Tim Iwig, Tecumseh, who owns Iwig Family Dairy, carries a newborn calf on his dairy farm in October 2009.

Norm Crawford, left, and Tim Iwig sort and load bottles of milk on a cart Wednesday at Iwig Family Dairy in Tecumseh before delivering the milk to Wichita. Iwig could be faced with closing his business because of record low milk prices, reduced sales because of the recession, and high feed and fuel costs.

Courtney Iwig feeds two newborn calves on her family's dairy farm in October 2009.

Tecumseh ? It’s 8 a.m. on a chilly, sunny Wednesday morning, and dairy farmer Tim Iwig already has fed and milked about 85 cows, fixed equipment, put the next batch of feed into a giant mixer, and helped with the birth of a new calf.

The 49-year-old farmer’s day started at 3:30 a.m.

In the next hour, he helps full-time employee Norm Crawford load bottles of fresh milk into coolers and then into an SUV to be hauled to Wichita; moves calves around to make room for the new one; and opens and then mans the store for a steady stream of customers.

He says his work won’t be finished until 9 p.m. and that’s not a given.

But without any hesitation, Iwig says he enjoys being a dairy farmer.

“Of course, I do. I spent my whole life trying to get into it, and I’ve spent the last 25 years developing it, and then because of the economy, we are in line to lose it,” he said.

Perfect storm

Iwig is in jeopardy of closing his business, Iwig Family Dairy, because of a perfect economic storm: record low milk prices, reduced sales because of the recession, and high feed and fuel costs.

And he is not alone.

Dairy farmers are hurting worldwide; there have been huge protests in Europe and Australia.

“The cost of production has been higher than the price of milk that farmers are getting,” said Chris Galen, of the National Milk Producers Federation. “They are losing money on every gallon of milk they produce.”

Like every household and business, every farm’s “break even” price is going to be different. In general, U.S. dairy farmers are getting about $1.10 per gallon and they need $1.30 to $1.40 to cover their operating costs.

In Kansas, farmers are earning about $1.13 per gallon and they need about $1.23 to break even and $1.70 to profit.

“The situation simply is you get up before dawn, you work all day and at the end of the day you are actually poorer than you were the day before because you are losing money on the milk you are producing,” Galen said. “It’s like paying to work.”

Mike Brouk, a Kansas State University dairy specialist, said there is a global milk glut.

“Basically, the situation that we are faced with is that we have more milk production than we have of consumption of dairy products. That’s not only here in the United States, but that’s worldwide,” he said. “Until the consumption and production lines align a little better, milk prices probably will remain depressed. It’s just a supply-and-demand thing, and you are dealing with a product that has a very limited shelf life. It’s not like a bushel of corn that you can put in storage for a few years.”

Brouk said the past six to eight months have been one of the toughest times for the dairy industry in 25 years. He doesn’t expect everyone will survive.

“It’s like any other business. Take the auto industry, for example. Is everybody going to emerge from it? Well, no,” he said.

Dairy farms have been on the decline for decades. Kansas is home to 380 farms, down dramatically from about 1,000 a decade ago. In Douglas County the number of farms has dwindled from 17 to seven.

Financing problems

Iwig hopes his farm can weather the storm. His first obstacle is obtaining about $40,000 by Thursday to satisfy the bank. He has an outstanding loan that has been guaranteed by the Farm Service Administration, but the FSA is withdrawing its guarantee because the farm doesn’t have a long enough history of being profitable. Although, he did turn a profit in the first quarter of 2008.

“We need more money to make up some interests, and we don’t have it. If we can’t make it up, then the bank will begin to foreclose on it,” Iwig said.

On Friday, Congress passed an agriculture spending bill that included $350 million in emergency funding for dairy farmers suffering from low milk prices. The bill is awaiting President Barack Obama’s signature.

If Iwig survives this week, it would be welcome relief but likely not enough.

“The money — I seriously think — will be woefully short by the time it is doled out compared to what we have lost in 2009. But, we will take whatever we can get,” he said.

Long history

Tim is the third generation of Iwigs in the dairy business on the same property just east of Topeka.

His sister-in-law Barbara Renner, Topeka, said it would be a crime if he loses the farm.

“I don’t think Tim hardly ever leaves the farm. He is here all of the time,” she said while helping a customer in the store. “He just puts all of his effort in it. This is his whole life — I mean this is his whole life. I’ve never seen somebody who is as dedicated as he is,” she said.

He began in the 1970s by milking his 4-H cows and selling raw milk to people who came and picked it up. After graduating from K-State in 1983, he started his own herd and sold bulk milk to Mid America Dairy Coop and Dairy Farmers of America.

Today, Iwig and his wife, Laurel, own about 85 milking cows and 108 acres. They rent another 60 acres.

The couple have two daughters, ages 24 and 22, and a 13-year-old son. The oldest daughter, Courtney, lives in her own apartment on the property and helps care for the calves. Laurel chips in by running the store and taking care of errands. The Iwigs have three full-time employees and eight part-time workers.

In 2001, they broke ground on a new production facility and in 2005, the company produced its first bottle of milk.

The milk is sold in the region and in almost all Lawrence grocery stores. He sells the most milk — about $15,000 per month — from his farm store. Community Mercantile in Lawrence is his second-best seller.

Iwig said sales dropped by about one-third during the second quarter of 2008. He went from selling roughly 3,000 gallons a week to 2,000. Now, he is sending more milk out in tanker trucks and getting about 83 cents a gallon.

“That is losing money all the way around,” he said. Iwig estimated that it takes about $65,000 per month to operate. “We are cutting corners the best that we can.”

He blames the sales decline on the recession.

“If money is tight, then they are going to reach for the cheap plastic milk,” he said. “My premium quality milk for some people is a luxury, I guess.”

On Friday, for example, a half gallon of 2 percent milk at Dillons, 3000 W. Sixth St., ranged from $1 for the store’s brand to $3.79 for Iwig’s milk. The other brands were less than $2.

Mary Edison, of Topeka, isn’t just willing to pay a higher price for Iwig’s milk, but willing to go the extra distance to his farm store, where she also purchased his butter and ice cream. His milk costs $2.95 for a half-gallon at his store, and $2.25 if you return the milk bottle.

She said the milk tastes fresher and lasts longer than other brands.

“If I get one of these as opposed to another brand in the store, this will last me all month and it won’t go bad,” she said.

Edison wanted to stock up when she heard the farm might be in jeopardy.

“I hope a miracle happens,” she said to Tim.

“Me, too,” he replied.