REGION – On Sept. 26 the Vermont Milk Commission met for the first time in six years in Montpelier to discuss the low price of milk. In the summer of 2014, the price of milk per hundredweight (approximately 11 gallons) was about $25. Last year, the price dropped substantially to less than $16. Now, the price of milk is hovering around $17 per hundredweight. The value of milk has always fluctuated with the trends of supply and demand, but dairy farmers and processers are concerned that the price has not increased as much as it should have by this time.
Many factors contribute to the situation, including the rise in organic dairy farms when conventional milk prices were slipping and the lowered prices of the two organic buyers, Horizon Organic and Organic Valley, who purchase more than half the organic dairy produced in the state. According to the Agency of Agriculture Foods and Markets, Vermont has about 900 dairy farms and 100 processing firms. Dairy accounts for 70 percent of the state’s agricultural sales.
When the price of milk is high, farmers are more likely to invest in new supplies, cattle, feed, etc. However, when the prices are low and there’s a surplus of milk, farmers have to compensate. There are national price protection programs that offer financial assistance to compensate the difference between the price of milk and that national average feed costs. Many Vermont farmers apply for these programs, but even these programs have their pros and cons.
With all the concerns facing the dairy industry in the state and region, the Legislature passed Act 77, which declares that the secretary of Agriculture, Food and Markets should convene the Vermont Milk Commission “to review and evaluate proposals that enhance and stabilize the dairy industry in Vermont and New England that may be appropriate for inclusion in the federal Farm Bill 2018.”
The Vermont Milk Commission met on Sept. 26 to discuss the situation, mostly projected numbers for 2018 milk prices and the current status of the dairy industry. Most notably, John Rutherford, the director of economics, planning and operations for Dairy Farmers of America, explained that the current Milk Margins Protection was passed in the 2014 federal Farm Bill and needs to be adjusted for the current situation. There are several adjustment suggestions, including: removing the 10 percent reduction in the feed cost calculation, adjusting the data used to calculate the feed cost calculation, changing the deadline for signing up for the program, and other negotiations.
Other presentations included Tom Bivins, the executive director of the Vermont Cheese Council, who explained that Vermont cheese artisans have seen an increase in sales in and out of state but face challenges marketing to the West Coast and internationally. Leon Berthiaume, general manager of the St. Albans Cooperate Creamery, provided information on the state’s milk volume and dairy products processing capacity in the Northeast. Berthiaume also called for more standardized and transparent calculation of the milk price within the Margin Protection Program. He voiced concern that different parts of the country are receiving reports of different rates.
Three more meetings are scheduled for the Vermont Milk Commission with the next one on Oct. 13. They will discuss milk and dairy products in school systems, the organic dairy industry, Conservation Title of the Farm Bill, and the USDA Farm Service Agency. The goal of these meetings is to gather information from dairy farmers, handlers, and even consumers to produce recommendations to the Vermont Congressional delegation for a five-year farm bill to be decided on in 2018.
More information can be found at the Vermont Agency of Agriculture Food and Markets website at agriculture.vermont.gov/node/1613. More information about the Act 77 legislation can be found at legislature.vermont.gov/statutes/section/06/161/02922. The meetings of the Vermont Milk Commission are open to the public with agendas, minutes, and informational packets available online.