3: Low milk prices hurt farmers
Addison County dairy farmers in 2009 weathered the worst milk prices in 30 years. For months on end dairy farmers lost money on every gallon of milk they produced.
These low prices — sinking at times to less than half the cost of production per hundredweight (cwt) of milk — drove 11 Addison County dairy farms out of business in the first 11 months of 2009. Statewide, the number of dairy farms fell from 1,078 to 1,026.
Low milk prices were spurred by a number of factors. The growth of the world market for milk products slowed to a crawl, and was projected to grow just 1 percent in 2009 (compared to 4 percent growth in 2008).
Meanwhile, competition from the European Union and other dairy-producing countries, like Australia and Brazil, was up, while individual consumers in many cases cut back. A melamine scare in China and the economic downturn both bruised the large Chinese market for imported milk products.
But the biggest factor driving low milk prices was a roughly 9 billion-pound surplus of milk in the United States. With too much milk on the market, prices for farmers’ product crashed. The low prices were part of the volatile pricing cycle in which many conventional dairy farmers find themselves trapped: Low prices drive farmers out of business, and as less milk heads onto the market prices rise. At that point, many farmers, looking to make up for periods of debt-inducing low prices, hurry to produce as much milk as possible at higher prices — and the excess fuels another crash.
That cycle spurred several Addison County farmers in 2009 to champion a supply management program, which some dairymen said would keep prices more stable by eliminating the volatility of supply. Leading the charge were local farmers like Bridport’s Marie Audet and the Dairy Farmers Working Together organization, who organized meetings throughout the state and reached out to dairymen in other parts of the country.
While many local farmers threw their support behind these supply management plans, others chastised their dairy cooperatives for being slow to the table to support the reforms, and as the year wore on a few — including Agri-Mark — signed on support for a supply management plan of some sort.
Even as some farmers rallied for supply management, others had tough choices to make. Farmers reported taking out tens of thousands of dollars in debt each month to stay afloat, and in the end several decided to close up shop. After running their family’s farm in Addison since 1995, brothers Sam and Dave DeVries decided in the spring to sell their cows and put much of their farm equipment up for auction.
Luckily, the year held a few silver linings for Vermonters in agriculture. Legislation passed in the spring to investigate the “Farm to Plate” network sparked a series of statewide discussions about how Vermonters can invest more in locally grown and produced foods. Rep. Chris Bray, D-New Haven, argued that eating locally would spur economic development, keep more money in state, and support local farmers.
And as 2009 wound to a close, with milk prices finally beginning to creep higher, news arrived that the U.S. Department of Agriculture would release emergency aid payments for dairy farmers. The USDA in December doled out $290 million in direct payments to dairymen. An average Vermont dairy farmer milking 125 cows would receive roughly $8,000 in aid through this program.
Though the help was welcome, farmers and legislators alike pointed out that the payments were no solution for the struggling industry.