Congressional Visits

On June 17th Yankee visited Congressional offices in Washington, DC. Participating were: Chairperson Paul Gingue, Vice Chairperson Rocky Giroux, Bob Smith and me. Bob Smith is a senior vice president of Farm Credit East who assists several associations with government relations.

We visited people in eight Congressional offices:

• Sen. Patrick Leahy and Adrienne Wojciechowski
• Rep. Bill Owens and Nell Maceda
• Kathryn Tanner in Sen. Kirsten Gillibrand's office
• Thomas Maloney in Sen. Jeanne Shaheen's office
• Lauren Tribble in Sen. Bernie Sanders' office
• Andrew Lattanner in Rep. Scott Murphy's office
• Sarah Levin in Rep. Paul Hodes' office
• Jake Oster in Rep. Peter Welch's office

Our main message again this year was that we are meeting the needs of our customers and doing business as usual, notwithstanding the continuing downturn affecting many of our customers, especially in the dairy and timber industries. We are lending money; our financial results are good; we continue to pay patronage refunds; and the Farm Credit System has not needed any government assistance. This message was well received.

Both the House and Senate have passed legislation for financial services regulatory reform, and a conference committee is currently negotiating the differences between the two bills. For the most part the Farm Credit System is not affected by this reform. However, we voiced our concern that one provision in the Senate version, the so-called Volcker Rule, could potentially have an adverse effect on the cost of Farm Credit System debt as compared to other GSEs.

Other issues that we mentioned were estate taxes, farm labor and issues relating to how we can work better with the Farm Service Agency. We provided each office with a copy of the Northeast Dairy Farm Summary published last month.

We happened to be in Washington for the 28th Annual Capitol Hill Ice Cream Party, sponsored by the International Dairy Foods Association. It was very popular!

UPDATE 6/25/10: Added the photo with Senator Leahy. Senator Leahy was one of the 12 senators on the conference committee mentioned above regarding financial services regulatory reform. That conference committee has been meeting over the past several days, and it concluded its work with a marathon 20-hour session ending around 5:30 AM today. New York Times article here. We are pleased that the bill approved by the conference committee satisfactorily addressed our concerns with the Volcker Rule. This morning's agreement by the conference committee means that the final bill will go back to the House and Senate next week for an up-or-down vote. President Obama is expected to sign the bill if it passes the House and Senate.

National Tree Farmer Convention

The 2010 National Tree Farmer Convention will be held in Vermont on July 13-15, 2010. The conference will be held at the Hilton Hotel in Burlington. Shelburne Farms will host field day events including interactive displays, demonstrations, exhibits, activities, workshops, tours and more. There will also be tours to other places in northern Vermont. Youth events will be held at the ECHO Center.

Vermont speakers at this national convention will include Thetford's John Morton of Morton Trails and biathlon fame and Prof. Thomas McEvoy of the Rubenstein School of Environment and Natural Resources at the University of Vermont.

The local host organization for the 17th National Tree Farmer Convention is the Vermont Woodlands Association. Yankee Farm Credit is a sponsor.

Slow Money National Gathering

The second annual Slow Money National Gathering was held in Vermont on June 9-11, 2010. Most events were held at Shelburne Farms. Over 600 people attended from all over the country, and a few from other countries:

Slow Money is a concept inspired by Slow Food, an international movement started in 1986 in reaction to fast food. Slow Food encourages people to enjoy local and traditional foods, and has much in common with what I call SLO agriculture (sustainable, local or organic agriculture). The purpose of Slow Money is to finance Slow Food.

Woody Tasch launched the idea of Slow Money in 2008 with the publication of his book Inquiries Into the Nature of Slow Money: Investing as if Food, Farms and Fertility Mattered.

The first annual Slow Money National Gathering was held last year in Santa Fe, NM, near where Woody Tasch lives. The second annual Slow Money National Gathering was held in Vermont in recognition of the significant amount of "SLO agriculture" in Vermont, such as the Hardwick Agricultural Revolution. The entrance to the Coach Barn at Shelburne Farms was flanked by large posters of Jack Lazor of Butterworks Farm in Westfield, VT and Tom Stearns of High Mowing Organic Seeds in Wolcott, VT:

From the web site: "[Slow Money] is a new way of connecting investors to local food systems, catalyzing new forms of social investing and philanthropy for the 21st century." The conference was attended by a "network of investors, donors, entrepreneurs, farmers, and activists who are giving birth to the nurture capital industry." (Nurture capital is intended to be contrasted with venture capital.)

Conference speakers included: Woody Tasch; Bill McKibben of Middlebury College; and Robert Zevin, one of the founders of socially responsible investing.

Northeastern Forest Products Equipment Expo

On May 7-8, 2010 the Champlain Valley Exposition Center in Essex Junction, VT hosted 5,500 attendees for the 2010 Northeastern Forest Products Equipment Expo.

• Highlights of the Expo included:
  Seminars on BCAP





• Banquet sponsored by Farm Credit for 6th consecutive year, held at Doubletree Hotel South Burlington, VT.





• After dinner entertainment: Slide show from wildlife photographer Gary Lee





• NELA Award Winners from Vermont:
  “Outstanding Service to the Forest Industry” George Buzzell
  “Outstanding Contributions to Forest Industry Education” Norman Hudson

This event is a joint collaboration between Farm Credit of Maine, Farm Credit East, and Yankee.

The winner of the Stihl MS 362 chainsaw door prize this year was Jerzey Heald of Lewis, NY (shown here with her parents Tom and Opal Heald, and Heather Curler from the Middlebury office).

Introducing Clara Hall

I am pleased to announce that Clara Hall joined the Yankee team on June 14th following her graduation from Cornell University with a degree in animal science, and a concentration in agricultural farm management and finance. She is a credit analyst in the White River Jct. office. Clara grew up on Fairmont Farm in East Montpelier.

Introducing Kyle Lussier

Kyle began working for Yankee on June 7th as a Credit Analyst in the Middlebury office. Kyle is a recent graduate of Southern NH University with a BS in Accounting and has spent the past year gaining experience working for Chittenden Bank. Kyle spent many years on Blue Spruce Farm in Bridport performing many farm related responsibilities.

Please join us in welcoming Kyle!

Dairy Policy Issues

Many proposals are presently circulating to fix the problems in the dairy industry. Representative Peter Welch is a co-sponsor of the Dairy Price Stabilization Program Act of 2010 (HR 5288). Senator Bernie Sanders is circulating a draft bill on this issue to introduce in the Senate. The USDA Dairy Industry Advisory Committee recently started holding meetings and is expected to issue a report by the end of the year. The National Milk Producers Federation has a proposal (click here). Dairy Farmers Working Together has a proposal (click here). I recently linked to a proposal by Steve Mandl, a former investment banker turned dairy farmer (click here).

Representative Collin Peterson of Minnesota, chairman of the House Agriculture Committee, has started holding hearings on the 2012 Farm Bill. In a recent interview with the Watertown Daily Times, published on 5/22/10, he said that the 2012 Farm Bill will likely include significant changes in federal dairy policy: Changes in dairy safety net expected. Some aspects of the various proposals listed in the paragraph above are likely to be included in the 2012 Farm Bill.

The problems in the dairy industry are not new, as I have noted before. Many solutions have been tried in the past. What have we learned from those experiences?

The Dairy Policy Analysis Alliance has recently published an excellent discussion of that question. The Alliance is a collaboration between the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri and the Department of Agricultural and Applied Economics at the University of Wisconsin-Madison.

The full document is Dairy Policy Issues for the 2012 Farm Bill (1 MB PDF file, 54 pages). An executive summary is available as a set of shorter briefing papers: Dairy Policy Briefs (1 MB PDF file, 16 pages). If you want an even briefer discussion, see this news release.

For a good understanding of the issues, it is well worth while to read the full document. But the first sentence of the news release summarizes the gist of the report: "Like a lot of strong medicine, past federal dairy programs have cured some industry ills but caused some unpleasant side effects."

Solutions to the problems of the dairy industry that have been tried in the past include: price supports, the MILC program, voluntary supply management, mandatory supply control, revenue insurance, milk marketing orders, and trade policy. Each approach has had unpleasant side effects, which are discussed in the report. And clearly none of those approaches was a successful long term solution, or there wouldn't be the current plethora of proposals to fix "the problem."

Most of the current proposals involve supply management. Voluntary supply management programs that have been tried include the 1984-85 Milk Diversion Program, the 1986-87 Dairy Termination Program (Whole Herd Buyout), and the current CWT program. These haven't proved sufficient, and so most current proposals involve mandatory supply control.

What does the Dairy Policy Issues report say about mandatory supply control? It has never been implemented in the U.S.: "In the past, dairy farmer interest in supply management has dwindled if milk prices improve..." Based on experiences in other countries, the report notes that "the tendency of mandatory supply management programs is to freeze the structure of dairy farms and regional milk production." Also "the first dairy producers to receive quota 'rights to produce' stand to receive a significant windfall gain" and "it may be difficult for new producers to enter dairying." These are all side effects that policy makers and the industry will need to consider.

As anyone involved in the dairy industry knows, the marketing of milk is complicated because of the many policy issues. The Dairy Policy Briefs and Dairy Policy Issues reports described in this post are an excellent resource to help understand these policy issues.

UPDATE: The NMPF board of directors approved their "Foundations for the Future" plan (news release). The IDFA likes the plan except for the supply management part (news release).

International Dairy Prices

In recent years dairy markets have become increasingly globalized. It is no longer sufficient to consider only domestic markets when thinking about factors that affect prices paid to U.S. dairy farmers. One must also consider international markets.

With that in mind, one resource for tracking international dairy prices is globalDairyTrade. This Internet-based electronic trading system for commodity dairy products was launched by Fonterra, the New Zealand dairy cooperative, in July 2008. I mentioned globalDairyTrade last year, but it's worth mentioning again. And it is encouraging to note that global dairy prices have improved in the past year:

The big increase in prices in 2007 and early 2008 is obvious, as is the collapse in prices in late 2008 and 2009. But prices have recovered significantly since last summer.

The quantity that is graphed above is an index calculated by Fonterra that they call gDT-TWI (globalDairyTrade-Trade Weighted Index). This index was 641 a year ago (6/02/09). The latest value (6/01/10) is 1179, an increase of 84%. However, this index has declined slightly in the last two months. The current value of 1179 is down 4% from 1232 on 4/06/10.

The original of the above graph (which may be easier to read) can be found on the Latest Results page of the globalDairyTrade web site. The Latest Results page contains links to more information on specific products, including anhydrous milk fat (AMF), skim milk powder (SMP) and whole milk powder (WMP). For even more detailed information, see the Historical Data section of the Latest Results page. This contains a link to an Excel spreadsheet with detailed data that you can view or download.

Farm Credit Fellow - Henry Pearl

Henry Pearl of Danville, VT was in the Middlebury office the week of May 24-27 for his one week internship for the Farm Credit Fellows program. Henry is a FARMS 2+2 student and will graduate from UVM next year with a bachelors degree in Animal Science. After graduation Henry would like to return home to start up an organic dairy to add to the maple sugaring and sawmill businesses.

Farm Credit Fellow - Jinny Purrier

Virginia (Jinny) Purrier visited the Newport office the week of May 24-27 as part of the Farm Credit Fellows program. Jinny has an associates degree in Dairy Farm Management from Vermont Tech and is currently a student at UVM in the FARMS 2+2 Program. She just finished her semester at the Miner Institute in Chazy, NY. She will be returning to UVM this fall as a senior. After graduation Jinny plans to pursue an internship/employment for a year before she returns home to Montgomery, VT where she hopes to restart the family dairy farm and incorporate some aspects of Ag tourism, such as a maple sugaring operation, farmstand, and a Bed & Breakfast.

Farm Credit Fellow - Mike Fitzgerald

Mike Fitzgerald spent the week of May 24-27 working in our White River Junction office as part of the Farm Credit Fellows program. Mike comes from a 45 cow dairy farm consisting of Holsteins and Brown Swiss in Colchester, VT. He has just entered his senior year at the University of Vermont in Ag Business, through the FARMS 2+2 Program, a state funded scholarship including two years at Vermont Technical College in dairy management and two years at UVM in Ag business. After school, Mike plans to start his own milk bottling facility on the home farm and enter the value added market, with an expansion to milking 80 cows while hosting annual farm visits open to the public for education and demonstration.