Co-op must think globally

Water quality also on agenda at 2015 meeting

Michelle Monroe

By Michelle Monroe

Executive Editor

Just
The Facts

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ST. ALBANS — With milk prices on the decline, members of the St. Albans Cooperative Creamery heard Saturday from experts about domestic and world milk markets.

Also, Vermont Secretary of Agriculture Chuck Ross spoke to about 300 co-op members during the annual meeting held at the St. Albans Town Educational Center.

He focused much of his talk on water quality, as the Legislature gears up to pass new environmental requirements for roads, forestry, developers, and farms.

There also was the usual procession of the state’s top politicians at what each year is one of the largest gatherings of dairy producers locally.

The good news for farmers was that while prices are expected to drop, low feed prices may keep margins in the range of $8 per hundredweight or higher, according to Peter Vitaliano of National Milk Producers Federation. “This isn’t going to be another 2014,” he told farmers. Last year saw record high prices for milk.

However, he assured them, it was also not shaping up to be another 2009 either. In 2009 the prices farmers received for milk, in many cases, was below the cost of production.

“We’re optimistic we’re not going to have another 2009 or 2012,” said Leon Berthiaume, general manager of the co-op.

Prices will likely be $2 per hundredweight lower than the average from 2011 to 2012, he said.

“More and more of what is driving your price and your margins and your income is the world market,” Vitaliano told farmers. Exports are now 15.5 percent of U.S. milk production.

Part of what drove prices upward in 2014 was the Chinese government. In 2013, the Chinese became fearful of a milk shortfall and began stockpiling dairy products. “They overdid it,” said Vitaliano. “They drove prices up to unprecedented levels.”

“China sucked up every drop of milk on the planet in the second half of 2013,” he added.

The higher prices, in turn, invited farmers to increase production. The top five exporting countries increased production by 23 billion pounds between 2013 and 2014, said Vitaliano.

Experts are expecting production at the European Union (EU) to remain steady this year. The EU is the world’s largest exporter of milk. U.S. production is expected to increase by 6 billion pounds this year, with the increase being absorbed by the domestic market.

The next three large exporters, including New Zealand and Argentina, are expected to increase their production by 3 billion pounds.

The reduced production increases reflect lower prices. The price in the EU has dropped to between $15.80 and $16.30 per hundredweight and Fonterra, the largest New Zealand cooperative, is predicting it will pay farmers just $14.10 per hundredweight this year.

In the U.S. forecasters are expecting prices to bottom out in April at an all milk price of around $15.50 per hundredweight.

Vitaliano identified several factors that may keep milk prices steady, including low butter stocks, which in 2009 and 2010 hindered the recovery of milk prices.

“I’m not yet ready to say this is going to be a year of dodging the bullet,” he said.

Bob Gray, who lobbies Congress on behalf of farmers, joined U.S. Sen. Patrick Leahy and Congressman Peter Welch, both Democrats, in talking about the ongoing transpacific trade negotiations.

“I do not want to have a trade agreement that will sell out our dairy farmers,” said Leahy.

Welch said he was concerned the final agreement may allow New Zealand’s dairy products to flood U.S. markets.

He also spoke of Cuba, which he recently visited with Leahy, as a potential new market for U.S. dairy. Currently, Cuba imports dairy products from New Zealand he said.

Gray expressed concern that in the haste to get a trade agreement done, “We may not get access to the Japanese and Canadian markets that we want.”

Immigration reform and the need for a program to allow farmers to legally hire farm laborers from outside the U.S. is also on the agenda, said Gray, although no one appeared to believe the current Congress would pass anything anytime soon.

Reform, said U.S. Sen. Bernie Sanders, I-Vt., is needed to bring stability to the lives of the 1,200 to 1,500 Mexican workers on Vermont’s farms. “They deserve that and so do you,” he said.

Republican opponents of immigration reform are threatening to withhold funding from the Dept. of Homeland Security in an effort to undo executive orders on immigration signed by President Obama.

“I think it’s a crazy idea,” said Welch. “It’s playing with fire in national security.”

In his address, Co-op general manager Berthiaume spoke of changes in the milk market over the past 10 years. Since 2004 milk production in Order I, the Northeast, has increased by 25.8 million pounds, which translates to 164 more truckloads of milk per day being shipped in the Northeast.

During the same period, fluid milk sales have declined, while Class IV (powder and butter) sales are up 30.5 percent.

Last year, the co-op turned 632 million pounds of milk into powder, an unprecedented amount, said Berthiaume. The new dryer has increased the co-op’s capacity to do so. The automated packaging equipment can fill about three 50-pound bags of powder per minute, he said.

The new store is doing $8 million in sales annually, he said.

Water quality

Ag. Secretary Ross focused his remarks on the need to protect Vermont’s waters.

“You should be incredibly proud of the contributions you make to the state,” Ross told the farmers. During his address, Gov. Peter Shumlin noted that with 6,000 to 7,000 employees dairy farmers collectively are one of the larges private employers in Vermont.

Each cow in Vermont creates $12,500 in economic activity annually and $3 million per day is circulated in Vermont as a result of dairy farming, Shumlin added.

The State of Vermont’s waters, which are impaired by excess nutrients, are not the sole responsibility of farmers, in Ross’s view. “It’s our responsibility as a society,” he said.

Although there is a great deal of attention on new pollution limits for Lake Champlain being developed by the Environmental Protection Agency (EPA) that is not his motivation for working on water quality issues, Ross said. “It’s not because of the EPA,” he said. “It’s because I’m a Vermonter like the rest of you.”

The Shumlin administration is ramping up to make the largest investment in water quality in the history of the state, said Ross. Everyone, including residents, developers, wastewater treatment plant operators, and road maintenance crews as well as farmers we be required to do things differently.

Best management practices on farms, such as creation of grassed waterways, buffers, and cover crops, reduced tillage and better incorporation of manure “are the kinds of things you all know how to do and we’re going to ask you to do more of them,” said Ross.

There will be assistance available, including the $45 million in funding the National Resource Conservation Service will have over the next five years to help farmers adopt better practices, Ross noted.

After small farms inspector John Roberts was hired last year, the agriculture agency discovered many small farmers are unfamiliar with the accepted agricultural practices (AAPs), the minimum requirements for water quality. “That’s the regulatory floor all of us need to comply with,” said Ross.

“I urge all of you to help each other understand what these AAPs are and how to comply with them,” he added.

His agency is seeking funding for more education, outreach and technical assistance.

Once they know the rules, the majority will comply, Ross said. As for the small number who doesn’t follow the rules, “It’s my job to enforce against them, and I will and I have,” said Ross. “They need to get in line and make their contribution just like all of you do.”

Many of the practices that benefit the lake also improve soil quality. “Many of the thing we’re asking you to do, you should do anyway,” said Ross.

Referring to the efforts to restore water quality to Vermont’s water as requiring an “all in” approach, Ross said, “It’s going to take all of us, and I believe you all can make a contribution and actually lead other segments of society.”