Maroney: Dairy Price Stabilization Act will drive Vermont’s small farms out

Editor’s note: This opinion is by James Maroney, a former Vermont dairy farmer.

An open letter to Congressman Peter Welch:

My difficulty with the Dairy Price Stabilization Act (as I perhaps imperfectly understand it) is that it takes its impetus to act from low milk prices, which dairy farmers have recently agreed are the result of oversupply.

But it does not distinguish between supply, which is fungible, and capacity, which is peculiar to each state, to each region and to each farm. Price is a function of supply, and supply is a function of capacity.

The median farm in Vermont has 120 cows, and there are about 700 farms in the state that size, with cost of production rates of probably $24 per hundred weight or about $10 per hundredweight above the current price.

The nation’s milk supply of 180 billion pounds that comes from 10 million cows, could as well come from 1,000 farms milking 10,000 cows each or from 50,000 farms milking 200 cows each. Because large farms make milk the most efficiently, the trend in the industry is away from the latter model, which characterize Vermont, and toward the former. Vermont has no 10,000 cow farms and because our geographical and social makeup would prohibit it, it is unlikely we will ever have them.

The business model for the large farm operation is predicated upon concentrating as many cows under one roof as access to land and capital will allow, feeding them high protein corn and bean supplements imported from Iowa, milking them three times a day around the clock in order to get as maximum production from each unit.

This would not, in and of itself, be such a bad idea if it were not for manure, an unavoidable by-product of milking cows. Manure is a valuable fertilizer if dispersed among 2,000 small- to medium-sized farms and spread on the same fields from which the cows feed came.

The problem with the large farm operation model is that it is virtually impossible to spread the manure from one barn housing 2,000 to 5,000 cows on the same fields from which their feed came. It would mean traveling more than 20 miles away to dispose of it.

That is why the large farm operation model is predicated upon purchasing urea made from petroleum and externalizing the cost of manure disposal (and weed control) into the lake. The big dairy model gives us the very conditions farmers are complaining about: over supply, low prices, farm attrition and lake pollution. In fact, the model cannot be affected without inviting these results.

Vermont has just 1,000 dairy farms left, of which roughly speaking 200 are organic, 600 are small (under 100 cows) 140 are medium-sized (fewer than 400) and 60 are large (400-2,500 cows).

I have heard it said many times that the cost of production on the average Vermont dairy farm is between $17 and $18 per hundredweight (about 12 pounds of milk, the measure used by the dairy industry) but this figure is wrong.

The Dairy Price Stabilization Act would put the price permanently below the median cost of production for 700, or 70 percent of Vermont’s conventional farms.

First, many farmers do not know what their cost of production is and many more would not admit to having costs above $20 per hundredweight as it would be tantamount to admitting that they are bad managers. All the average cost of production tells us is the total amount of milk divided by the total number of farms.

That would be interesting to a policy maker, who simply wants the greatest volume of lowest cost milk. But our mission here is not to produce milk: There is already too much of that.

Our mission is to preserve Vermont farms. So what we need to know is the median cost of production not the average. The median farm in Vermont has 120 cows, and there are about 700 farms in the state that size, with cost of production rates of probably $24 per hundred weight or about $10 per hundredweight above the current price.

Obviously, the price is below the median Vermont farmer’s cost of production: Why else are they going out of business?

Just as obviously, if the Dairy Price Stabilization Act fixes the price above where it is now, it will drive supply, and in order to shrink supply, it must therefore fix the stable price below where it is now.

That would put the price permanently below the median cost of production for 700, or 70 percent of Vermont’s conventional farms. As these farms go out, large farm operations would continue to expand, driving the price down, putting all the remaining Vermont farms, whose ability to expand is proscribed by geography and social regulations, out of business, too.

In other words, if prices are not high enough to sustain Vermont dairy farmers, the solution is not to stabilize the price to favor large farm operations, but to direct support to the kind of capacity Vermont has and wants.

I hope that you will rethink the Dairy Price Stabilization Act and write a bill that favors the return of our small- to medium-sized farms. These farmers cannot survive making conventional milk.

It is imperative that they be told that the government will not assure their survival and that the state of Vermont cannot assure it either.

They must be guided, with rather a strong hand, into producing food for local consumption, that provides them a living and Vermonters a clean environment.

Remember: There is no scenario anyone can articulate that makes conventional dairy farming profitable in Vermont that does not decimate 70 percent of our farms and that does not pollute the lake.

But it is not about milk, which no matter what you do is and will continue to be in excess supply. It is about constructing a sustainable economy for Vermont farmers, so they will take care of their land, produce our food but stop polluting our water.

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