Organic Consumers Association

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How Small Dairy Farms Can Survive: Go Organic

Stressed by low milk prices, high energy costs and last year's disastrous growing season, pressures are greater than ever on Vermont's family farms. Feb. 8, there were 1,136 cow-only dairy farms in the state, a decline of 123 -- 10 percent -- since 2005. In the last two months, 14 farms have gone out of business.

We asked a broad range of people with industry ties for their ideas on how best to move forward. The question: What needs to be done to ensure the future of dairy farming in Vermont?

To ensure the future for dairy farming in Vermont, the next farm bill must have a mechanism in place to tie the price of milk to the cost of production.

We here in the Northeast have a much higher cost of production than either the farmers in the South or the West. If we are unable to achieve a higher price, then many more farmers will be forced out of business, resulting in a loss of our infrastructure. If the country were divided into five regions, each region would have its own price. Supply of milk would reflect the price. Each region would regulate production within its confines.

I do think the state should be interested in helping dairy farmers. They are the backbone of the state. With a strong federal pricing system in place, the state could provide matching state dollars to farmers' dollars to assist its dairy farmers to improve their operations. This could include anything from fencing supplies for organic dairymen, to stalls for conventional dairy farmers.

Obviously, we as taxpayers realize the state has financial limitations. Providing some annual state assistance, the state will realize a financial gain through the resulting vibrant dairy and tourism industries -- the two being so closely interrelated. It would also ensure that the consumer would have fresh, wholesome product right here in Vermont!

Mark Magnan, 38, Magnan Bros. Dairy Inc., Fairfield, member of the Young Cooperators board of directors, St. Albans Cooperative Creamery

In the midst of the difficult and critical challenges confronting Vermont's dairy farmers, organic dairy farming in Vermont has been rapidly expanding in recent years. Strong consumer demand for organic dairy products in the Northeast has led to very favorable farm-gate prices for organic milk. As a result, the number of organic dairy farms in Vermont has been growing: In 1995 Vermont had 14 certified organic dairy farms; today there are 126. By the end of 2007, The Northeast Organic Farming Association estimates that there will be more than 200 -- more than 15 percent of all Vermont dairy farms. The expansion of organic dairying is an exciting and hopeful development in the future of Vermont's dairy industry. All dairy farmers, including organic farmers, depend on a strong dairy infrastructure -- a system of feed and equipment dealers, veterinarians, farm technical support programs, etc. NOFA-VT is working closely with the governor's Dairy Task Force, Vermont's Agency of Agriculture, farm organizations, government agencies and farmers to help address these critical needs. On the national level, NOFA-VT is working with other organic farming organizations to include provisions in the farm bill that support the continued development of organic agriculture. We are also working to ensure that USDA-National Organic Program dairy standards continue to inspire consumers' confidence and reflect their diverse environmental, health and ethical concerns. NOFA-VT believes that the future of organic dairy farming in Vermont depends on the unquestioned integrity of certified organic dairy products.

David Rogers, 59, administrator & policy advisor, Dairy and Livestock Technical Assistance Program, National Organic Farming Association, Richmond

On the way to high school in Milton, I took our family farm's milk, and two or three other farms' milk, to the Milton Co-op Creamery with Dad's 1950 Dodge pickup.

All those farms had kids, paid their bills and maintained a respectable status in town. Now, 40-plus years later, a farm family can ship a trailer load of milk and struggle to stay status quo with the checkbook. It's all about a failed milk-pricing policy. Dairy farm families can no longer do more for less. Receiving similar prices per hundredweight of milk shipped in the '60s and '70s with 2006 and 2007 costs is not realistic. The consuming public has seen consistent price increases in milk and dairy products, but a consistently declining percentage finds its way back to the farm families.

Bigger retail markets, processors, and commodity handlers have all covered their costs, taken a margin and left less and less for the producing farmer.

Today's farm businesses need fair, equitable pricing derived by meaningful reform, and innovative ideas developed around pure, healthy products produced and based on farmer performance. However, these times of volatile peaks and valleys in milk pricing combined with a troubling crop planting and harvesting season, have driven many farm businesses to rethink the future.

Some have already made the decision to leave the industry. We currently have about 1,026 dairy farms left in the state, and we in the supporting feed, seed, fertilizer and other related businesses need to worry about how many more will depart.

Dairy is in a crisis situation -- It needs your support, now!

Jim Bushey, 65, co-owner, Bourdeaus' & Bushey, Inc.,

Give farmers what they want and need: a fair and stable price for their milk. Here is what the state should do:

Build long-term markets for 100 percent Vermont milk. Nothing would help farmers more than the value-added income from a Vermont brand. It works for everything from teddy bears to salsa. Why not milk?

Put the state's money where its mouth is. Buy 100 percent Vermont milk for colleges, prisons, cafeterias, schools etc., and pay a fair and stable price for it. It's common sense, good business and keeps tax dollars in Vermont.

Use its influence to get publicly-funded institutions (like Fletcher Allen) and private businesses (like IBM and National Life) to do the same.

Encourage private capital (contributions and investment) to invest in dairy infrastructure, such as expanding the new value-added processing plant in the Northeast Kingdom or building a milk plant in Burlington. We built an aquarium on Lake Champlain; we can build a dairy plant on Pine Street.

As the 100 percent Vermont brand grows, more consumers will buy 100 percent Vermont dairy products; their money going to Vermont farmers who benefit from the added value of their 100 percent Vermont brand.

Anthony Pollina, 54, vice president, Vermont Milk Co., Hardwick

 Markets are the expression of a political process. This is more than evident in the way we price milk. The economic drivers that supported our working landscape for 100 years have been altered as a result of a shift in power that favors western states.

Farmers must adapt to this new reality if they are to survive, because the reigning consensus does not favor a return to price controls and regional milk markets. For years, state agricultural policy has focused on bailing out the dairy industry while lip service is paid to innovating, diversifying and creating new market opportunities for Vermont dairy farmers.

The market for premium, quality cheese for instance, is growing at around 20 percent a year, faster than any other segment in the dairy industry. To capitalize on this opportunity will require significant investment in infrastructure, marketing, technical resources and training programs.

Investment in energy generation on farms, value-added processing of dairy and dairy by-products and a renewed focus on the value of Vermont branding, in and out of state, are crucial to building a new agricultural economy.

The cold fact is that we no longer have a comparative advantage in the production of commodity milk. If, as a society, we value the small farm, we must create opportunities for those farms to exist within the current economic landscape, which is pregnant with opportunity. After all, markets are the expression of a political process.

Mateo Kehler, 37, Jasper Hill Farm, Greensboro

I believe dairy farming will continue to exist in Vermont in the future. But it will likely not look like it has in the past.

Unless a major event shifts the trend, we can expect the average dairy farm to get larger with more cows per farm.

The fastest-growing cost on dairy farms is the family cost of living. This means that, if profitability per cow remains the same from one year to the next, farmers are under pressure to increase cow numbers just to maintain their standard of living. Your question infers something can be done to reverse or stop the loss of dairy farms. Other states have approached this problem without success. But the fact is, federal milk pricing policy is not likely to change dramatically to favor small farms.

We can use state funds to add to milk prices, but will taxpayers fund this when we are in need of higher education funding and providing health care to the uninsured? So, we can continue to try other programs such as reducing real estate taxes, providing support services or providing business planning services, but these do not address the problem withof low milk prices.

The unique trend in Vermont is the explosive growth of organic dairy farms, but even organic dairy farms are facing pressures.

The future of Vermont dairy looks to be bipolar, with larger conventional farms and smaller family-size organic farms. Organic farms will likely be larger than our image of family-size operations in the past. The threat to organic dairy farms is a slowdown in the growth of the market and bigger farms entering production.

Other factors that can cause a major shift in current dairy trends, besides an unexpected change of federal policy, are environmental regulations that will make large farms unviable, concern over animal welfare and stricter immigration laws.

Bob Parsons, 53, extension agriculture economist, associate professor in the University of Vermont Department of Community Development and Applied Economics

Much like the three-legged milking stool, I believe the future of dairy farming in Vermont needs three separate areas of focus to make our industry profitable and durable:

1. At the national level, the emergency assistance funds for our state should be voted through Congress and distributed as soon as possible. These dollars would make a tremendous difference in paying off feed bills as well as and purchasing feed for spring.

We need fast action on the immigration bill that died with the last Congress -- although current legislation works for seasonal industries (horticulture, ski areas, etc.) it does not work for the dairy industry.

Federal marketing orders need a major restructuring -- let's get back to basics as to the necessity and usefulness of the way milk is priced.

2. At the regional level, it would be extremely useful if our states would enforce labeling laws currently on the books. There are no antibiotics in anyone's milk!

Hauling issues around weight limitations between states in the Northeast need to be addressed.

3. At the state level, we need work on infrastructure -- slaughterhouses, distribution and marketing assistance for diversified farms; broadband and cell phone access for all farmers and continued and improved educational opportunities for farmers of all ages.Workers' compensation costs need to be revisited during this biennium.

The state should be looking at research and development to put a methane digester on every farm in the state -- regardless of size -- that would assist with our energy costs, our nutrient management plans and our efficiency.

Let's look into a counter-cyclical payment for dairy farmers that would come from state and farm inputs.

Jackie Folsom, 56, partner with Roy Folsom in Crooked Brooks Farm, LLC, Cabot, and president, Vermont Farm Bureau

Vermont farmers need to be profitable year to year to keep them on the land so they can continue to provide the economic and tourism benefits to the state and its rural communities. They also need to be profitable if there is to be a transfer of the farm from one family generation to the next. Farm families deserve a fair price for their hard work and contributions to their communities, their state and their country.

Vermont dairy farm families also need a farm price safety net program -- either state or federal, or a combination -- that helps to boost farm prices when milk production costs are far above the on-farm price of milk. The former Northeast Dairy Compact is an example of a successful program that returned more than $140 million to farm families. It was funded from the marketplace, not taxpayers. That type of general program, on the state or federal level, must continue to be explored.

Dairy farms in Vermont also need to be as cost competitive as possible with other regions of the country, so further methods to help alleviate farmland property tax are needed. Vermont farmers are also excellent stewards of the land and should not be burdened with environmental mandates, particularly those that have no funding attached.

Robert Wellington, 52, senior vice president of economics, communications and legislative affairs, Agri-Mark Inc., Methuen, Mass.

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