ST. ALBANS — While dairy farmers resume discussions of a longterm solution to the perennial problem of low milk prices, farmers themselves are making it clear urgent action is needed now.
At a gathering of 400 farmers, cooperative leaders and state agriculture officials on Monday in Albany, N.Y., a farmer stood up and pointed out that all of the solutions under discussion would take time to implement. “I don’t know if I have enough money to make it through to the end of the year,” he said, according to Bob Wellington, the Agri-Mark vice president who organized the meeting.
That sense of urgency was clear in the Messenger’s discussion with Bill Rowell, a Highgate farmer who attended the meeting. “I can’t believe our country uses its farmers this way,” he said. “We crowded people out into the streets that worked their whole lives with nothing.”
After four years of low milk prices, dairy farmers are hanging on by a thread, and so, Rowell said, are their vendors. “What happens to the agricultural community when we start losing our vendors?” he asked.
Vendors of feed, fertilizer, equipment and services used by farmers are having to seek loans for operating costs at banks, just as farmers are. But instead of land, their collateral is their receivables, Rowell pointed out. Receivables – debt to be collected from customers – less than 30 days old are taken by the banks at face value, he said. Sixty-day receivables are discounted 50 percent, 90 days 75 percent, and those over 120 days are worthless.
Some vendors are holding hundreds of thousands of dollars in receivables over 120 days old, said Rowell.
“What happens when that business goes out of business?” he asked. “Everybody’s wringing their hands, but I don’t see any sense of urgency.”
“They say there’s a sense of urgency, but where’s the progress toward a solution?” Rowell asked. “We’ve got all these people in the industry that don’t feel the sense of urgency the farmers are feeling and the vendors are feeling.”
As things currently stand, farmers have just one way to control their supply – watch their neighbor go out of business. When enough farms have shuttered, the supply of milk tightens and prices start to rise. But in response, farmers, many of whom need to pay off debts accumulated when prices were low, increase production to take advantage of the high prices. The supply then increases, leading once again to low prices. It’s a trap the industry has been stuck in for decades.
“No one can back off,” said Rowell. “All we can do is make more milk.”
The northeast dumped 170 million pounds of milk in manure pits in 2017, said Rowell.
“Do you just keep funneling money into the problem and hope you’re not one of those farmers who has to give up?” he asked.
A proposed solution which would have helped keep production of milk in line with demand, stabilizing prices, stood a good chance of passing Congress as part of the 2012 farm bill, but was blocked by then House Speaker John Boehner, despite a nationwide lobbying effort by farmers.
Wellington pointed out that the Trump administration has allocated $12 billion to assist agricultural producers impacted by a trade war Trump has launched with the European Union, Canada, Mexico and China – the U.S.’s largest trade partners. Many of those countries, including Mexico, a major purchaser of American dairy products, have imposed tariffs on cheese and other agricultural goods in response to Trump’s tariffs on manufacturing.
Initially Sonny Perdue, the U.S. Secretary of Agriculture was talking about a direct payment to farmers, but Wellington said that would only help if it was sufficient size and duration. Two billion to pay farmers an additional $2 per hundredweight of milk for the next six months would make a difference, he said.
But the government has begun backing away from such a large payment, according to Wellington. “A small check isn’t going to do much,” he said.
A large purchase of cheese, another possibility, can “come back to haunt us,” said Wellington, by creating a large supply that can drive down prices in the future.
Wellington sees another option, one he hopes to explore with other cooperatives and members of Congress, using $1 billion of that $12 billion to pay farmers $10 per hundredweight for milk they don’t produce. That saves them the cost of production and puts money in their pockets.
It would also lower the current milk glut by 10 billion pounds.
“That’s huge,” said Wellington, adding that every two percent imbalance moves the price $20.
A new farm bill has passed both houses of Congress and is now in a conference committee, in which legislators will iron out the differences between the House and Senate versions. Vermont Senator Patrick Leahy is on that committee.
Wellington said it was still possible to get some help for dairy farmers inserted into the farm bill. “If anyone can get anything done on dairy down in Washington, it’s Leahy,” he said.
Leon Berthiaume, CEO of the St. Albans Cooperative Creamery, agreed that there was a possibility of getting some changes in the farm bill. There’s “still potentially opportunities to do some more tweaking with the margin protection program,” he said.
Rowell, however, was less sanguine about the possibility of Congressional action. Members of Congress, he said, “couldn’t agree on lunch.”
In addition to immediate national relief, Berthiaume, who attended Monday’s meeting, said “different states are trying to figure out how to support their industry.”
Asked if there was anything he would like to see Vermont’s candidates for the legislature and governorship propose, Berthaiume said that those running for office need to understand what’s being asked of farmers.
The cost of production is more than $20 per hundredweight, he said.
But the mailbox price, the price in farmers’ milk check, was just $16.86 per hundredweight in May, which is where the price has been, with little variation, since January.
Vermont Secretary of Agriculture Anson Tebbetts also attended the meeting. Tebbetts said he would be focusing on next steps, including a meeting with Wellington. “We’ve got to keep the energy moving,” he said. “We can’t dilly-dally too long here. We need to get working on something soon.”
The proposals presented at Monday’s meeting can be seen at www.dairyproposals2018.com. The Messenger will take a closer look at those proposals next week.
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