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Dumped Milk, Falling Prices, Shrinking Demand: Vermont Dairy And The Coronavirus

Cows on the Orr family's dairy farm, in Orwell, are pictured in this 2015 file photo. Anson Tebbetts, Vermont's agriculture secretary, spoke to VPR recently about Vermont's dairy industry and about challenges faced by the state's farmers.
Kathleen Masterson
/
VPR file
We talk with dairy farmers, a cheese maker and the Secretary of Agriculture about the dairy industry in the wake of economic turmoil caused by the coronavirus.

With restaurants and schools closed, some dairy producers and processors say they're seeing demand for Vermont dairy shrink. That's led to falling milk prices last month and some dairy farmers and producers dumping milk. We talk with Agriculture Secretary Anson Tebbetts and dairy farmers about the disruptions.

Our guests are:

  • Anson Tebbetts, secretary of Vermont’s Agency of Agriculture, Food and Markets.
  • Paul Doton, a fourth-generation dairy farm in Barnard and member of the Agri-Mark Board of Directors, representing a region of 41 farmers in Vermont and New Hampshire.
  • Leon Berthiaumesenior advisor of DFA-Vermont operations, which merged with the St. Albans Cooperative Creamery in August.
  • Mateo Kehler, head cheesemaker and cofounder of Jasper Hill Farm, an artisan cheesemaker in Greensboro.

Broadcast live on Tuesday, April 7, 2020 at noon; rebroadcast at 7 p.m.

The following has been edited and paraphrased for brevity. 

What can the state of Vermont do to support dairy farmers, and how has COVID-19 affected them so far?

A Q & A with Anson Tebbetts, Secretary of Vermont's Agency of Agriculture, Food and Markets

Is dairy being dumped right now in Vermont, and if so, what sort of products are being dumped? 

Anson Tebbetts: There is dumping going on across the nation, including in Vermont, where there is just not a place to market many dairy products at this time. Milk and raw products are being dumped, but cheese producers are also at risk at this point.

We in Vermont have a robust network of artisan cheesemakers who saw their markets dry up overnight with the shut down of schools, restaurants and coffee shops.

What are you telling farmers as the Agency of Agriculture at this time? 

We have a team that we've put together to talk about economic recovery in both the short and long term. We are also asking the USDA to take steps to help stabilize the economy. First, we are asking the federal government to buy out all of the cheese that's currently in inventory. There is a high demand for food right now, and farmers can help. Cheese is nutritious and stores for longer than liquid milk. [By making it], processors can get rid of supply, which stabilizes the price [of liquid milk]. 

We are also asking the USDA to establish a minimum price point of $19.50 per hundredweight [farmers are paid by the hundredweight for the milk they produce]. That's the cost of production in the Northeast. We have support in that from our neighbors — New Hampshire has signed on, as have Massachusetts, Rhode Island and Connecticut. New York is sending their own letter. 

You'd think that even though restaurants and schools are closed, people would still be buying milk and dairy products to consume at home. Where is the pinch point in the system that's causing concern right now?

With institutions, colleges, schools, restaurants and exports closed, consumers can't make up for what was happening on the commercial side. There are some issues with international trade as well. 

We have, however, seen a slight uptick in individual consumers buying dairy, but that will need to continue. 

What is Vermont doing to encourage the federal government to allow farms to apply for federal disaster assistance loans through the Small Business Administration, for small businesses impacted by COVID-19? 

Right now, there is disagreement in Congress over who is eligible. There is pressure from Vermont and from other states for Congress to work through that. Hopefully, over time, that program will open up. 

Farmers are, however, eligible for the Paycheck Protection Program. Farmers should also check in with their local Farm Service Agency offices regarding new programing in the coming weeks and months. 

How can the Agency of Agriculture, Food and Markets help?

It's heartbreaking. We are doing everything we possibly can do to get as much money back on the farm as possible. We have about 650 dairy farms in Vermont, and if the forecasts are true on this, just about every one of them is at risk. It's a crisis and a real emergency. 

The cost of production in Vermont, at best, depending on the operation, is about $19 to $20 per hundredweight [of liquid milk]. Some of the forecasts we're seeing are for $5 to $6 below that. Farmers can't sustain that. We've got to do everything we can to get these relief programs up and running as soon as possible so they can sustain through this crisis over the next few months. 

What is being done to protect migrant farmworkers currently doing essential work as part of Vermont's dairy industry, especially those who are undocumented?

We've had discussions about this throughout the agricultural community. Every dairy farmer is in full mode now to protect their workers form getting sick, and their families. The University of Vermont Extension has been reaching out to make sure that protections are there, that we're using best practices on farms, that we're limiting contact between employees, just like we are at maybe a cheese plant and so-forth. 

I know our farmers rely on so many people to keep their operations going and I know their heart and soul is in protecting every single farmer and worker on their land to keep them healthy. 

It sounds like what your saying is that it's really up to the farm owner or farm manager to protect the workers and that it's not necessarily something the state is taking the lead on. I think you're right that most—if not all—farmers have the best interest of their workers at heart, but that's quite a guarantee to put into the hands of farm owners.

If something was to go wrong, or sideways, I would hope someone would reach out to officials and address that issue. Every industry is going to have low pockets where maybe the best practices aren't being following. 

Dairy farmworkers have been deemed essential workers under the governor's executive order, but essential workers still have to follow social distancing practices in their workplace. Are there any protections in place for dairy farmworkers?

I'm not familiar with every situation on every farm, but I know from discussions that have been circulating throughout the dairy industry they are trying to use the best practices possible to protect their workers and their safety and health.

What can consumers be doing to support farms at this time? 

There is no one that has not been touched by this pandemic. People have to make choices and take care of their family and their friends, their animals and their workers. Evaluate what you can do and what you can't. That said, it would be wonderful if folks could reach deep down there and support their local farmer if they can.

Farmers have done a great job of delivering their product, but it's a fragile situation right now. We have an abundance of food in our local system, it's just a matter of getting it to the folks who need it. Vermonters should be proud. 

What can be done to protect Vermont dairy farmers in the long-term? 

Under the current system, farmers do not know what they are going to get paid until a month after they deliver the product. In most industries, people don't get up in the morning to go to work not knowing what they're going to get paid.

At the Vermont Milk Commission, we've been advocating for a growth management plan for a couple of years. However, this would have to be implemented as part of a federal system. Six months, a year from now, maybe people in Washington will say, 'Hey, we need a better long-term plan for the stability of our farmers.'

  

How are Vermont farmers seeing their businesses affected by COVID-19?

A Q & A with Paul Doton, a fourth-generation dairy farmer in Barnard and member of the Agri-Mark Board of Directors and Mateo Kehler, head cheesemaker and cofounder of Jasper Hill Farm, an artisan cheesemaker in Greensboro.

Paul, what are you seeing on your farm in Barnard and what are you hearing from other farmers? 

Paul Doton: There's a lot of fear and anxiety right now about what might be coming. Everybody is hurting. We milk 70 cows, and I think it's important to note that the average farmer right now has not yet really been affected by this, because our milk check for this week is still about $18. There's a delay. 

The cows certainly have not been affected. We haven't changed our operations. We still care for them, feed them, milk them and have them in the same routine as before. 

How do you talk to other farmers about not getting too down right now?

Paul Doton: I am an eternal optimist. Somehow, we are going to come out on the other side.

Mateo, what have you seen at Jasper Hill? 

Mateo Kehler: We lost a significant part of our market overnight when restaurants closed. About 35% of our sales were going into the food service sector. We see a lot of shops trying to do curbside delivery, but we've also seen about a 50% drop in our baseline sales over the past three weeks or so. 

It's the same story: suddenly, we have too much milk on our hands. 

Yesterday was the last time our herd at Jasper Hill Farm was milked. We've dispersed our herd to neighbors and to Anderson Farm in Glover. 

We are also converting our milk into harder cheeses to build an inventory. We hope to be able to sell that when things get back to normal. 

What challenges do artisan cheesemakers face right now? What will it take for them to survive COVID-19?

Mateo Kehler: At Jasper Hill, we are going to survive this if we are able to manage our cash flow. When you have substantially less cash coming in from week to week, you have to make some really hard decisions.

For more about how COVID-19 has impacted Vermont's artisan cheesemaking industry, head here.

We don't know how long this is going to last and we are very close to the market, meaning that when retail sneazes, we are going to catch a cold. When the restaurant industry has a downturn, that's tough for us. The flipside? When retail and food service comes back, artisan cheesemakers will be able to bounce back with them. 

How will this change the market that Vermont artisan cheesemakers rely on to move their product? 

Mateo Kehler: I am most concerned that we are going to lose so many customers — the small businesses, restaurants and retailers that are going to go under over the next few months — that our market is going to be significantly changed. 

Vermont is an incredible network of small producers that have built this incredible community of production, and I don't think we can take that for granted. It isn't necessarily going to survive if consumers don't really reach out to support producers in Vermont. 

What does COVID-19 spell for dairy cooperatives in Vermont?

A Q & A with Leo Berthiaume, senior advisor of DFA-Vermont operations, which merged with the St. Albans Cooperative Creamery in August, 2019.

Have you also seen and heard that milk dumping is now occurring in Vermont?

Leo Berthiaume: Yes. It's an ever-changing situation for the last couple of weeks as we are really trying to understand these unprecedented marketing conditions. 

We saw initially, a bump in demand at grocery stores, as customers stocked up on many products, including dairy, in anticipation of shelter-in-place orders. Since then, the retail demand has dropped a bit and we've seen food service sales drastically decline as a result of school and restaurant closures, which has resulted in an overall surplus of milk. 

That excess milk is coming back to our facilities and to other facilities that can try to push as much product as we can into storable products like nonfat dry milk powder, but these plants are operating at capacity. So when there is no more capacity, we are in a position where we are disposing of raw milk on farms. And it is really a last resort. 

Are there ways to salvage parts of that liquid milk for sale in bulk commodity markets? 

When we have the opportunity to salvage any portion of the [liquid] milk, that's our first choice. But some of the other market segments are also saturated with, for example, bulk cream and bulk skim condensed milk, and other bulk products.

We evaluate this on a day-to-day basis, so there might be products that processing plants dispose of because there isn't a market for that product. 

Do you anticipate processing plants having to lay off workers as a result of COVID-19?

We've already seen a reduction in [staffing] in some facilities because of their product mix. They don't need as many employees because they are not supporting food service businesses.

Some plants have also had to have periodic shutdowns because of COVID-19, which has really interrupted the supply chain. 

Those things both impact the volume of milk in the market on a given week. 

If the pandemic is causing liquid milk to be dumped, could we shift our processing operations very quickly to produce a lot more milk powder? 

First I want to assure everyone that we are trying to get the best value for the milk that our dairy farmers are producing every day. We are working with grocery stores nationally to make sure they are ordering what they can to meet consumers' needs. 

We are also communicating with all of our customers to see what capacity they have to turn milk into other dairy products. All of us within the indutry with processing plants that can make storable goods are trying to process as much milk as we can. When we can't, and we're operating at capacity, that's where you see milk being dumped at home.

In St. Albans, we produce nonfat dry milk powder, so we are maximizing that to the extent that we can because it lends itself to storage and also to exports. This is a global situation we are dealing with. Exports are down, but it has not stopped us from trying to put up as much product as we can. 

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