Dairy Farmers, Industry Groups Meet in Albany

Dairy farmers and industry supporters met in Albany, N.Y. on Monday, August 13 to discuss the current milk price and pricing environment. Hosted by the Agri-mark milk co-operative and co-sponsored by CoBank and Farm Credit East, the day was spent looking at what could be done to improve conditions going forward.

A tweet by Anson Tebbetts, Vermont Secretary of Agriculture, Food, and Markets:

UNDERWAY. Dairy pricing meeting in Albany #NY. Laura Ginsberg from @VTAgencyofAg addressing forum about supply management programs. Details about meeting: https://t.co/JWW4fY6iaC pic.twitter.com/2rMB2Z9i9P

— Anson Tebbetts (@anson_ag) August 13, 2018

A historical timeline of previous attempts to better coordinate the supply of milk in the U.S was reviewed. Legal perspective of what other commodities do and what's acceptable with respect to public accountability was shared. Finally, presentations were made of a few proposals that have been put forth followed by a reaction from the audience and a panel of legal experts.

Bob Wellington, Sr. Vice President at Agrimark, ran the meeting, and encouraged attendees to review the proposals, submit comments, become familiar with them. Throughout the day he repeated,: "Our best chance for a positive solution is widespread involvement."

The proposals, along with a chance to comment on each have been posted on the following website:

Dairy Farm Income Enhancement Proposals

VT Secretary of Ag. Tebbetts Plans Conference Call for Dairy Farmers-TOMORROW

Secretary Tebbetts would like to provide an update to dairy farmers that may have migrant labor by conference call on:

Tuesday, February 14 from noon to 1 p.m.

 

 

Call in number:

877-273-4202

 

Conference room number – 8279200

 

Agenda for the call

 

1.       Work done so far

a.       Brainstorming at meeting Feb. 2.

b.      Governor’s cabinet on Civil Rights

c.       Law to be passed and impact to farm labor

2.       Ideas for emergency milking relief

a.       Assistance from inmates

   i.      Training

  ii.      Pay

 iii.      Length of time

b.      Longer term hiring of inmates upon release if trained etc.

c.       How to alert farmers that this exists without keeping a list

3.       Longer term action

a.       H2A application for 10 months of labor

b.      Emergency application

4.       Feedback from those on the call

 

Please share this message with other dairy farmers who you may know that fit this description.

Please help us get the word out widely. 

 

Farm to Plate Appendix B - Dairy

On 2/10/12 the Vermont Sustainable Jobs Fund published Appendix B of the Farm to Plate Strategic Plan: Revitalizing Vermont's Dairy Industry. Click here for the link and scroll down. (Click here for an earlier post about Farm to Plate.) The appendix does a nice job of pulling together in one place a lot of information about Vermont's dairy industry.

One of the interesting things about the appendix is how it incorporates quotes from the 1976 report of the Governor's Commission on Food. So much of it still applies! Some of the issues affecting Vermont's dairy industry today go back even further, as evidenced by the booklet "This Milk Problem" published by UVM Extension in 1937.

Appendix B makes the following comment about financing today's dairy industry: “sufficient financing [for large dairy farms] is not available from one source.” We would not agree, as we provide all of the financing needs for many of Vermont’s largest dairy farms. I did a quick count (might have missed a few) and came up with loan commitments in excess of $100 million to 20 large dairy farms. That's an average of $5 million per farm. A few of those farms are in neighboring counties in New Hampshire and New York, but most are in Vermont.

There is no farm that we are unable to finance simply because it is too large.

UPDATE 4/19/12: Appendix B has been updated to include a discussion of Yankee Farm Credit's role in financing the dairy industry in Vermont. We appreciate the willingness of the Vermont Sustainable Jobs Fund to consider our comments.

National Dairy Producers Organization

A new organization in the dairy industry is the National Dairy Producers Organization. Headquartered in Fresno, California, the NDPO was organized last September. The primary organizer is Tom Van Nortwick, editor of Agribusiness Dairyman magazine.

The NDPO seeks to represent dairy producers regardless of size or region. The mission of the NDPO is to influence dairy policy discussions—with the goal of improving profitability for producers. The organization has formed a board of directors, and is in the process of forming state delegations.

The board chair is Bill Rowell. Readers of this blog will recognize Mr. Rowell. Together with his brother Brian Rowell, Bill is involved in Green Mountain Dairy in Sheldon, VT, which was Vermont Farm of the Year in 2008. The Yankee board and staff toured Green Mountain Dairy last summer. Bill Rowell has been active in recent dairy policy discussions through Dairy Farmers Working Together.

Click here for more information (1 MB PDF file) about the National Dairy Producers Organization including a membership application.

News articles about the formation of the National Dairy Producers Organization:
The Evening Sun 10/11/10
The Country Today 11/10/10
Capital Press 11/19/10

UPDATE 1/04/11: Additional information about the National Dairy Producers Organization and more links can be found in the first comment.

UPDATE 1/13/11: The NDPO has approved a Contract with Producers which states its positions.

UPDATE 1/27/11: The NDPO will hold a conference call specifically for Vermont dairy producers on Thursday, Feb. 3 at 8:00 PM. The call in number is 424-203-8000, the participant code is 327974 #. For more information contact Bill Rowell.

UPDATE 1/27/11: The NDPO will hold its first annual meeting at the World Ag Expo in Tulare, California, on Feb. 8-10. All dairy producers are invited to attend. For more information contact Bill Rowell.

Progressive Dairyman Poll on Dairy Policy

Vermont's three Members of Congress have sponsored two bills on dairy policy (see Dairy Policy Bills). There are also other dairy policy proposals under active consideration. Some have been introduced as bills in Congress and some have not.

Progressive Dairyman magazine recently provided a roundup of the various proposals and conducted a poll. The following link is a good place to start, then follow the links from there for more detail:

PD POLL: Dairy Reform [Updated July 2]

The proposals included in the Progressive Dairyman poll were:

• Federal Milk Marketing Improvement Act of 2009 (S.1645) aka the Specter-Casey Bill
• Farmers Union proposal
• Holstein USA Plan (Dairy Price Stabilization Plan)
• NMPF Plan (Foundation for the Future)
• Dairy Growth Management Initiative
• Dairy Price Stabilization Act of 2010 (H.R.5288) aka the Costa Bill
• Ration-all
• Strategic Dairy Reserve

(Progressive Dairyman did not include the DPI Plan or S.3531.)

The "Holstein USA Plan" aka the Dairy Price Stabilization Plan is the plan favored by Dairy Farmers Working Together (see Growth Management Plan).

Progressive Dairyman has a concise side-by-side summary of three of the above plans (Specter-Casey, the Dairy Price Stabilization Plan and the NMPF Plan): Part 1 from the 7/21/10 issue and Part 2 from the 8/11/10 issue.

The results of the PD poll were: Specter-Casey 67%, NMPF 15%, Dairy Price Stabilization Plan 12%, all others 6%. However, the magazine editors felt that the results were skewed by a Pennsylvania consumer write-in campaign as they explain here.

This raises an interesting question. How should we decide dairy policy? Should we be influenced by a consumer write-in campaign? Or...Should we trust the experts?

Dairy Policy Bills

I mentioned last month that Rep. Peter Welch is a co-sponsor of a House bill on dairy policy and that Sen. Sanders was circulating a draft Senate bill. Sen. Sanders has since introduced his bill with Sen. Leahy as a co-sponsor.

The House bill is H.R.5288 and is titled the "Dairy Price Stabilization Program Act of 2010." Info on Thomas and GovTrack. (Thomas is the official web site, but GovTrack is easier to use. It should be the same information, as GovTrack gets its information from Thomas.)

The Senate bill is S.3531 and is titled the "Dairy Market Stabilization Act of 2010." Info on Thomas and GovTrack.

Senators Sanders and Leahy will hold a press conference about S.3531 at the Lucky J. Holsteins Farm in South Burlington (John, Joyce and Todd Belter) at 10 AM on Monday, July 12.

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.

Dairy Price Index (DPI) Methodology

One of our members brought to my attention this article in the May 2010 issue of American Dairymen magazine:

Dairy Price Index (DPI) Methodology for Pricing Wholesale Milk

Click here for the "editor's note" about this milk pricing proposal.

What do you think? Is this proposal a good idea? Would it work? If this interests you, please share your thoughts in the comments.

Keep Local Farms Update

The following update on the Keep Local Farms initiative was received today from Diane Bothfeld, Deputy Secretary of the Vermont Agency of Agriculture, Food and Markets:

Hello All,

Hope winter is treating you well. This update is for the Keep Local Farms Program.

The program has been up and running since September 12 and is really starting to take off. Two colleges are on board – UVM began Nov 16 and Harvard began Oct 19 – where $0.10/single serve milk purchased goes to the Keep Local Farms fund that will be distributed to dairy farmers.

The website is up and running at KeepLocalFarms.org and we are seeing increased traffic. The site is educational and the pages getting the most hits are Farmer Profiles and Day on the Farm!! Also contributions have come through the website. If you are a dairy farmer and want to have your profile listed – please contact me.

On January 14, 2010 the Keep Local Farms program launched with Hannaford’s Supermarkets. In January, Hannaford supported an information phase – directing shoppers that purchasing local milk helps local farms and that consumers should go to the KeepLocalFarms.org web site to learn more about local farms and how they could take part in the Keep Local Farms program.

In February, Hannaford’s is supporting the Keep Local Farms program through a contribution phase at the register – shoppers can contribute $2 or $5 toward the Keep Local Farms program to build a fund to make a meaningful payment to dairy farmers.

The partners working on the Keep Local Farms program – New England Family Dairy Farms Cooperative, New England Dairy Promotion and the Vermont Dairy Promotion Council – are working on adding more colleges to the program, increasing membership in the Cooperative and working with consumers to raise awareness about the Keep Local Farms program throughout New England. Each of these partners is governed by dairy farmers from the New England States.

I encourage you all to take a look at the website, view the promotional materials if visiting one of the participating colleges, and visit your local Hannaford store to view the materials promoting the Keep Local Farms program. Hannaford has stores in Maine, New Hampshire, Vermont, Massachusetts and New York.

If you have questions about this program, feel free to contact me!

Diane Bothfeld
Deputy Secretary

Thanks for the update, Diane!

Keep Local Farms

The Keep Local Farms program announced an arrangement with Hannaford Supermarkets yesterday to support northeast dairy farmers. Beginning February 1st Hannaford customers can make a voluntary contribution at the checkout register which will be pooled and paid to dairy farmers. More info:

Hannaford Supermarket pledges to help local farmers - WCAX article 1/12/10
Hannaford to help New England farmers - Burlington Free Press article 1/13/10

This marks a major new direction for Keep Local Farms. The program kicked off last September with initial support from UVM and Harvard. Interested persons can also support the program online.

Keep Local Farms is a joint initiative of the New England Family Dairy Farm Cooperative, the Cooperative Development Institute, the Vermont Dairy Promotion Council and the New England Dairy Promotion Board. Yankee director Walt Gladstone is president of the New England Family Dairy Farm Cooperative, and was present at yesterday's media event in South Burlington. The print edition of today's Burlington Free Press has a photo with Walt and others, but the photo is not online.

Senate Judiciary Committee Hearing

Senator Patrick Leahy held a hearing of the Senate Judiciary Committee in St. Albans today: “Crisis on the Farm: The State of Competition and Prospects for Sustainability in the Northeast Dairy Industry.” Senator Bernie Sanders also participated:

Senator Leahy dedicated the hearing to Harold Howrigan.

Much of the testimony concerned Dean Foods. Senator Sanders stated that Dean Foods held 70% of the fluid milk market in New England, and 80% or more in many other states.

The first panel of witnesses included Christine Varney, Assistant Attorney General for Antitrust, and Dr. Joseph Glauber, the Chief Economist for USDA. Ms. Varney said that the Dept. of Justice and the Dept. of Agriculture will be holding a series of joint workshops in 2010 to explore issues relating to competition in agriculture, including the dairy industry. (DOJ news release)

The second panel of witnesses included three Vermont dairy farmers (Bill Rowell, Paul Doton and Travis Forgues) and Bob Wellington, economist for Agri-Mark:

The following graph of dairy farm income and expense was on display at the hearing:

One of the policy issues discussed was the Dairy Price Stabilization Program (aka Growth Management Plan) proposed by Dairy Farmers Working Together, the Milk Producers Council of California and the Holstein Association USA.

The hearing was well attended, with many farmers, politicians and media present. Click here for links to all of the statements and testimony.

UPDATE 9/20/09: Burlington Free Press coverage of the hearing:
Milk processors under fire
Dairy industry antitrust issues not new
photo gallery
Roger Allbee's letter to the editor about the hearing

Anne Galloway's coverage of the hearing on vtdigger.org:
Antitrust division to probe complaints about Dean Foods’ alleged monopolistic practices
(includes YouTube video of some of the testimony)

UPDATE 9/21/09: Wall Street Journal coverage of the hearing (subscription may be required to read):
Top Antitrust Enforcer Supports More Scrutiny of Dairy Industry
Kylie Quesnel is quoted.

Musings about "This Milk Problem"

Federal milk marketing orders exist under the authority of the Agricultural Marketing Agreement Act of 1937. The current northeast order came into effect in the late 1930s after farmers voted for it in a referendum. In 1937 UVM Extension published a booklet titled "This Milk Problem" by Harry R. Varney to educate farmers so that they could make an informed vote. (Click on the photo to see a larger view.)

The booklet gives a good overview and history of the dairy industry in Vermont as of 1937. Times on the farm were difficult in the 1930s, as they are now. It is interesting to compare and contrast the situation in the 1930s with today. If any reader of this blog would like a copy of this booklet please contact Ruchel St. Hilaire for a paper copy.

The best minds in the northeast have been thinking about "this milk problem" for over 70 years. (Click here for a recent example.) It's still a problem, perhaps now more so than at any time since the 1930s. I certainly do not have the answer to the problem. But that doesn't mean I don't think about it. I have spent most of my life around dairy farmers, and yet there are many things about the marketing of milk that I don't understand. While I don't have answers, I certainly have questions. Please note that the questions below are only "George" questions. They are not "Yankee Farm Credit" questions.

I often hear it said that "the system is broken." I wonder if this is true. It seems to me that the system of federal milk marketing orders was designed to make sure that all farmers receive "equal" prices, adjusted for such things as milk composition and distance to market. No matter how good a job a farmer or his/her cooperative does in marketing milk, all farmers receive the "blend" price. The system was designed to make sure that all farmers benefit when market prices are high. And of course all farmers suffer when market prices are low. Isn't the system working exactly as designed? Maybe we should ask the question: Is it still the right system? Does the current system itself inhibit innovative thinking about marketing?

I also often hear it said that proximity to the Boston and New York fluid markets is a strength of the northeast dairy industry. The booklet "This Milk Problem" discusses the importance of the Boston fluid market in some detail. This was certainly a strength at one time. I wonder if it is still a strength or if it has become a weakness. Perhaps a mortal weakness. Does the northeast dairy industry's strong attachment to fluid markets inhibit innovative thinking when it comes to marketing?

A few observations lead me to wonder about this. First, it was not always this way. Before 1900 fluid milk shipments to Boston were not significant because there was no easy way to transport milk. Butter and cheese production were more important. In the 1890s the largest butter factory in the world was in St. Albans, Vt. ("This Milk Problem" p. 8) If fluid markets were not always king in the past, will they necessarily always be king in the future? Second, New Zealand did not become a world power in the dairy industry by selling fluid milk. They found a way to be profitable with other dairy products. Third, the parts of the northeast dairy industry that have become famous and (often) successful in recent years are not selling fluid milk. Examples: Ben & Jerry's, Stonyfield, Cabot, Jasper Hill and the many onfarm cheesemakers. Whether through old technology (cheesemaking) or new technology (ultrafiltration) maybe the value in milk is in the components. Does the current marketing system allow this value to be fully realized?

One last set of questions. I often hear it said that one goal of food marketing policy is to provide cheap food for consumers. I ask—why? The goal of a marketing policy should be to create and capture value. The organic sector has figured that out, and kudos to them for doing so. Perhaps the conventional sector could learn something about marketing from the organic sector. A question I would ask when formulating a marketing policy is: How does a policy of cheap food help farmers create and capture value?

Well, I'd better stop asking questions, and get back to my day job. I am only a banker. I leave the job of finding markets for the products that farmers wish to produce where it belongs: with the farmers themselves and their processing/marketing co-ops.

Growth Management Plan

A "Growth Management Plan" for the dairy industry has been proposed by the Milk Producers Council of California. Here's a brief overview of the plan.

All dairy farms already track their milk production. Each quarter, production would be compared to the same quarter the previous year. If production increased by more than the "Allowable Growth," the farmer would pay a "Market Access Fee" on the farm's entire production that quarter. The total sum of money collected from the Market Access Fees would be distributed to those farms whose production did not exceed the Allowable Growth.

The Allowable Growth and the Market Access Fee would be determined from time to time by the U.S. Secretary of Agriculture in consultation with an advisory board. The Milk Producers Council estimates that Allowable Growth would be 1.5-3% and that the Market Access Fee would be $0.50-0.75/cwt.

The GMP is not intended to increase average milk prices over the industry cycle. It is intended to make the cycle less volatile.

This plan, or a close variation of it, is supported by Dairy Farmers Working Together and the Holstein Association USA (they both call it the Dairy Price Stabilization Plan). The plan calls for compulsory participation by all dairy farmers in the U.S., and therefore would require Congressional action to implement.

Rob Vandenheuvel, General Manager of the Milk Producers Council, explained the GMP at the NEDLT meeting earlier this month. Click here for his presentation. I found interesting Rob's comments on slide 13 ("this is not a supply management program") and slide 18 ("the GMP would actually get us CLOSER to real market signals").

The GMP was also discussed at the Northeast Dairy Summit in March. The plan has been analyzed by Cornell University (click here).

NEDLT Meeting

The Northeast Dairy Leadership Team met in Binghamton, NY on June 2-3.

One of the presentations was by Dr. Scott Brown of the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. Dr. Brown presented an analysis of the effect of the CWT program. He estimated that, not counting the CWT herd retirement currently in process, CWT increased the price paid to dairy farmers by an average of approximately $0.66/cwt each year for the period 2004-2008, and he estimated the effect for 2009 to be $0.71/cwt. Some in the audience questioned CWT's continuing effectiveness because markets seem to have adjusted. In other words, the program seems to have a greater effect when it is a surprise. Are farmers stocking up on heifers because they now expect CWT? Click here for Dr. Brown's full presentation.

Another presentation was by Andrei Mikhalevsky of Fonterra, the New Zealand dairy cooperative. Fonterra does business in 140 countries, and so has a good view of world dairy markets. About a year ago, Fonterra launched globalDairyTrade, an Internet-based electronic trading system for commodity dairy products. Currently whole milk powder (WMP) is traded. The Latest Results page shows the results of the latest auction, as well as graphs of WMP prices for the past few years. The surge in world prices in 2007 into early 2008 is obvious. Mr. Mikhalevsky said that Fonterra does not expect world dairy prices to recover before next spring. He also noted that the U.S. and New Zealand would make good partners in the world dairy markets, because their flush seasons come at different times of the year (since one is in the Northern Hemisphere and one is in the Southern Hemisphere). Fonterra sells more than just commodity dairy products; one item that surprised some members of the audience was that Fonterra has developed premium markets in Asia for colostrum. Click here for Mr. Mikhalevsky's full presentation.

Rob Vandenheuvel, General Manager of the Milk Producers Council in Chino, California, spoke to the group about the Growth Management Plan. (Mr. Vandenheuvel was also a presenter at the Northeast Dairy Summit in March.) The GMP deserves a post of its own.

Click here for all of the presentations at the June NEDLT meeting.

Northeast Dairy Summit

The Northeast Dairy Summit was held on March 20th at the Sheraton Conference Center. It was sponsored by Dairy Farmers Working Together. About 300 people attended, including dairy leaders from California, Florida and Idaho, as well as many Vermont farmers. Gov. Douglas started the meeting with brief comments.

Panelists included:

Calvin (Cal) Covington, CEO of Southeast Milk, Inc. in Belleview, FL
John Meyer, CEO of Holstein Association USA in Brattleboro, VT
Jim Stewart, farmer and former President of the Idaho Dairymen's Association
Bob Naerebout, Executive Director of the Idaho Dairymen's Association
Sybrand Vander Dussen, farmer and President of the Milk Producers Council in Chino, CA
Roger Allbee, Secretary of the Vermont Agency of Agriculture, Food & Markets
Rob VandenHeuvel, General Manager of the Milk Producers Council in Chino, CA

Dr. Chuck Nicholson of the Cornell Program on Dairy Markets and Policy gave a presentation on a Growth Management Program (GMP).

Ray Souza, farmer and President of Western United Dairymen in Modesto, CA, spoke to the audience by phone.

There was a wide range of opinions expressed at the meeting. At one of the spectrum, Mr. Stewart advocated strong free market policies. At the other end of the sprectrum, Mr. Meyer advocated a strong supply management program that would require farmers to "sacrifice individual entrepreneurial freedom."

Dairy Farmers Working Together hopes that forums like this will help farmers reach common ground, but for me one takeaway from the meeting was that the dairy industry is more divided than I had previously thought. Click here for the DFWT page about the Summit. This page has links to some of the presentations and also links to news articles about the event. Yankee Vice Chairperson Paul Gingue is quoted in the Burlington Free Press article: "Farmers brainstorm policy fixes." Another good article about the Summit is in the St. Albans Messenger: "Regional dairy interests struggle to find solutions."

NEDLT Meeting

The Northeast Dairy Leadership Team met in Binghamton, NY on February 2-3.

Most of the discussion centered on balancing issues. The northeast U.S. has a higher Class I utilization than other parts of the country, which is usually viewed as a strength for the region's farmers. The Federal Milk Marketing Order System ensures that Class I (i.e., fluid) buyers of milk get what they want when they want it. This leaves buyers of the other classes of milk (i.e., for manufacturing) subject to significant swings in the volume of milk available to them. Click here for links to the presentations. For a summary of the balancing issues from the perspective of a buyer of non-Class I milk, see slide 21 in the presentation by Joe Simmons of Kraft Foods.

Also presenting at the meeting was Gary Snider, a farm business consultant for Farm Credit of Western New York. Gary talked about how farmers can survive increasingly volatile markets, drawing on his experience working with about 30 large dairy farms in western New York.

Grafton Conference

Last week I attended a second meeting of the 33rd Grafton Conference, on the Vermont dairy industry. The first meeting was in March (see this post). The Windham Foundation will now publish a report from the conference. I will post a link here when it is available.

Much has happened since the March meeting. The Vermont Milk Commission has been active (more info here). Commodity prices peaked at the end of June and have since fallen dramatically. Milk prices are much lower than was expected last spring. The Chinese milk scandal (milk tainted with melamine) broke in July, significantly reducing demand for milk products in China. The Saputo cheese plant in Hinesburg was damaged by fire in September, and the company announced in October that it was closing the plant.

Outside of agriculture, the subprime financial crisis worsened significantly in September, prompting major government interventions in the financial markets. Earlier this month it was announced that we have been in a recession for a year. And the Obama administration and a new Congress take office next month, which will affect public policy of all kinds.

All of these topics were discussed. I was asked to speak on two topics:

The financial stress we are seeing on farms: We are hearing from farmers that there is considerable stress. It has not yet shown up in our statistics, but they always lag stress on the farm.

The effects of the financial crisis on the availability of credit for agriculture: As discussed in other posts on this blog, the Farm Credit System is still able to obtain funds, but at increased cost. Yankee's variable interest rates to members are presently 0.75% higher relative to prime than last summer.

UPDATE 1/23/09: The financial stress on farms has increased in the weeks since the Grafton Conference, as milk prices continue to decline and the general economy contracts. And while Yankee's variable interest rates to members are still 0.75% higher relative to prime than last summer, they are now the lowest in Yankee's history. Both topics are discussed in this post.

UPDATE 7/20/09: Click here for the conference report (1 MB PDF file).

This Milk Problem

The issues discussed at the Grafton Dairy Conference are not new. All of the issues mentioned in the preceding post were discussed in detail in a booklet titled "This Milk Problem," published by UVM Extension in 1937. (Click on picture to enlarge.) Some of the best minds in Vermont have worked on "this milk problem" for over 70 years.

The first sentence in this booklet is interesting: "Vermont is the only state in the United States in which the number of cattle exceeds the number of people." There were then 405,000 cattle (dairy plus beef) vs. 360,000 people. Today we have 140,000 dairy cattle as compared to 610,000 people. And Vermont dairy farmers are making twice as much milk.

Vermont has a long and rich agricultural history (5 MB PDF file), symbolized by the statue of Ceres, the Roman goddess of agriculture, on top of the Capitol dome in Montpelier. I do not know the future of agriculture in Vermont, no one does. The most significant lesson we can learn from the past is that the future is likely to be different from today. Whatever the future brings for Vermont agriculture, the Farm Credit System will be part of it. It is the mission assigned to us by Congress.

Grafton Dairy Conference

The Vermont Agency of Agriculture and the Windham Foundation jointly sponsored the Grafton Dairy Conference on March 6-7. This was the 33rd Grafton Conference.

Over 30 people participated, representing all aspects of the Vermont dairy industry: farmers, co-ops, processors, buyers, government, education, finance and nonprofits. There was respectful, honest and vigorous discussion in groups both large and small, in organized meetings and otherwise, during nearly all waking hours. Everyone who was present deeply cares about the Vermont dairy industry.

Participants discussed the vital importance of the dairy industry to Vermont, the vital importance of the Boston market to the Vermont dairy industry, milk prices that on average are insufficient to cover costs and provide a "fair" return on farmers' capital and labor, and highly volatile milk prices.

Additional posts about the Grafton Dairy Conference: This Milk Problem, Apple Pie for Breakfast.

UPDATE: There was a follow-up meeting of the Grafton Dairy Conference on December 15-16, 2008. Click here for a report.