Man: Hey, hey.

KHOKHA: Workers call the cows in for the morning milking and 450 Holsteins shuffle into a barn, where they're hooked up to a computerized system.

Mr. MENDOZA: Like that cow, for example, which gave 10.2 pounds of milk. Just got done milking. They're going to go out and eat grain and then they'll eat hay.

KHOKHA: For years, the Mendozas have sold their milk to a cooperative that supplies Safeway. But this milking parlor is about to shut down. These cows have purple tags in their ears, indicating they've been sold for slaughter.

(Soundbite of car door)

Mr. MENDOZA: I'm going to take you down there and show you the other end of the ranch.

KHOKHA: Mendoza is 65, and he looks like a man who's spent his life on a ranch. He drives a mud-spattered pickup, wears thick rubber boots and filthy jeans. But he doesn't look like a guy who will cry when he talks about selling off his herd.

Mr. MENDOZA: It's sad but it's something that's you economically have to do. You also have the guilt pangs because your heritage and everybody worked so hard to build this thing. And you're the one that has to terminate it and let it go. It's humiliating. You're not very proud of yourself when you've got to do something like this.

KHOKHA: Mendoza is selling his cows through an industry-funded program that aims to ease an oversupply of milk. The program requires dairies to sell their entire herd for slaughter and agree to stop milking cows for at least a year. Mendoza says he's squeezed between competition from mega-dairies, the high cost of feed and the dip in consumer demand. These days he's earning only about half of what it costs him to produce each gallon of milk.

Mr. MENDOZA: So when you've a lower price and a greater input cost, you're in big trouble. Hell, we got more for our milk 30 years ago than we're getting now.

KHOKHA: That's right. USDA economists project this year's average milk price paid to dairy farmers will be the lowest since 1978. Joey Mendoza says part of the pain of leaving the business is all the other people who will be affected. Eight families work for him on the ranch.

Mr. MENDOZA: I was raised to be an honorable and a fair guy. So when your decision indirectly affects families like that and their kids — wow, you know, that's - that leaves a bitter taste in your mouth.

KHOKHA: Ray Souza is president of Western United Dairymen, which represents about 1,100 California dairy farmers.

Mr. RAY SOUZA (President, Western United Dairymen): When you leave the dairy industry, it's highly emotional. And especially when you're put in a situation where you have no alternative but to leave.

KHOKHA: At least two California dairymen have committed suicide in recent months. Souza and others in the industry believe it's at least in part because they were losing their farms. The dairy industry has gotten some help from Washington. The USDA has subsidized farmers with more than five million dollars in aid over the last few months to make up for some of the income loss.

Back on his ranch, Joey Mendoza says if he can ride out this downturn, he'd think about reopening in a few years as a small organic dairy. He could make more money per gallon for organic milk. Otherwise he might try and earn a buck renting his scenic farm to dairy industry advertisers. He thinks if they can take pictures of happy cows grazing near the ocean, it might encourage consumers to drink more milk.

For NPR News, I'm Sasha Khoka.

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