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View ProfilesPublished January 18, 2023 at 10:00 a.m. | Updated February 7, 2023 at 2:57 p.m.
Andy Birch and his wife, Sarah, set about reviving his family's Derby dairy farm in 2014, when milk prices were near record highs. They bought a small herd of Holsteins, upgraded the aging barn and began selling milk to the Cabot Creamery cooperative.
The next year, milk prices plunged 30 percent, blindsiding the young couple as they watched their savings evaporate. Prices fell another 7 percent the following year before recovering slightly. They tanked again during the pandemic, then rebounded strongly last year.
"It's hard to go from year to year not knowing what our milk price is going to be with these dramatic swings," Birch said.
The couple survived the roller coaster, cushioned from the worst impacts of the volatility by having little debt and generous landlords — his parents.
Hundreds of dairies in the state haven't been so lucky. Since the Birches reopened Maple Grove Farm eight years ago, the number of dairy farms in Vermont has dropped 40 percent, from 880 to 527. The downsizing has been decades in the making; in the 1940s, there were more than 11,000 dairy farms in the Green Mountains.
During most of this consolidation — fewer farms working the same number of cows — milk production rose steadily due to improvements in feed, genetics and milking technology that increased the yield per cow. But so many farms have stopped milking in recent years that both the number of cows and the amount of milk produced in Vermont are starting to slide, as well.
Milk production peaked at 2.7 billion pounds in 2017 but has since dipped to around 2.5 billion. The number of cows has slipped from 125,580 in 2019 to about 117,000 today.
That's led anxious lawmakers to explore a controversial solution: requiring that farmers be paid more for their milk. The payments farmers get, based on prices set by the federal government, are simply not enough, they say. A few states, including Maine and Pennsylvania, already have such price premiums to aid dairy farmers.
"If we keep doing the same old, same old, we'll get the same old results," Sen. Bobby Starr (D-Orleans) told Seven Days last week.
Starr, longtime chair of the Senate Agriculture Committee, grew up on a dairy farm and once owned a hauling company that served dairy farmers. He cochaired the seven-member Task Force to Revitalize the Vermont Dairy Industry, which was created by the legislature in 2020 and just issued a report with two key recommendations.
The first is that Vermont should continue to reimburse farmers for participation in U.S. Department of Agriculture insurance programs, something the state began doing last year. The insurance can pay farmers when production costs, such as the price of feed, unexpectedly increase. The state paid $1.6 million in premiums for farmers; the report recommends expanding that funding for 2023.
The second, and potentially more far-reaching, recommendation is to give the Vermont Milk Commission added authority to set the minimum price that dairy processors must pay farmers for their milk. Ben & Jerry's, Cabot Creamery and Commonwealth Dairy would have to pay a minimum price set by state regulators for the milk that goes into the ice cream, cheddar cheese and yogurt made at their Vermont facilities.
It's a thorny proposition, one fraught with legal, economic and political questions that could take months or even years to sort through before it could be put in place. Some dairy processors, such as Ben & Jerry's, are already voluntarily paying extra to certain farmers for adhering to desirable practices.
But Starr and others say the time to act is now, when milk prices are high but the memory of the recent price turmoil is fresh in the minds of farmers.
"You don't wait until the bottom falls out and then say, 'Oh, my golly, why didn't we do that last year?'" Starr said.
Federal and industry sources predict that milk prices will likely slip by several dollars from this year's record highs of more than $24 per 100 pounds of milk (about $2.09 per gallon).
Dan Smith, a Montpelier attorney who cochaired the task force and has been involved in milk regulation for more than 30 years, said Vermont's dairy industry today is virtually unrecognizable from the one he grew up with.
When he was young, the vast majority of Vermont milk was trucked in bulk out of state, mostly to the Boston market, where it was bottled for sale in supermarkets.
Today, about two-thirds of Vermont's milk is sold to in-state food manufacturers who turn it into a dizzying selection of high-end ice cream, cheese, butter, sour cream and yogurt, most of which is sold out of state.
"The old industry is gone," Smith told Starr's committee last week. "There is no other way to explain it."
While companies such as Ben & Jerry's and Cabot Creamery have grown into big, profitable enterprises, many of the dairy farmers producing their milk are getting squeezed out of existence, Smith said.
"We have a thriving industry at the same time we're losing farms," Smith said.
It was wise for the industry to transition away from the low-margin commodity milk market toward higher-end, value-added dairy products, Smith said. But the farmers supplying the milk for those products have become trapped in an economic and regulatory system that leaves them little choice but to accept prices below their costs of production, he added.
"The value is there, but it's never trickled down to the farm," Starr said.
Vermont's dairy farms often have higher environmental and trucking costs than farms in other states, but that's not reflected in the federal formula that determines what they are paid for their milk, Starr said.
The draft bill that Starr's committee is considering would give the milk commission the authority to raise prices to reflect such costs, but only after holding an industry referendum on the issue. That means farmers would need to be on board.
Dairy Farmers of America, the nation's largest dairy co-op, opposes the move. DFA bought the state's oldest dairy co-op, the St. Albans Cooperative Creamery, in 2019.
State premiums can have unintended consequences and create "disorderly market conditions," such as companies looking out of state for milk supplies not subject to the premium. That's according to a letter that Kiersten Bourgeois, DFA's director of marketing and industry affairs, sent to the task force.
To prevent Ben & Jerry's from simply buying cheaper milk from New York, the task force came up with a simple solution. Vermont-based dairy processors would have to pay the Vermont price to farmers regardless of their location. This approach would also sidestep any legal concerns about interstate commerce, which Smith said would not apply because Vermont would simply be regulating milk purchases within its borders.
Smith knows a thing or two about the interstate milk trade. He helped establish and run the Northeast Interstate Dairy Compact, which from 1997 to 2001 set the prices for fluid milk in the six New England states. Smith was executive director and general counsel of the compact commission until political pressure from Midwest dairies ended its run, he said.
The federal milk pricing program, which has its roots in the New Deal, was designed to be a price floor to ensure the nation had an adequate milk supply. The prices are set and regularly updated by the U.S. Department of Agriculture for each of 13 regions, or marketing "orders." A key goal of the program is to prevent an oversupply of milk from depressing prices below farmers' transportation and feed costs.
"But the floor has become the ceiling," Smith said.
He thinks Vermont should consider adding a premium to the federal price. DFA's Bourgeois contends that the state would be wiser to focus on changes to the federal pricing formula than to pursue state premiums.
Birch, the Derby farmer, is conflicted about Vermont getting involved in determining what he's paid. He likes the idea of a more stable price for his milk, especially as he considers whether he can afford to invest in making his operation more efficient, he said.
But if Cabot Creamery's owner, Agri-Mark, were required to pay higher prices for Vermont milk, that might make it harder to compete against other big brands, he said. He also worries that the cooperative might seek to offset its higher milk costs by hiking fees on farmers, which would undermine the whole effort.
"If we can do it without hurting the marketability of our milk, then I think that's a wonderful thing," he said. "But if we're just going to be moving money from one pocket to the other, that's a situation I'd want to avoid."
Those are valid questions the milk commission would have to address before it made any decisions, Smith said. The task force is only recommending that the legislature update the law to give the commission the powers and tools it would need to pursue over-order pricing, he said. All the draft bill requires is that the milk commission hold a public meeting on the issue.
Starr said he expects the Senate to pass the bill this session.
Rep. Rodney Graham (R-Williamstown), a former dairy farmer who sits on the House Agriculture Committee, doubts that the House would do the same. The premium pricing could cause some national brands that contract with local processors to shift production elsewhere, he said.
"Hood could just pull out of the state of Vermont," Graham said.
Starr countered that producers threatening to leave Vermont over a few cents per gallon were "blowing smoke."
Anson Tebbetts, secretary of the Agency of Agriculture, Food and Markets, is chair of the commission. He said his agency shares the task force's concern about the financial health of farmers and would take a close look at any bill aiming to boost their payments.
"We are open to anything and any strategy," Tebbetts told Seven Days. "If it's viable and if it can help dairy, we are all in."
To date, however, that has not included price controls. The milk commission was last active in 2019 to provide feedback on the federal Farm Bill.
Tebbetts' agency and lawmakers have instead focused on helping struggling dairy farmers modernize their operations through grant programs such as the Northeast Dairy Business Innovation Center. The USDA program run out of Tebbetts' department issues federal grants to help farmers diversify their businesses, upgrade milk tank capacity and embrace new packaging, he said.
Such programs are important, but to task force member Heather Darby, they are "dancing around" the core issue that farmers aren't being fairly paid.
Darby, a University of Vermont Extension agronomist who has worked with dairy farmers for more than 15 years, said she didn't want to be part of yet another report about the decline of the dairy industry. She wants to help craft a real solution that would help the people who feed the rest of us make a living off the land.
"We have to do something different and at least try something bold and new," she said.
The original print version of this article was headlined "Milk Check | Some lawmakers say Vermont should consider a milk-price premium to help struggling dairy farmers"
Tags: News, Seven Days Aloud, Seven Days Aloud, dairy, dairy industry, Task Force to Revitalize the Vermont Dairy Industry, dairy farmers, milk prices, Seven Days Aloud, Video
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