Citing the Wall Street Reform Act, Sanders said it “required the Commodity Futures Trading Commission to impose strict limits on the amount of oil that Wall Street speculators could trade in the energy futures market by January 17 of this year.” Limits still have not been implemented.

His announcement came on the same day, he noted, as a Wall Street Journal article called “Big Banks Cash In on Commodities.” The story touches on the big first quarter numbers being reported across the commodities market by large banks, specifically J.P. Morgan. The company earned $750 million in commodities in the first quarter of 2011, a steep increase from the $514 million earned in all of 2010. As the article noted, these numbers are not confirmed by J.P. Morgan, who doesn’t make them publicly available, but were reported by a firm called Coalition, which “analyzes the performance of investment banks.”

The bill could be seen as an imposition on the free market, and Republicans may oppose the bill on those grounds, but Sanders said that the market isn’t free now, and that his bill would help.

“When you have more supply today, and less demand [and oil prices are higher], tell me how that’s free market,” Sanders said. “That is the very opposite of free market.”

“But don’t take my word for it,” Sanders continued. He pointed out the testimony of Exxon Mobil CEO Rex Tillerson, who testified before a Senate committee that excessive speculation is causing a 20 to 40 percent spike in oil prices. A 20 percent spike, Sanders said, “translates into about 70 cents a gallon at the pump.”

Exxon Mobil’s first quarter profits in 2011 were $10.65 billion, up $4.35 billion from last year.

When asked how his bill differs from the Wall Street Reform Act in terms of efficacy, Sanders said its language was much more targeted at speculation than the broader stroke of the Wall Street Reform Act. “It’s going to be very specific,” he said. “In other words, if this bill is passed, speculation will end, period.”

In addition to introducing the new legislation next week, Sanders has also written President Barack Obama about the issue. Sanders wrote, “It is now April 28, 2011, and the CFTC has still not imposed limits on oil trading in direct violation of both the letter and the spirit of the Wall Street reform law.”

Sanders calls on Obama to “ask for the immediate resignation of any CTFC commissioner who refuses to obey the law and nominate someone who will.”

Sen. Sanders also voiced his strong opposition to the Ryan Plan, a budget proposal by Rep. Paul Ryan, R-Wisc., which calls for tax cuts for wealthy Americans, funding cuts to many social programs including Medicare, Medicaid. Sanders said the budget, which would go into effect for fiscal year 2012, will not pass.

“The President would veto it tomorrow,” he said, “the democrats in the Senate will never accept it.”

Sanders, the only U.S. Senator registered as Independent, said he won’t accept it either.

“It is not just community services; it is not just education and Pell Grants; it is not just environmental protection; it is virtually every program that you can think of,” Sanders said of cuts made by Rep. Paul Ryan’s plan. Ryan’s plan also calls for tax cuts to people in the highest income bracket.

Sanders said this was unacceptable.

“You don’t destroy Medicare, make huge cuts in Medicaid and education, and then say to the richest people in this country, ‘Hey, we’re going to give you more tax breaks,’” he said.

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“President Obama’s proposal is a major step forward to limit the greed and reckless behavior of Wall Street that has caused so much damage to the economy.  We need to do everything we can to limit the size of too-big-to-fail financial institutions and end the gambling addiction on Wall Street.

“One of the reasons I am strongly opposed to the re-nomination of Ben Bernanke is that, in truth, he has had the power to do this from day one.  Our goal must be to create a new Wall Street that invests in the productive economy creating decent paying jobs for all Americans.”

Sanders is the author of legislation that would require the Treasury Department to break up too-big-to-fail financial institutions (S.2746, The Too Big to Fail, Too Big to Exist Act)

Contact: Michael Briggs or Will Wiquist (202) 224-5141

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The Vermont grant – one of 25 announced by the U.S. Department of Labor – was among the largest awarded under the $100 million Energy Training Partnership program. The awards ranged from $1.4 million to $5 million.

“One way to move our country toward energy independence, slow global warming and create good-paying jobs is to use energy in a smarter way,” said Sanders, the chairman of the Senate Green Jobs and New Economy Subcommittee. “As a nation we have to cut consumption by making our homes and businesses more energy efficient and move to renewable energies. Trouble is, today you would have a hard time finding workers qualified to do those jobs. This funding helps address the problem by training thousands of Vermonters for good-paying green jobs.”

Sen. Patrick Leahy (D-Vt.) said, “Vermont is right, and early, to make a strong and sustained commitment to cutting-edge green jobs. This project continues the training necessary to help families and businesses transform to a greener economy.”

“Vermont has long been a leader in embracing the economic opportunity inherent in combating climate change,” said Rep. Peter Welch, a member of the House Committee on Energy and Commerce. “This grant is a recognition not only of our state’s past successes but also of our enormous future potential to take the lead in creating green energy jobs. It will help homeowners and business owners save money on energy bills, reduce carbon emissions and create jobs Vermonters need.”

The Central Vermont Community Action Council will use the grant to help find good-paying green jobs for the unemployed, underemployed, veterans, women, the disabled, and high school dropouts. The council will partner with Vermont Technical College, the Vermont Office of Economic Opportunity, Vermont Works for Women, Vermont Coalition for Runaway and Homeless Youth Programs, organized labor and industry.

The project will provide intensive case management and training to 398 individuals, and ensure that nearly 2,000 others receive training. Participants will receive certificates – including the Homebuilders and Remodelers Association’s Certified Green Professional certificate – or apprenticeship and licensing credits recognized by the International Brotherhood of Electrical Workers.

“Our outstanding award recipients were selected because their proposed projects will connect workers to career pathways in green industries and occupations through diverse partnerships,” said Secretary of Labor Hilda L. Solis.

Sanders authored the Green Jobs Act with then-Sen. Hillary Rodham Clinton. Then-Rep. Solis was the lead House sponsor of the Green Jobs Act. Their legislation, which became law as part of the 2007 energy bill, was funded for the first time as part of last year’s $787 billion economic stimulus legislation.

Contacts:
Michael Briggs (Sanders): 202 224-5141
David Carle (Leahy): 202 224-3693
Paul Heintz (Welch): 202 226-8346

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The U.S. Department of Agriculture began processing payments under the Dairy Economic Loss Assistance Payment program just prior to Christmas. Farmers have already begun seeing deposits.

Sen. Patrick Leahy (D-Vt.), a senior member of the Senate appropriations committee, and Rep. Peter Welch (D-Vt.), cochairman of the Congressional Dairy Farmers Caucus, helped guide the measure through the congressional appropriations process.

This funding will result in a payment of about $8,000 to the typical Vermont farmer.   The Sanders dairy assistance measure provides $290 million for direct support to dairy farmers and another $60 million set aside nationwide to purchase cheese for food banks and nutrition programs.

The county-specific funding levels as calculated by the U.S. Department of Agriculture are $1,206,542 for Addison County; $89,328 for Bennington County; $378,141 for Caledonia Country; $241,599 for Chittenden County; $113,441 for Essex County; $1,505,072 for Franklin County; $114,982 for Grand Isle County; $161,587 for Lamoille County; $371,581 for Orange County; $730,752 for Orleans County; $273,943 for Rutland County; $143,378 for Washington County; $139,186 for Windham County; and $114,225 for Windsor County.  In total, Vermont farmers will receive $5,783,757 in emergency aid.

Sanders said; “At a time when family-based dairy farmers in Vermont and across the country have received the lowest milk prices in 40 years, these emergency payments will be a real help in keeping many Vermont farms viable and in business.  The truth is, however, that we need long-term solutions to the dairy crisis in order to create a situation where farmers receive fair and stable prices for their product.  My office is now working with dairy farmers and their organizations in Vermont and around the country to examine how we go forward – including the need for supply-management.”

Leahy said, “Slumping revenues have pushed dairy farmers to the brink, and these payments will help many to hang on.  Secretary Vilsack pledged to promptly get these funds into farmers’ hands, and we appreciate his efforts.  We also commend the Farm Service Agency county staff for working so hard to get these payments out to farmers so quickly during the holidays.”

Welch said, “2009 has been a tremendously difficult year for Vermont’s hardworking dairy farmers. While this emergency assistance will be helpful to many farmers struggling to hold on until prices rebound, it is clearly just a drop in the barrel. I am hopeful that, working with Vermont farmers and the Congressional Dairy Farmers Caucus, we will make great strides in 2010 toward building a dairy industry that is sustainable in the long term.”

The average price farmers received for their milk fell this year to as low as $11.30 per hundredweight, down from $19.30 in July 2008.  Prices have recently rebounded to $15 per hundredweight. It costs farmers at least $18 per hundredweight to produce milk. As prices plunged, family dairy farms in Vermont and around the country went out of business.

For farmers who may not have participated in the Milk Income Loss Contract or MILC program, sign-up for this aid remains open until January 19, 2010.  They should go to their local FSA County Office and submit their production numbers for February through July 2009.

Contacts:

Will Wiquist (Sanders): 202 224-5141

David Carle (Leahy): 202 224-3693

Paul Heintz (Welch): 202 577-7970

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Vermont coops weigh programs to rein in milk supply

Marie Audet, right, talks with her husband Eugene and Margaret Laggis at a hearing in St. Albans recently. Audet is one of the founders of Dairy Farmers Working Together, a grassroots group that is pushing a growth management program for the dairy industry. Photo by Terry J. Allen.

Raw milk is a highly perishable product. Once it leaves the cow’s udder, it has to be processed into bottled milk, cheese, butter or yogurt within a few days.

That fact makes dairy farmers more vulnerable to the vagaries of the market than other food producers. Dairymen (and women) can’t wait for a better price. Unlike the farmer who raises soybeans or carrots, a dairy producer’s raw milk has to be processed almost as soon as it’s been vacuum pumped from the Holstein and piped into the steel bulk tank.

On the farm, cows have to be milked no matter what, and day to day that imperative trumps everything else – even the glut of dairy products on the global market.
And when the milk supply outstrips demand, as it does in predictable, 36 month cycles, according to a Cornell University study, milk prices plummet as they did in 2006 and at the beginning of this year.

The current downturn is the worst in living memory. Milk checks are half what they were in 2008 and, in effect, because of the high cost of production, farmers are paying dairy processors to take their milk. (The cost of production is $16-$18 per hundredweight, or 11.6 gallons of milk; farmers receive about $11 per hundredweight.)

Farmers won’t see break-even prices for raw milk until July 2010, according to USDA projections, and economists are already predicting the next downturn — in 2012.

It’s counterintuitive, but some farmers are already bulking up on heifers (teenage cows) in order to profit from a potential price uptick next year, and it’s that surplus of heifers that will likely set off the next dairy market crash, according to Dr. Mark Stephenson, an extension economist with Cornell University.

Currently, there are two short-term fixes for the oversupply problem: killing thousands of cows and/or letting hundreds of farm businesses fail nationwide.

Since last winter, the dairy industry group Cooperatives Working Together has taken more than 225,000 cows out of production in the United States to counter a 2.6 percent, or 5 billion pound annual milk surplus, according Jim Tillison, chief operating officer for CWT.

In Vermont, 26 farms have taken the herd buyout since December of last year, and the process of natural selection has begun. In all 32 have gone under, and UVM Extension agricultural economist Bob Parsons predicts 150 Vermont dairy farms will sell out by next summer. There are 1,046 farms left in the state currently.

Beyond survival of the fittest?

Several dairy groups have proposed a less painful, more long-term solution to the problem: growth management. Proponents believe that if farmers limit the amount of milk they produce, they can control the supply, lessen the volatility of the milk market and ultimately get a better price for their product.

“The quickest way ever for us to make more money, to bring in more revenue is to increase production, whether prices are high or low,” says Marie Audet, a Bridport farmer and member of Dairy Farmers Working Together, the grassroots group that began looking at growth management options in 2006. “So we’re creating our own surpluses. Basically, the only tool we have is what we sell. We’re trying to fix that.”

A coalition of three organizations — DFWT, Holstein Association USA and the California Milk Producers Council – is proposing that Congress adopt a new, “budget-neutral” program that would incentivize farmers to limit increases to their milk supply.

Under the plan, production levels for each farm would be averaged over a three-year period. These averages would be used to calculate a base annual production level for each farm that includes a small percentage increase. Farmers who go beyond the preset level in a given year would be required to pay a market access fee. Everyone else would receive a share of the pooled fees.

Unlike CWT’s herd buyout program, participation would be mandatory. An advisory board and the USDA would administer the program, according to the Holstein Association.

“Supply management is kind of going to cut out some of the opportunity for speculation in the middle,” says Lucas Sjostrom, of the Holstein Association. “Right now we have swings between $10 hundredweight and $20 hundredweight which really equates up a $1.50 swing in the grocery store, however even though our prices have dropped, the prices in the store have not. So if we could manage supply with the perishable product, which in 7 days needs to be either turning into cheese or be in fluid milk in the store, we can give farmers an opportunity to make a profit instead of getting rid of one-third of the dairy farmers every three years.”

Dr. Mark Stephenson, an economist with Cornell University’s extension service, says the 36-month milk cow breeding cycle has the biggest impact on market volatility. Stephenson’s research shows that a growth management program that limited the number of cows in production would stabilize the milk supply — and prices.

Implementing such a program, however, would require an act of Congress. Sen. Bernie Sanders, D-Vt., and Rep. Peter Welch, D-Vt., have voiced support for a growth management plan. Proponents say a draft bill is under congressional review.

Last week Sen. Patrick Leahy, D-Vt., provided a meeting room for a Senate and House staff briefing on the coalition proposal. More than 30 staffers attended. A similar briefing will be scheduled in the House in the next few weeks, according to Amanda St. Pierre, of DFWT.

Sen. Patrick Leahy, D-Vt., at the Senate Judiciary Committee hearing in St. Albans. Photo by Terry J. Allen.

At the recent Senate Judiciary Committee Hearing in St. Albans, where Leahy recorded testimony about the dairy crisis, Sanders took a straw poll of support for a supply management system. Twenty or so farmers in the audience raised their hands.

The dairy cooperatives that handle raw milk in Vermont have been less enthusiastic. But all three are considering some kind of growth management option, and the issue is starting to gain traction.

Coops weigh in

The biggest news? Dairy Farmers of America, a national cooperative with 18,000 member farmers in 48 states, including Vermont, adopted its own growth management initiative last week.

DFA, which markets 35 percent of U.S. milk, is proposing that this initiative replace the national herd buyout program, according to Ralph McNall, chairman of St. Albans Cooperative Creamery, which works in tandem with DFA. Farmers would pay 25 cents per hundredweight under the proposed growth management initiative, and participation would be mandatory, he says.

The DFA initiative includes elements of the Dairy Farmers Working Together, Holstein and Milk Producers Council proposals, though there would be no market access fee, McNall says.

On a scale of 1 to 10, the decision by DFA to support growth management is a 10 for McNall. “It’s a big, big deal,” he says. “It’s the biggest deal I’ve been involved with in terms of the dairy business.”

Amanda St. Pierre of Dairy Farmers Working Together says she’s hoping DFA will be willing to talk with the coalition soon. “We’re willing to work through whatever issues need to be worked out for the good of the dairy farmers,” she says.

The directors of St. Albans also recently passed a resolution that “supports the concept of a CWT or growth management program.”

Massachusetts-based Agri-Mark, Inc., which serves 1,300 members in New York and New England, including 400 from Vermont, will consider growth management proposals among other options at its next meeting in mid-October.

Neal Rea, the chairman of Agri-Mark’s board of directors, says the cooperative is “in favor of looking at options and ideas to reduce national milk supply.” Rea says Agri-Mark was one of the first coops to support supply management in the United States through the CWT herd buyout program.

Though Agri-Mark has continued to support the Milk Income Loss Contract (a federal subsidy system) Rea says cooperative directors “have some concerns over programs that are run and controlled by the federal government.”

“If we had to make that (a DFA-style growth management initiative) a mandated program the government would probably have to be involved,” Rea says. “They’d collect the money and it would have to go through USDA and the concern is that USDA would probably have to run the program. They’d request dairy farmer input, but it very well could be a government run program determining how we spend our money.”

The National Milk Producers Federation, which represents coops and runs the CWT herd buyout program, came out with its own set of recommendations last week, none of which, with the exception of a requirement for full participation in CWT (currently 67 percent of farmers pay in 10 cents per hundredweight), appear to address the long-term effects of oversupply. An attempt to reach Jerry Kozac, CEO of National Milk, yesterday was unsuccessful.

A few weeks ago, Christopher Galen, spokesman for the trade group, said, “We at National Milk have not taken a position yet on the so-called price stabilization plan, which as you know is being promoted by the Holstein Association, by Dairy Farmers Working Together and there’s also a group in California called the Milk Producers Council and they’ve become the three musketeers, if you will, having formed a coalition to support in concept this growth management plan.”

St. Pierre says that if the industry doesn’t work with farmers to create a system that provides long-term stability consumers will suffer.

“Ultimately, who’s going to be hurt is the American consumer,” she says. “When we’re seeing consolidation of the farming industry we’re down to 55,000 dairy farmers. Couple more of these cycles and we’ll be down to 15,000 to 20,000 in the whole country.”

She is particularly disturbed by the pain her neighbors are enduring. “An eerie silence has fallen on the Vermont dairy industry,” St. Pierre says. “It’s almost grieving to be honest with you.”

McNall says if prices don’t go up soon and the long-term volatility problems aren’t resolved, the state could lose its dairy industry.

“We’re at a crossroads like I’ve never seen before,” McNall says. “It’s extremely serious. Here in the Northeast, Vermont especially, it’s on the verge of perhaps losing our dairy industry. And I’m not sure a lot of people understand that. It’s that serious. Our infrastructure is in trouble. It isn’t just us. Our bankers, our suppliers, they’re in trouble. And people can’t afford to exist like this. I don’t mean to sound that negative, but in reality dairying could change fast here in the state of Vermont. There’s no other state that depends so much on dairying as Vermont does. On a per capita basis, well, you and I have more at stake than anyone else in the country.”

Bob Wellington, an economist for Agri-Mark, Inc., the dairy processor that manufactures Cabot Cheese summed up the situation this way: “This is not a case of having no supply control. We have supply control right now and it’s harsh and it’s cruel and it’s low milk prices. We have to ask: Which system do you prefer?”

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Senators say dairy industry consolidation hurting farmers

Sen. Patrick Leahy and Sen. Bernie Sanders listen to testimony at the Senate Judiciary Committee hearing on antitrust issues in the dairy industry on Saturday in St. Albans. Photo by Terry J. Allen.

A lack of competition may allow dominant dairy processors to “exert power” and depress the price farmers receive for raw milk, according to Christine Varney, the assistant attorney general for the Antitrust Division of the U.S. Department of Justice, who spoke at a congressional hearing held in St. Albans on Saturday.

The largest dairy processor in the country, Dean Foods, buys 70 percent of the milk produced in the Northeast. Sen. Bernie Sanders, I-Vt., has asked the Department of Justice to investigate the Dallas-based corporation’s alleged anti-competitive market practices.

Sen. Patrick Leahy, D-Vt., who called the hearing as part of a congressional investigation into “anti-competitive” dairy industry practices, asked Varney if that level of industry buying power “bothers” her.

“Competition is not very well served when you have one player in the market who controls 70 percent of the market,” Varney said. “We look very carefully at the activity in a market when you have that kind of dominance.”


Varney explained to the audience of 100 people in the St. Albans City Hall that some dairy processors have become “vertically integrated.” These manufacturers not only process raw milk, but also may own parts of the supply chain “such as distribution of its products or supply of its inputs.”

“Vertical relationships in dairy markets would include, for example, a processor entering into exclusive agreements with a specific cooperative to buy raw milk,” Varney testified.

Varney said her division would pursue an investigation of anti-trust violations allegedly perpetrated by dairy processors and would examine complaints about a lack of transparency in the industry as a whole.

“Transparency is something we all need in order to understand how we can improve the production, the health and life of the dairy industry in the United States,” Varney said.
Leahy and Sanders reiterated that Dean Foods has reaped enormous profits this year at a time when dairy farmers are facing a rip tide of red ink and going deep into debt to stay afloat.

Milk prices, which have reached 30-year lows, hovering in the $11 per hundredweight range are not expected to reach $15 per hundredweight until next summer according to USDA economists.
Meanwhile the cost to produce raw milk in Vermont has remained high – at around $18 per hundredweight – partly because farmers must buy more grain here due to the state’s short growing season.

As a result of this whipsaw of low prices and high costs, agricultural economist Bob Parsons at UVM Extension has said Vermont could lose 150 farms in the coming year.

Willard Rowell, owner of Green Mountain Dairy in Highgate, testified on Saturday that his farm will likely lose $1.6 million this year. He and his family milk 900 cows. Last year their income was $2.5 million.

Paul Doton, who milks about 60 cows with his wife and son on their 200-acre farm in Barnard, says he is scraping by because he sells maple syrup, vegetables and does some custom mowing and snowplowing.

“Without this income, I would already be out of business,” Doton said. “Doton farm, much like many other Vermont farms, cannot hang on much longer. How long can we go on losing $4,500 per month? My answer is – not long at all.”

Dean Foods reported first quarter profits of $76.2 million this year, up 147 percent above its reported earnings in the same quarter in 2008, Sanders reported at the hearing.

Sanders said the corporation paid its CEO, Gregg Engles, $116.38 million over the last five years.

“What we are seeing in recent years is a growing concentration of ownership, specifically in dairy processing,” Sanders said. “According to the dairy industry press, one company, the largest milk producer in America, Dean Foods, controls approximately 90 percent of the milk market in Michigan, about 80 percent of the milk market in Massachusetts, 80 to 90 percent in Tennessee, over 80 percent in northern Alabama, over 70 percent in northern New Jersey and in New England about 70 percent.”

In 2001, Suiza Corp. bought Dean Foods, adopted the company’s name, and formed the largest dairy manufacturing corporation in the United States. The company sells milk and other dairy products under 50 “well-known local and regional brands and a wide array of private labels,” according to its web site.

Sanders asked Varney if she would pick up an investigation into the “far-ranging anti-competitive practices” of Dean Foods and Dairy Farmers of America. The 26-month probe, conducted by career investigators at the Department of Justice, was dropped in 2006.

“It is my understanding that in August of 2006 that team recommended action against some of the dairy industry’s biggest firms, including Dean Foods, Dairy Farmers of America and National Dairy Holdings,” Sanders said. “Unfortunately, under the Bush administration it was kicked over to the political people and they decided not to pursue that investigation or take any action. Can you give us assurance that you in fact will continue that investigation and if it leads you to the conclusion that action should be taken that in fact you’re prepared to take action?”

Varney replied, “I can give you every assurance that any investigation I undertake that leads us to believe there is evidence sufficient to prosecute will be prosecuted. There is no doubt that we will prosecute that kind of activity should we find it.”

The Senate Judiciary Committee will accept written testimony from dairy farmers through Sept. 30 at Dairy_Hearing@Judiciary-dem.senate.gov.

Bob Wellington testifies

VTDigger

You’ve read the headlines. The dairy industry is in crisis. Milk prices have fallen to 30-year lows. Worldwide demand for cheese and powdered milk has plummeted because of the global recession. Farmers are eating into their equity to survive.

But how bad is it, really?

If you didn’t know any better, you might assume the current downturn is like the others because every few years, the bust cycle recurs: Farmers hit the skids and politicians sound the “crisis” alarm.

Vermont, after all, has been losing dairy farms by the hundreds for decades. We had 11,206 farms in 1947; 4,153 in 1970; and today we’re down to 1,046.

This downturn, however, is different.

Vermont Agency of Agriculture officials, agricultural economists, farmers and suppliers – normally a stoic lot — are uncharacteristically throwing around words like “dire” and “scary.” Rep. Peter Welch told a House agriculture subcommittee that the dairy industry in Vermont is on the “brink of collapse.”
This time around, state officials and economists say even Vermont’s best farmers might not escape unscathed because of the length and severity of the downturn. They worry about the resilience of the industry as a whole.

With milk prices at 30-year lows, farmers are hemorrhaging money. Market predictions indicate they’ll continue to bleed cash until next summer. No one seems to know, at this point, when milk prices will  reach break even, cost of production levels.

“The market doesn’t give any indication of turning around quickly,” says Roger Allbee, secretary of the Agency of Agriculture, Food and Markets.

UVM Extension agricultural economist Bob Parsons says the way things are headed, 150 more farms could go under by next summer. The state has lost 32 farms since January.

In addition to the severe slump in market demand, farmers are spending more than ever to make milk, and to stay in business they’re accruing debt at an alarming rate. At the same time, their assets have dwindled as cow and equipment values have dropped, making it more difficult for them to borrow money.

Here are the factors driving farmers to the brink of insolvency:

• For every $3 gallon of milk, the farmer gets 90 cents. The kicker? That gallon costs the farmer $1.80 to produce. In addition to record low milk prices, Vermont farmers are facing higher-than-ever input costs for grain, fertilizer and supplies. Consequently, the gap between the cost of production and the milk price has grown to unprecedented levels, according to Kelly Loftus, communications director for the Agency of Agriculture.
• Farmers have been losing thousands of dollars each month since the crisis began. The cost estimate used by agency officials is $100 per cow per month. A 120-cow dairy on average is losing $12,000 a month; a 700-cow dairy, $70,000 a month. Total losses since February for farms of this size? $84,000 and $490,000, respectively. Add the basic cost of living for a family, $40,000, to that number and you get the whole picture: Without an outside income, those farms are likely to go $124,000-$530,000 in the hole this year.
• Farmers are eating up equity at an alarming rate. Hundreds of dairies are borrowing more money and restructuring their loans to pay for daily operating costs. Farm Service Agency loan volume is up 60 percent this year; Yankee Farm Credit has loaned 19 percent more this year than last.
• Farmers are juggling bills to stay afloat and that means they have thousands of dollars in unpaid bills. Dairy suppliers, particularly grain dealers, are in a bind. They are carrying, thousands and in some cases millions, of dollars in delinquent accounts receivable. Because most of this debt is unsecured, grain dealers are finding it difficult to borrow more money so that they can extend more credit to farmers.
• There is no end in sight. Prices for milk fell below production costs in December 2008 and plummeted in February to $11-$12 cwt, or hundredweight, the equivalent of 11.6 gallons. The average cost of production is $17-$18 cwt. According to USDA Economic Research Service, prices are not projected to reach break even levels until next summer. ERS predicts the average price next year will be $14.65-$15.65 cwt.

Even interventions from the government – low-interest loans and increased spending on federal commodities — won’t be enough to get farmers over the hump, economists and state officials say.

An amendment from Sen. Bernie Sanders, I-Vt., that passed the Senate, but has yet to be considered in the House, could raise the milk income loss contract, MILC, a subsidy for dairy farmers, by $1.25-$1.50 a hundredweight, but it has yet to pass. An increase would help farmers substantially, but the subsidy would not bring milk prices back up to cost of production levels of $17-$18 per cwt in the near future.

Sanders says he wants to get at the root problem, which in his view comes down to processors taking huge profits as they pay out a rock bottom price to farmers for raw milk. He has called for a Department of Justice investigation into allegations of price-fixing and anti-trust violations by Dean Foods, which controls 70 percent of Vermont’s milk. Sanders says helping farmers get a fair price for their product is the best long-term solution.

For the short term, however, the crisis has not yet been averted.

Last month Secretary Allbee asked a group of dairy processors to help to create an emergency fund for farmers. They expressed little interest. As a stopgap measure, the agency is launching a fundraising Web site

http://www.keeplocalfarms.org, through which officials hope to funnel donations from the public to farmers.

The Agency of Agriculture has also devoted the latest issue of its newsletter to the dairy crisis, and it reads like a survival guide. About half of Agriview is devoted to human services programs for food stamps, fuel assistance and subsidized health care. There is a list of mental health resources, a pitch for a nonprofit mediation service and a story about how to talk to kids about financial problems. Other articles offer how-tos on filing bankruptcy, auctioning cows and equipment and selling development rights. The agency is promoting these measures as a way to keep farms going under extreme circumstances.

“Farmers aren’t proud to be in the news because we need handouts, because we need more subsidies,” says Marie Audet of Blue Spruce Farm in Bridport. “We don’t like that and we don’t think it’s necessary because we grow an awesome product. We do it efficiently and in a sustainable way, and we shouldn’t be in the news because we need subsidies. There’s got to be another way.”

Audet hopes that the nonprofit group she helped to form, Dairy Farmers Working Together, can push legislation that would enable farmers nationwide to engage in a coordinated supply management system that would help to control the amount of milk available on the market. Audet says this is the only way dairy farmers are going to get a fair price for their product.

Ironically, at a time when more Vermonters are concerned about where their food comes from, local farmers that produce milk are under siege.

As Sanders puts it, “You will end up with a situation where consumers will be dependent on very large farms for their milk or perhaps increasingly dairy products coming from abroad. I think that is a very, very unfortunate scenario because in Vermont people are increasingly concerned about the quality of the food products that they’re eating. They don’t want food from farms in China where regulation is very, very weak for example.”

Copyright, Vtdigger.org

See “Dairy: The big picture”

See “Pillar of rural economy”

See “Losses driving farms into debt”

See “Dairy downturn whacks businesses”

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