It is rare for a pump that is still running to drop off production so fast. You probably have a hole in the drop pipe in the well. This will let the water out before it gets to the top of the well. It will also stir up the well and make it produce more red stuff. Turn the pump off and see if you can hear water running back down the well. If you can take the pipe lose at the well head, you can tell if water is still standing in the pipe or if it goes back down the well. My guess is a hole in the pipe just above the check valve on the pump.