WHITEFIELD — In the face of rising costs, Maine’s dairy farms are looking for ways to stabilize a state fund that helps them fill in the gaps between the cost of production and the federal milk price.

A draft report from the Maine Dairy Task Force says the state needs to set aside at least $7.5 million each year in a dairy stabilization program first established in 2004.

“The Tier Program has proven to be a crucial economic development tool that invests directly in Maine’s rural communities, helping sustain and grow the state’s local food system and safeguard its rural character,” according to the report.

Annie Watson, who runs Sheepscot Valley Farm in Whitefield with her husband Michael Moody, said nearly everything farms need to operate — fuel, labor, energy, seed, fertilizer and repairs — are more costly now than ever.

That’s partly due to a market that continues to consolidate. Over the last 30 years, Maine has gone from 602 dairy farms to 140.

“We often say that as dairy farmers we buy everything at retail and we have to sell everything from our farm wholesale,” Watson said. “That can be a really hard balance to make work.”

Watson, who serves on the task force and is president of the Maine Dairy Industry Association, said that funding that varies from year to year adds financial stress to a system that’s supposed to bring a sense of stability to farmers.

The draft report suggests that lawmakers consider increasing revenues from gambling proceeds, increasing the tax on adult use cannabis from 10% to 13.5% or adding a 5 cent per pack tax to tobacco products.

Watson said these ideas are just “potential options” and that the task force will meet again in the coming weeks to shore up a final report that’s due to the Legislature Jan. 6.

“I don’t think as farmers we’re necessarily very excited about the idea of taxing other agricultural products to support our own agricultural product,” she said. “Our hope is that our legislative body can come up with some creative ideas to support this industry that desperately needs support.”

Peter Brennan, executive director of the New England Convenience Store and Energy Marketers Association, said while his group supports dairy farmers, they would likely oppose a tobacco tax increase.

He said tobacco taxes are regressive, meaning that they most deeply affect those least able to afford them. Brennan said the state may want to tap into the rainy-day fund — which is at its legal limit of $968 million — to help the farmers.

“The risk you get when you keep layering sin taxes is that people will find a way to get them cheaper” likely on the illicit market, he said.

The Cannabis Association of Maine, which represents adult use cannabis businesses, did not respond to a request for comment on Friday.

When it comes to gambling, the dairy fund already gets about $450,000 a year from a 0.5% tax on slot revenue at the Oxford Casino. Other support for the program comes from the state general fund and over the last 20 years, lawmakers have opted to contribute nothing to the fund all the way up to $20 million, according to the report.

The task force report lays out the dairy industry’s impact in Maine, noting that in 2022 dairy cattle and milk production accounted for nearly $147 million in direct sales and had an overall statewide impact of $230 million. The sector supports 14,600 jobs directly or indirectly and pays out more than $835 million in total wages.

The report emphasizes the role the dairy industry plays in the state’s entire agriculture system, describing it as an “anchor” on which many other farms rely.

“Maine farms, 89% of which produce less than $100,000 of products annually, likely could not sustain the essential network of agriculture-dependent businesses and service providers without their dairy farming neighbors,” the report states.

For Watson and her husband, the decision to purchase the farm in Whitefield in 2013 was both a lifestyle choice and a business decision. It’s a place to raise their children and the continuation of a tradition of dairy farming in her husband’s family.

“It requires an amount of dedication and commitment that is really unlike any other profession or business,” she said. “But the rewards frankly outweigh all of those challenges.”