As Dairy Farms Head Into 5th Year Of Low Milk Prices, Support Builds For Supply Management

Jan 31, 2019

After four years of low milk prices — which has led to the loss of dozens of Vermont dairy farms — experts say to expect little improvement in 2019. As the downward spiral continues, policymakers are increasingly looking for ways to control the milk supply to stop the price freefall.

Douglas DiMento works for the Agri-Mark dairy cooperative, the largest in New England. He told farmers gathered Thursday at the Vermont Farm Show that the price situation is likely to improve, but only because fewer farmers will be making milk.

“We do expect prices to increase later this year, but most of that increase will come in the second half of the year,” DiMento said. “Unfortunately, a lot of the increase is going to come on the backs of farmers going out of business throughout the U.S. It's been a tough four years, and we're looking like it's going to be another tough fifth year in a row for farmers.”

"It's been a tough four years, and we're looking like it's going to be another tough fifth year in a row for farmers." — Douglas DiMento, Agri-Mark

Vermont had 796 dairy farms in 2017 and 702 in the last quarter of 2018, according to numbers provided by the state.

The serious attrition in farm numbers has been the focus of work at the Vermont Milk Commission, a state body charged with improving the dairy economy.

The commission said in a new report that some form of supply management system is needed to curb the chronic overproduction that has depressed milk prices for years. 

The report recommends a “growth management plan” that would include a two-tiered pricing system that would pay farmers less above predetermined production limits. 

“What’s the signal to stop making milk? The signals aren’t there,” said Diane Bothfeld, the director of administrative services at the Vermont Agency of Agriculture, Food and Markets. “Potentially in this program, your base gets the going rate. And if you’re over that, you get a much lower rate, much lower.”

"What's the signal to stop making milk? The signals aren't there. ... We're overproducing for what we have markets for." — Diane Bothfeld, Vermont Agency of Agriculture

Bothfeld served as adviser to the Vermont Milk Commission. Her message to farmers Thursday was that the industry has to find some way to control its own production. She described herself as a reluctant convert to the idea of supply management.

“We’re overproducing for what we have markets for,” she said.

To underscore her point, she pointed to the latest federal data that shows 1.4 billion pounds of dairy products are stored around the country. 

“November the year before, it was 1.2 billion. This isn't going away,” Bothfeld said. “We've got too much product. It puts downward pressure on prices and makes it hard for the prices to recover. We can try exporting it, we can try eating it, but we've got too much. I have never been an advocate of supply management. I don't see any other way out of these prices. So I have been converted.”

Bothfeld said any supply management program needs to implemented nationally if it's going to work, but she acknowledged it will be a tough fight in Congress.

And that is the challenge, said Bill Rowell who owns Green Mountain Dairy, a large farm operation in Sheldon.

Rowell has long advocated for supply management. He said overproduction is both a regional issue, and a national problem.

“This is a detriment to all of our farms and the rural communities across the country,” Rowell said.

"This [overproduction] is a detriment to all of our farms and the rural communities across the country." — Bill Rowell, Sheldon dairy farmer

According to Rowell, half the nation's milk comes from just 1,200 of the country’s 45,000 dairy farms.

“And [those farms] are not really in the East — they’re in the upper Midwest, the West, and the Southwest,” he said. “So Congress needs to pay attention.”

The milk commission report laid out some broad parameters for lawmakers to consider, including a governance board made up of dairy farmers that would work in conjunction with the U.S. Department of Agriculture.

The program would also need a methodology to establish base production levels and would need to develop rules to deal with the the merging of farm operations and other changes in business structures.