Supermarket woes for dairy farmers

ADDISON COUNTY — Some lawmakers are learning about dairy farmers’ financial problems during debates and meetings in the Vermont Statehouse and in the nation’s capital.
But Sen. Harold Giard, D-Bridport, said one doesn’t need to go beyond the local supermarket to get a vivid picture of the issues plaguing farmers and what is needed to get them back on their feet.
While walking in the dairy section in one of Middlebury’s chain supermarkets last week, Giard — a former dairy farmer and member of the Senate Agriculture Committee — gestured to gallons of milk lined up in a long cooler.
He noted a price of $3.13 per gallon for the milk, of which only $1.03 is ending up in farmer’s pocket, due to the many deductions and price adjustments that take place as the product makes its way from the farm to the supermarket.
By contrast, he noted a price of $1.34 per gallon for water sold in the store. Giard’s voice was brimming with frustration as he noted that the bottled water — some of it simply drawn from the tap in major cities — was yielding 29 cents more per gallon than what farmers are realizing for their milk.
“This is ludicrous,” he said, with disgust.
He surveyed the various cheddar cheeses in the store, selling for an average of $6.34 per pound. Giard said Agri-Mark/Cabot bought the milk for $2,400 per ton, but is able to sell it as cheese for $12,680 per ton.
“Who keeps the difference?” Giard said.
He then walked over to the freezer section and surveyed the many brands of ice cream. He noted that 1.5 billion gallons of ice cream are purchased by American consumers each year.
It wasn’t too long ago, Giard said, that ice cream was made overwhelmingly with cream and was sold in half-gallon (1.89 liter) containers.
He picked up a container of Bryers ice cream, with a listed volume of 1.42 liters, and referred to a 1.75-liter container of Hood ice cream. In both cases, the containers had the same front surface area as a traditional half-gallon yet there was less ice cream, and thus less dairy product, inside.
“How does the farmer win when it used to be a half-gallon?” Giard asked rhetorically.
He then read the ingredients labels on the containers of several brands of well-known ice creams — including Vermont-made Ben & Jerry’s. While the first ingredient listed, in most cases, was cream, the ensuing ingredients — more often than not — were listed as “liquid sugar,” “water,” and “skim milk.”
The bottom line, according to Giard: Most ice cream makers are using less dairy in their products, which are sometimes whipped with air. That has meant even less revenues for farmers, who are already struggling with plummeting milk prices and rising fuel costs.
“How do I win when they add water?” Giard said. “It’s not for the taste; it’s to displace dairy product.”
Adding insult to injury, according to Giard, is that Vermont farmers pay a fee of 15 cents per hundredweight to promote the products at the state and national levels that contain less dairy than they did a generation ago.
“Why should the farmer promote stuff like this?” Giard said. “He shouldn’t.”
Giard, who is running for re-election this fall, plans to introduce in the Vermont Senate:
• A resolution asking that Vermont ice cream makers take the water out of their manufacturing process.
• A bill requesting that the dairy promotions fee of 15 cents per hundredweight be taken off farmers.
• A bill asking that Vermont farmers be relieved from the stop charges and hauling fees they must currently pay for trucking their milk to recipients beyond the farm. The Vermont Agency of Agriculture is currently researching those costs and will present recommendations to the 2007 Legislature. The agency’s study is being spurred by a Giard-sponsored bill (S.226) that was passed into law this spring.
The promotions, stop charges and hauling fees, when added together, can add up to tens of thousands of dollars in funds that farmers could otherwise spend on mortgages, equipment and other mounting debts, according to Giard.
“Farmers appreciate what the governor and the Legislature did for them in approving $8.6 million (in emergency funds), but what they need is a long-term policy,” Giard said. “The money is in the market; we simply have to go get it.”
He challenged area dairy cooperatives to show more leadership in lobbying on behalf of farmers to increase their return on products sold in the marketplace.
“We need to teach the co-ops marketing,” Giard said. “We have to compete and get a fair price.”’
But competition is one of the reasons why relieving the stop and hauling charges from farmers could backfire, according to Bob Wellington, a dairy economist with the Agri-Mark/Cabot co-op. That’s because passing along those charges could make Vermont milk more expensive to plants that would simply buy more of the product from neighboring New York, which produces roughly six times more milk each year than the Green Mountain State, according to Wellington.
“Competitively, it can’t be done,” Wellington said.
Agri-Mark Cabot charges farmers a stop fee of $7, and a variable hauling rate of around 50 cents per hundredweight to get the milk to the market, according to Wellington.
He noted, however, that farms producing organic milk don’t pay hauling charges; the purchaser does.
“There is a tight supply of organic milk,” Wellington said.
He added Agri-Mark/Cabot will continue to look at ways to help farmers.
“They are getting a lower price (for milk) than they got 25 years ago, and their costs are much higher,” Wellington said.
Rep. Willem Jewett, D-Ripton, sits on Vermont’s Special Commission on Milk Pricing. The panel is studying, among other things, ways to get farmers more money for their milk.
It’s clear that Vermont’s dairy crisis is being influenced by factors across the nation, according to Jewett.
“Over-supply in the Southwest kills our farmers,” Jewett said. “When they put a cheese plant in Texas, it kills us.”
To further dramatize the breadth of the dairy crisis, Giard drives up to the window at the local McDonald’s restaurant and orders what the menu refers to as the “Milk Jug.” He notes that the state’s milk promotion officials recently trumpeted a contract to provide enough milk for 400,000 McDonald’s Milk Jugs.
Giard hands his $1.08 (99 cents, plus tax) to the restaurant cashier, who passes him his Milk Jug, which contains 4 ounces of skim milk. He computes that McDonald’s is able to acquire the milk from farmers at $241 per ton, and is selling it at $7,603 per ton.
The numbers leave a bad taste in his mouth, and bring back memories of just how tough it is right now to make a go of it in agriculture.
“I’ve lived through this nightmare; I know what it’s like,” Giard said. “If I don’t do something for dairy, those 20 years (spent in farming) will be lost.”

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