WINCHESTER, Ind.—Like many of his neighbors, farmer Tony Goltstein has to deal with the aftermath of the dairy bubble.

But besides his mounting financial troubles, Mr. Goltstein also must contend with bubbles the size of small houses that have sprouted from the pool of manure at his Union Go Dairy Farm. Some are 20 feet tall, inflated with the gas released by 21 million gallons of decomposing cow manure.

But he has a plan. It requires a gas mask, a small boat and a Swiss Army knife.

The saga of Mr. Goltstein's bubbles, which are big enough to be seen in satellite photos, began about seven years ago and traces the recent boom and bust of U.S. dairy farmers.

Mr. Goltstein, 43 years old, had moved his wife and their three children from the Netherlands to Winchester, population 4,600, about 90 miles east of Indianapolis. They planned to build a dairy farm with 1,650 cows on 180 acres.