HUTCHINSON, Kan. (AP) — Swimming in more red ink than his Jerseys could milk, Merle Yoder had a decision to make.

So, in May, he put his 90-some head of cows on the auction block.

Hurt by low milk prices along with high feed and fuel costs, selling the cows was the final outcome - at least for the time being, the Hutchinson dairyman said eight months later as he walked across the farm on a sunny January day. He doesn’t see a future other than dairying — noting he’s hopeful the economy will rebound and the 110 heifers he still owns will someday grace his dormant milking parlor.

“I’m a dairyman at heart,” Yoder said, then added optimistically, “I don’t think (recession) can slow down indefinitely.”

Mirrored by a faltering U.S. economy and a struggling export market, milk prices dipped nearly 50 percent after reaching record levels in 2007 and early 2008. Prices fell to a low $11 a hundredweight, causing some farmers to lose at least 30 percent of their equity.

It was enough for at least 50 of the state’s Grade A dairies to close in the past two years, said Kansas Department of Agriculture Deputy Secretary Constantine Cotsoradis.

Now, after one of the worst years for milk producers, state agriculture officials are asking legislators in Topeka to pass a bill that would raise some fees for processors, haulers and others in what Cotsoradis calls an effort to protect the state’s dairy industry from further price drops.

State budget shortfalls have driven the agriculture department to slash funding, Cotsoradis said. The agency’s share of state general fund dollars has been decreased to 1977 levels and employee vacancy rate is 26 percent.

Despite cuts in the department, including laying off one dairy inspector, the agency’s dairy inspection program remains under funded — a necessary program in order for the state’s dairies to fall under federal guidelines that allow them to ship milk across state lines.

Cotsoradis said he realizes there could be some impact that would trickle down to the more than 350 Grade A dairies still operating that already are pinching pennies, but added that “by not being in compliance with the interstate milk shippers agreement, the market for Grade A milk would be diminished.”

Some changes are minimal, such as increasing the fee from 1.5 cents to 2 cents for each 100 pounds of packaged grade A pasteurized milk and milk products sold at retail, as well as increasing the fee from 1.5 cents to 2 cents for each 100 pounds of Grade A raw milk delivered to a processor within the state. Others are higher, including charging haulers a $100 fee for an annual inspection of their milk tank trucks.

In all, the funding would raise about $77,000 a year, Cotsoradis said.

This isn’t the ideal time to implement increases, said former dairy farmer and Kansas Dairy Association Executive Director Mike Bodenhausen.

“After what our dairymen went through in 2009, it is going to take a good banner year just to get them back to breakeven,” he said.

However, he called losing the ability to deliver product to other states “devastating” — noting the state’s dairies have a long history of not having many problems or milk contamination, contributing this fact to the state’s exemplary inspection service.

“We’re always reluctant whenever there is a fee increase,” said Bodenhausen, who still farms near Muscotah. “We’ve been working with the ag department since early summer. Our first approach was that we wanted to make sure that they had done all cost-share and cost-saving measures available before we would consider a fee increase.”

The Kansas Livestock Association also supports the bill, said John Donley, the organization’s assistant general counsel.

Hutchinson dairy producer Yoder said he understands such measures, noting that when he was milking, some of his product was hauled to Missouri.

Despite the struggling economy, Yoder and his wife, Irene, don’t want to find another profession. It’s the only livelihood they’ve really ever known. When his wife’s father needed help back in 1996, the Yoders left their small Tennessee dairy and moved to the farm where Irene grew up and began milking cows.

Now, he’s just hoping for an economic turnaround. The heifers he still has will calve in June.

Bodenhausen said prices already are starting to rebound to breakeven levels, around $15 to $16 a hundredweight.

“We’re hopeful that 2010 will be better,” Bodenhausen said. “But we’re not out of the woods by any means.”