Milk prices later rebounded. But in 2012, the cost to feed Rodgers’ cows soared, which he said made business tough once again.
“Fuel was outrageous, grain was outrageous,” he said. “I frankly had one month where the milk check didn’t cover the grain bill and the labor costs.”
The federal government is now accepting applications for a new dairy industry insurance program designed to limit farmers’ losses when feed prices rise. Vermont’s congressional delegation and state and federal officials made the announcement Thursday at the Fairmont Farms dairy farm in East Montpelier.
The Margin Protection Program passed as part of the reauthorization of the 2014 Farm Bill. The insurance program is designed to protect farmers from the volatile prices of corn, soybeans and alfalfa hay used to feed cows, and the price farmers received for their milk.
In 2009, milk prices dropped under $12 per hundred pounds, which is below the cost to produce milk for many farmers, state officials say. Now, there are about 880 dairy farms in Vermont, but the state is losing 25 to 40 farms each year, a state official said.
Vermont Agency of Agriculture Deputy Secretary Diane Bothfeld said milk prices are now well above $20 per hundredweight and feed prices are stable.
“That margin has been helpful, but things go up and down easily,” she said. “So there are no guarantees how long things will stay that way.”
The Margin Protection Program gives money to farmers when the margin between the price they pay for feed and the price they receive for milk shrinks to certain levels. Under the program, farmers select a margin they are comfortable with, and if it shrinks, insurance coverage kicks in.
Bob Paquin is the state executive director for the Farm Service Agency, which is managing the the insurance program. He said farmers should apply before the Nov. 28 deadline.
He said farmers will need to gather their three-year milk production history to calculate premiums. He said farmers should do this now and later decide what coverage they want based on market forecasts for feed and milk.
An annual $100 administrative fee is required. From there, farmers decide each year how much coverage they want. Farmers must remain enrolled until 2018.
The Farm Service Agency has developed a web tool to estimate premiums based on coverage and milk production. One federal official estimated a 300-head dairy farm seeking the most comprehensive coverage available might pay up to a $50,000 annual premium.
The premium is calculated using the amount of coverage desired and the farm’s production. Farmers decide what margin they wish to maintain between $4 and $8, and can ask for coverage from 25 percent to 90 percent for milk produced under their selected margin.
Rodgers said under the new program, the relationship between expenses and income will finally be considered.
“There are times when we could make milk at $16 dollars [per hundredweight] and be very, very profitable. And there are times when we could make milk at $16 and lose our shirt,” he said.
The U.S. Department of Agriculture and the University of Vermont Extension program will host information sessions about the new program in October.
The meetings will begin at 10 a.m and will be held at the following locations:
• Oct. 13 at the St. Albans American Legion;
• Oct. 14 at the Middlebury American Legion,
• Oct. 15 at the Rutland Holiday Inn;
• Oct. 16 at the White River Junction Fairfield Inn;
• Oct. 17 at the Newport East Side Restaurant.
