Business & Economy

Glut of milk leads Vermont farms, co-ops to dump product

Gallons of milk at a grocery store. Creative Commons photo by via Flickr.
Gallons of milk at a grocery store. Creative Commons photo by via Flickr.
An oversupply of milk is bringing down prices in the Northeast and driving large dairy cooperatives to dump their product in manure pits, experts say.

Although low prices for milk products can be a short-term positive for consumers, the low prices are causing a hard time for farmers who otherwise enjoyed the benefits of record high milk prices for the past five years.

That’s according to Doug Dimento, a spokesperson for the Agri-Mark dairy cooperative based in Massachusetts. The cooperative includes milk-processing plants in Middlebury and St. Albans and has been forced to dump skim milk at its processing plant in Springfield, Massachusetts.

“There’s just too much milk around, more than the plants can handle,” Dimento said. “It’s not only a Northeast problem. If you look at the news clips, it’s happening around the country as well.”

Dimento said a hundred pounds of milk (hundredweight) sells for about $17.50 this summer, down from about $24 a hundredweight last year. But it usually costs farmers between $18.50 and $20 to produce a hundred pounds of milk, he said, so they are taking a loss when they sell their milk.

As a result, AgriMark is taking the cream off the top of milk to make butter, then dumping skim milk into manure pits on their property or at large farms, Dimento said. Rain washes the milk away, leaving little change to the manure pit, he said.

“Farming isn’t the best,” said Paul Percy, a dairy farmer in Stowe. “The weather isn’t great. It’s been very hard to get our crops in. Corn isn’t doing too well, and the price of milk is on the low side.

“Last year was an excellent year, one of the better years,” Percy said. “Right now, the butter market is real good. The value of butter is pretty high. So that’s what’s good.”

The U.S. Department of Agriculture measures dairy output by classes, product and grades; and in units that include pounds, hundred-pound measures, called hundredweights, and gallons. Data shows that fluid skim milk prices have plummeted, powdered skim milk prices have dropped and butter is doing better than milk.

Powdered skim milk went for 94 cents per gallon in April, according to the USDA, down from $1.71 in July 2014. Class I butterfat sold for $1.88 per pound in April, down from $2.47 in July 2014. Class I skim milk and regular milk are down 48 cents per gallon and 65 cents per gallon, respectively, over the same period.

“Farmers around the country are facing big drops in prices, so they’re compensating by trying to produce as much milk as possible to pay their bills,” Dimento said. “[Cooperatives] are dumping milk because there’s too much milk around and none of the milk processors can handle all of the milk that we produce.”

Dairy Farmers of America is another cooperative with members in the Northeast, including Vermont. Clark Hinsdale, a Charlotte farmer who also president of the Vermont Farm Bureau, is a member of the DFA who says the co-op should start paying farmers not to produce so much milk.

“I haven’t talked to folks during this dumping cycle, so I don’t know if they’ve changed their mind,” Hinsdale said. “We’ll all be glad to be paid some fraction of the cost of milk to not produce what we would otherwise produce.”

Dairy farmers also carry a type of crop insurance regulated through the USDA that would pay farmers when milk prices go too low. Prices aren’t low enough for the basic insurance through the federal government to kick in, according to Hinsdale.

Paul Doton, a farmer in Barnard and a board member of Agri-Mark, says the problem is exacerbated because the milk market has changed and consumer demand is lower.

“People are just not drinking as much milk as they were in the past. They’re switching to other things,” Doton said. “But the bottom line is this class I market is not taking as much milk as it was before.

“Dairy farmers have a way to keep producing milk to keep cash flow, and if the milk price is low, they produce milk to make more money,” he said. “It’s disheartening to have to go through all the labor and effort to have to produce milk and then to have to dump it.”

Doton said the market might improve slightly in September, when students return to school, because schools must offer servings of milk with school lunches.

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  • fred moss

    Eliminate all the subsidies that are handed out and all government involvement with “price control” and the market will dictate the price.

  • William Hays

    Solution: more Federal subsidies and regulations. Wot say, Bernie?

  • James Maroney

    The farm crisis has its roots in the Industrial Revolution, in the opening of the Erie Canal, in Free Market Capitalism, in the federal water reclamation projects of the 1920s, in federal agricultural policies initiated in the 1930s, in the adoption of “advanced” technologies and in state land use policies. In a word, all these developments have contributed to the malaise affecting Vermont’s agricultural economy. To address these symptoms, the state has for two generations allocated roughly $60/80M/year to “save our farms” and “protect the lake,” chiefly by relieving farmers of property and sales taxes. Lower costs undoubtedly eased the pain but Vermont farmers cannot survive without an economic purpose, i.e., they cannot survive without making a profit.

    Vermont’s dairy farmers did not devise the policies that brought them to the their present circumstances. Those who wished to survive learned long ago to convert taxpayer support to new capacity. They went to the bank to take on more debt, with which to consolidate their neighbors, with which to build larger barns, in which to house more cows and to acquire more land on which to grow more corn with petroleum-based fertilizers and herbicides.

    Rush Limbaugh likes to remind his audience that when the government subsidizes something, we get more of it, but in this case, what we got more of was not farms, which arguably we wanted, but milk, which we did not. In spite of all the happy talk emanating from VAAF&M boasting that Vermont agriculture leads the nation in Farm to School, Farm to Plate and Farmers Markets, Vermont consumers spend 95% of their grocery money for food imported from out of state. Vermont’s largest agricultural sector is conventional dairy, which produces barely 1% of the national supply. Our farms produce no measurable portion of in state demand for meat, fish, grain, fruit or vegetables. If, in fact, Vermont farmers were to all go suddenly out of business tomorrow, no one would notice. We do not, in other words, farm to grow our food; we farm to sustain the illusion that we do, or, to put it bluntly, for appearances only. This means that Vermont allocates $60/80M/year, and with the new “clean water law” another $7.5M/year, for over production, low farm prices, farm attrition and lake pollution.

    Vermont has adopted a policy to require that we get 90% of our energy from renewable sources by 2050, which is laudable. But conventional agriculture is the second largest source of global greenhouse gases, behind only electrical and heat generation and ahead of the entire transportation sector. Vermont’s energy policies turn a blind eye toward the profligacy of conventional dairy, planning instead to treat manure as a “renewable” feedstock for methane digesters. In other words, our new energy policy will ask the taxpayers to support the state’s largest contributor to water pollution in its push for sustainable energy. And since the most conspicuous results of Vermont’s agricultural policies are over production, low farm prices, farm attrition and lake pollution, it would appear to this writer that we are working at cross purposes.

    Let us suppose that the state has adopted a policy that it is henceforth impermissible for any person or any industry to pollute the lake. All persons and all industries must henceforth adjust their production models to conform to this policy. The state has submitted a plan to the EPA by which it proposes to meet its TMDL, or to “clean up the lake” but the plan imposes virtually no material constraints upon conventional dairy. This means that the state esteems conventional dairy and its attendant environmental and social consequences above the attainment of its federally mandated water quality standards. Call your representative or senator if you think this makes no sense.

  • Jamie Carter

    So if prices are plummeting why does a gallon of milk still cost twice what it did only a few short years ago? The price has gone down 25% and yet if I walk into Price Chopper I don’t see a 25% decrease since last year?

    Regardless, it’s clear we have too many farms, or cows…

  • Judith McLaughlin

    Excellent comment Mr. Maroney.

  • William Hays

    I would support subsidizing moo-cows as living art. Might help the farmers. They are great to look at and Vermont seems to have lots of money to throw at “artists”, no matter how inane their “work” is.

  • Jackie Folsom

    I find it disturbing when folks make comments which only discuss one side of an issue. If all the farms in Vermont went out of business, nobody would notice? How about Cabot, Ben and Jerry’s, Commonwealth, St. Alban’s, Franklin Foods, Swan Valley? Those companies rely on the quality milk produced by Vermont dairy farms – they provide jobs, pay taxes, buy electricity – and are a large part of the $3 MILLION of money that comes instate daily from the markets outside of Vermont. It is true only a small fraction of milk/products stays here; that’s because the markets are Boston, Washington DC and south along the coast as well as exports.
    As far as the TMDL goes, it would appear that the state deems the town populations more esteemed than the farmers, as towns are allowed the ability to dump raw sewage into the lake during a storm event. There is no big push to make the towns build better treatment plants or invest in infrastructure, despite the growing concern of more storms coming. And Vermont dairy farmers should be allowed to make a profit – they are Vermont businesses, after all!

    • Jackie,
      How do we create a system whereby dairy producers’ profits are not at the expense of those downstream? It does not appear that the current structure is working for the public nor the individual Vermont farmer.


  • Perhaps if the price of dairy actually reflected its true cost of production (water quality and ecological protections and fair labor practices such as those required in other industries), these market swings could be avoided and stabilized.

    Who benefits from the current wasteful (on many levels) system? Clearly not the farmer, the undocumented immigrant worker, nor those downstream of the industry. Cheap milk and exploited labor or dirty water? A false choice for too long.

    Time for labor, farm, and environmental advocates to band together to demand a change that prioritizes the public interest over corporate shareholders. Please contact me directly if you are interested in making that change happen.

    James Ehlers
    [email protected]

  • Nate Freeman

    Is dumping milk legal? Can you put anything into a manure pit and let the rain wash it away? Just askin’.

    “AgriMark is … dumping skim milk into manure pits on their property or at large farms, Dimento said. Rain washes the milk away, leaving little change to the manure pit, he said.”