Dairy industry continues to take hits; worldwide milk glut keeps prices low
SALISBURY — The Bridport Grange and Addison County Farm Bureau will host a legislative luncheon on April 9 that will focus on the mounting financial challenges for farmers in the Green Mountain State.
But local farmers and lawmakers this past Monday had no interest in waiting a week to vent their frustrations, as they spent the vast majority of the latest legislative breakfast describing the fragile state of a dairy industry beset with surplus product that has reduced milk prices and left more farms on the brink of closing.
“The world’s changing, and unfortunately we’re in a world marketing situation for the agricultural community,” said Rep. Harvey Smith, R-New Haven and a senior member of the House Agriculture & Forestry Committee.
“Right now, there’s basically a surplus of milk in the world, not just in Vermont,” he added. “Milk prices have gone down and this is the third year in a row that milk prices have been low. It’s putting a tremendous amount of financial stress on all farmers, whether it’s a large farm, a small farm or medium-sized farm… There’s hardly anyone that’s taking on any new milk producers today, and that’s the first time in my lifetime I’ve seen that happen. If somebody wanted to start up an operation, there really isn’t a market for their milk right now. We are seeing some significant changes.”
Sixty-two-year-old state Sen. Chris Bray, D-New Haven, said the number of Vermont dairy farms have dwindled from 11,000 to approximately 840 during his lifetime. Meanwhile, milk production has remained consistent “because we know how to get more from a cow, and farming practices have changed,” Bray said.
Fewer farms producing more milk in a flooded market means lower financial returns and little incentive for a new generation to go into dairy, officials said.
State and federal lawmakers hope to toss another life preserver to the industry, but both lawmakers and farmers are hoping for a long-term solution.
Bray began his legislative career in the Vermont House in 2006. He was assigned that year to the House Agriculture Committee. On Monday he recalled that in 2006 Vermont had a milk subsidy program to help farmers through a tough period.
“We paid out $11 million during a low point in milk prices,” Bray said. “It was a very tough period for milk prices and reminds me of right now — a decade later.”
Smith also recalled the program, funded through a surcharge on milk sold at the store. But he added Vermont “doesn’t have the horsepower” to pull off such a subsidy right now.
“Vermont produces 60 percent of the milk that’s consumed in the New England states,” Smith said. “We’re not purchasing milk; we’re supplying that market. So we don’t have the ability to put a surcharge on milk purchased at the store in order to cover some of that cost (of a subsidy).”
Maine, according to Smith, has such a dairy assistance program, but he noted Maine is the only state in New England right now that is experiencing a milk shortage.
PRICING ROLLER COASTER
Part of the financial conundrum, according to Bray, is that the New England regional price for milk is set by a federal milk price administrator in Boston.
“That individual has one charge, and that’s to make sure there’s an adequate supply of milk in the Northeast,” Bray said. “They’re not looking to make sure farmers are making a decent living, or that they are meeting costs of production.”
Essentially, the federal administrator is looking to ensure a price that’s as low as possible, but that hopefully inspires people to go out and milk cows, Bray said.
It’s a price that only increases when milk is in short supply, according to Bray.
“I think we are on this (pricing) roller coaster for as long as we’re in this system,” he said.
Bray pointed north, to the Canadian province of Quebec, which has implemented a quota system for milk production. The system brought stability to Quebec-produced milk, whereas Vermont milk prices have remained volatile, according to Bray.
Those who get into dairy production in Quebec have to buy an allocation as part of the quota system, Bray noted.
“It doesn’t seem to fit for the Vermont or American personality, so we have not gone that way,” Bray said of milk quotas.
Rather than quotas, Vermont has tried to reduce expenses for farmers.
Sen. Claire Ayer, D-Addison, specifically pointed to the Current Use Program and Vermont Housing and Conservation Board as state levers for helping farmers.
Ayer noted the state spends $55 million to $60 million each year on the Current Use Program, in which enrolled agricultural fields and forestland are appraised based on the property’s value as a producer of wood or food, rather than its residential or commercial development value.
In addition, the Vermont Housing and Conservation Board each year provides money to help conserve farmland and forestland, according to Ayer.
“When farmers sell their conservation rights on their farms… it lowers the tax base but makes that land more affordable for new farmers who want to come in,” Ayer said. “For a while, that was about the only way a new farmer could get into the business.”
But she acknowledged farmers need even more help during times like these.
“When there’s too much milk in the market, it’s hard for farmers to get a good price for their product,” Ayer said.
MOVE AWAY FROM DAIRY
One of the bright spots in agriculture has been farm diversification, according to Bray. For example, many farmers have transitioned from conventional milk production to making artisan cheeses and premium butter. Others have ditched dairy altogether to focus on organic crops or beef production.
“With diversification comes greater stability,” Bray said.
Vermont’s landmark Farm to Plate legislation, championed by Bray, has seen an uptick in farms (including boutique cheese, produce and vineyards) in the state since the law was passed in 2009. During that time, the state has added 6,400 manufacturing jobs and seen a $100 million bump in agriculture-related receipts.
“It’s an evolving marketplace,” Bray said. “Big dairy is going to be tough, and I think everyone is going to find their own path forward.”
Lawmakers acknowledged, however, that a new product niche becomes less financially viable as more entrepreneurs jump into it.
Smith made a shift around a decade ago from dairy farming to beef production. Many others have since followed suit.
“When I started, there were only one or two other people in Addison County doing it, and now there’s around 30, and we’re competing against one another,” Smith said. “It makes it hard to get a good return on that.”
And while Vermont has a lot of land to sustain value-added crops, the state has yet to develop the markets and production facilities to get those foods to consumers, Smith added.
Chris Goodrich and his family run the Goodrich Farm off Halladay Road in Salisbury. The Goodrich family is poised to supplement its income thanks to a new methane digester project that will turn on-site cow manure and Addison County food waste into renewable energy for Middlebury College.
“It’s been extremely challenging,” Goodrich said of the effort. “We’ve had a great partnership with Middlebury College, Vermont Gas and now (Wellesley, Mass.-based) Vanguard Renewables.”
The project will also remove the phosphorous content from cow manure, thus helping the lake cleanup efforts.
“We want those nutrients to stay in the field,” Goodrich said.
Addison County Farm Bureau board member Bill Scott used a little humor to describe Vermonters’ historical dedication to agriculture, even in the face of prolonged economic hardship. He talked about the fictional farmer who was asked “What would you do if you won Megabucks? He replied, ‘I’d farm until it was all gone.’”
Those interested in farming have two upcoming chances to get more information on the topic.
On Monday, April 9, the Bridport Grange and Farm Bureau will host a “legislative luncheon” at the Bridport Grange Hall on Route 22A. The luncheon begins at noon.
Then on Saturday, April 14, the Farm Bureau will host a dinner dance at the Middlebury VFW on Exchange Street. The free event kicks off at 6:30 p.m. with appetizers and discussion about farming issues. The dance, featuring the Horse Traders band, begins at 8 p.m. Attendees are encouraged to bring a dessert to share or some canned goods for the local food shelf.
Reporter John Flowers is at [email protected].
The U.S. Department of Agriculture will be reopening the enrollment next week for the much-improved Margin Protection Program for Dairy (MPP-Dairy), which aims to help more farmers. Click here to read more about it.
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