ENOSBURGH — In 2017, there was an average of 796 dairy farms in operation in Vermont. As of this month, there were just 711.

That’s a loss of 12 percent. In Franklin County, 11 farms have gone out of business this year. Talk to farmers or their suppliers and you’ll hear of many more operations on the brink.

Loss of farms poses a threat not only to farmers themselves, but to the businesses they frequent, from the corner store to equipment and feed dealers.

As farmers enter their fourth year of milk prices below the cost of production, they’re sharing stories of neighbors whose milk checks are zero after payments are sent to their lender, feed dealer and other suppliers, or farmers who want to go out of business but can’t because their lender is pressuring them to stay in operation, even as they lose money, because the lender has no hope of recouping what’s owed to them.

Enosburgh farmer Phil Parent, who recently refinanced his farm, said, “I’m 32 years at it and I’m starting all over again.”

Jacques Rainville, a farm owner who also works as a milk hauler, has a dramatic solution – cut the milk supply 15 percent for six months. “Let’s say there’s one trailer less, we’re dumping it anyway,” he said.

That oversupply is the problem is well known. Farmers are trapped in a cycle in which when prices fall, they make more milk to try and bring in enough income to cover their fixed costs in land, buildings and equipment. When prices rise, they make more milk to try and make up for the losses they sustained when prices were low.

The only way the supply falls is when enough farmers go out of business to reduce the supply and raise the price.

Each trip through the cycle leaves only the most tenacious, or sometimes the most fortunate, farmers standing.

That cycle takes a toll on suppliers as well, who offer credit when times are poor and then must stand in line to collect when prices rise. Cutting off credit to farms means losing customers.

Rainville’s proposal would have U.S. Secretary of Agriculture Sonny Perdue order a cut in the supply for six months. If the price doesn’t rise enough to cover the cost of production, then the cut would remain in place for another six months.

“We’ve got to get some money back to the farmers,” said Rainville. “We’re losing them left and right.”

“We have made more product than what the market demands. We need to face that,” said Parent, who co-authored Rainville’s proposal. “For way too long we’ve been focusing on production, production, production.”

Others have suggested Rainville’s proposal is too drastic and will “shock the market,” Rainville said. But he believes a market shock is needed.

A dramatic reduction in milk supply might help to reduce the oversupplies of cheese, butter and milk powder. Under the current pricing formula, the price farmers receive for fluid milk – the milk people drink or pour on their cereal – is tied to the price of cheese and powder.

In July, there are 1.4 billion pounds of cheese sitting in U.S. warehouses, according to data from the U.S. Dept. of Agriculture, an all-time high. Butter stocks are at 318,000 pounds, an increase of 3 percent over July 2017, although it is a reduction from June.

Farmers are also in a quandary over what to do with the excess milk they’re making.  Milk which can’t be bottled or used to make dairy products such as cheese, ice cream and yogurt is turned into milk powder to “balance” the market.

“It’s either dump it or powder it,” said Rainville. “The more we powder, the lower the price will go.”

Having large stocks of powder increases the supply above demand, lowering the price, which, in turn, impacts the price farmers receive for their milk.

A sharp, immediate reduction in the supply of milk is just the first step in Rainville and Parent’s proposal. Phase two would be a national committee to develop two supply management proposals and present them to farmers for a vote. Once farmers have selected the proposal they favor, it would go to Congress.

“Give the farmers two plans and let them vote. Farmer voted, not processor voted,” said Rainville.

At a meeting earlier this month in Albany, N.Y., which Rainville attended, attorneys advised those present that should the cooperatives attempt to control supply themselves, they could face an antitrust suit, such as the one which has targeted a Cooperatives Working Together (CWT) program which paid farmers to reduce their cow numbers by selling entire herds.

But getting changes through Congress is another challenge.

“We need a good price and a stable price,” said Rep. Peter Welch, D-Vt. He believes a supply management program is needed, but farmers across the country must put their combined weight behind a single proposal for it to have any hope of getting through Congress, he suggested. “The most important thing is dairy farmer unity.”

 

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