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...