Dairy farms around Vermont are struggling amid low milk prices that are in some cases well below the cost of production. The result is that an increasing number of farms are starting to go out of business. Last week, the iconic Nordic Farms in Charlotte auctioned off its cows and machinery.
The Agency of Agriculture says 12 farms have called it quits just since January and that leaves the state with 750 dairy farms down from 813 last March.
VPR's Mitch Wertlieb spoke with Clark Hinsdale, the owner of Nordic Farms. Hinsdale is also a long-time dairy advocate and former president of the Vermont Farm Bureau.
MW: It's well known by now that low milk prices are crippling many small and medium-sized farms in Vermont your operation though it's pretty large one and yet you still had to sell off equipment and cows. Was low milk prices the driver behind that particular move?
CH: It was a major factor in the future of the farm. I spent the better part of a year trying to find a buyer for Nordic while it was a turnkey operation.
MW: When you say a turnkey operation what do you mean by that?
CH: Well, what I mean is it was a completely going situation. You know we're getting a milk check twice a month and so it's a going concern as opposed to bare land in a barn. To clarify I operated the farm until 2014. I turned it over to my hired man and his family who had worked hard and I thought deserve the opportunity.
Then we went into a four-year skid of lower and lower milk prices. So my hired man and his family, they took bankruptcy. I then bought the assets back from the bank and spent a year trying to sell the farm. It's hard to accept that what was a state-of-the-art facility 14 years ago is now functionally obsolete.
MW: That is the amazing thing to me. I mean does this situation that you're talking about here say something about the larger context of dairy farms in Vermont and their future survival?
CH: Absolutely and I've been speaking out on that and I do plan to write my "exit letter" from the dairy industry and try to share what I think I've learned with co-operative leaders and policymakers.
MW: I wonder if you would share just a little bit maybe a preview for us of what you planned to write in that exit letter? I mean what do you think Vermont dairy farmers need to keep this industry that's so iconic in Vermont alive?
CH: Number one they need to be told the truth. And the truth is that a 50-cow farm, a 100-cow farm, and a 250-cow farm are no longer economically viable in the state of Vermont, nor will they ever be.
MW: They have to be bigger? Way bigger?
CH: They have to be bigger. We get very dependable financial information from the Farm Credit System where they amalgamate the financial statements of hundreds of dairy farmers each year and do an analysis and what the analysis shows us is that the last couple of years virtually the only dairy farms that have been profitable have been over 500 cows. For the smaller farms, it's just a question of how much you lost. We're looking at the erosion of equity on dairy farms in excess of 10 percent a year. Let me give you an example: In my case, since I'm willing to share the figures, at our auction we average $960 per cow. In 2014, the same auctioneer offered me $1,800 a cow for our herd across the board, if I were to have gone out then. So essentially, you can say that the value of dairy cows in the last four years has been cut in half.
MW: I just wonder what the effect is practically speaking. If small- and medium-sized farms dairy farms in Vermont go the way of the dinosaurs we are left with just big farms?
CH: It's very important to understand that dairy farming is the best kind of farming for rural economies bar none. The reason for that is very simple: Every dairy farmer gets two milk checks every month. The money flows very evenly over the course of the year. So the fact that the cows are milked 365 days a year means the milk truck drivers have full-time jobs. The grain truck drivers have full-time jobs. The vets have full-time jobs, there are full-time jobs at the farm machinery implement dealers selling and repairing farm machinery.
Many of the big farms in the west, you know they're the company store. They operate on a scale where they buy things wholesale directly from the manufacturer right onto their farm. They put nowhere near the money into the local community at the hardware store, the grain dealer. They're essentially their own company town.
Now, I'm not putting these farmers down. I want to support these farmers because we're [either] going to have large dairy farms or no dairy farms. That's the choice and the agricultural leaders in this state can help figure out how to counsel the small farmers out, how to get the equity back that they're that they're owed from the co-operatives and how to transition them, not necessarily completely away from dairy, but to being a cog in the wheel of the dairy industry where maybe they grow heifers, maybe they do custom work.
There are many services that are still needed but what's happening is nothing short of a cultural crisis. I can tell you that most people going out of the dairy business feel like they personally failed, feel like they've let down the generations before them. They feel like they're selling off the family heritage, it's not a job. It's who we are.
MW: As I understand it you still own the land at Nordic Farms, much of it is conserved, what's going to happen to the farmland?
CH: I'm visiting with people about that. I'm going to be very excited when there's that opportunity to make an announcement. But this farm with its beautiful Route 7 location, it's proximity to Burlington. This is a place where you need to be able to grow things, produce things that you can sell directly to the public and take advantage of the location.
MW: Can you give us an inkling of what it is you may be hinting at there as far as a future endeavor?
CH: Well, you know, if people in society don't want to pay for the milk they drink, then we should make something else that they want to drink. And one of the rapidly growing industries in Vermont is the craft beer industry.
People seem to be willing to pay plenty of money for quality beer. So let them drink beer. I think there's a strong possibility that this farm will become part of the growth of Vermont-sourced products to make other beverages.
MW: You talk really eloquently about how a lot of small dairy farmers who haven't been able to make it feel like they're personally responsible, like they've failed in some way. It's so heartbreaking to hear that and even if your farm wasn't necessarily considered a small farm I wonder how you felt about auctioning off these cows, this equipment, did it hit you emotionally in some way?
CH: Absolutely. My father was a 1953 graduate of the University of Vermont, College of Agriculture. He was successful in other businesses but it's what he always wanted to do and when he did it he did it right.
Nothing he loved to do more than to give thousands of farmers and other folks tours of the robotic dairy and to talk to people about how we could get the seven day a week, two or three times a day, back-breaking, repetitive labor out of dairy farming so farmers can retire with backs and knees that work. A lot of pride here.
We really viewed ourselves as having a broader mission than just making milk. And I feel an obligation to do anything and everything I can to help my friends out there in the dairy industry and in some cases it's going to be for them to look ahead to a different way of making a living on their farm.