Editor’s note: This commentary is by James H. Maroney Jr., of Leicester, who has a master’s degree in environmental law and policy from Vermont Law School and is a former farmer.
Dear Gov. Phil Scott,
[I] was pleased to hear you say in your budget address that you support funding for Lake Champlain cleanup, but I was most interested to hear you say that a shrinking population is the root of all our problems. To reverse this trend, you suggest that we need to think “outside the box,” to present bold ideas and toss out solutions that once seemed right but haven’t worked.
I do not need to tell you that Vermont has a long agricultural history or that since the late 19th century the principal product has been commodity milk. Vermonters overwhelmingly support farmers. But taxpayers have spent $80-100 million per year to clean up the lake and support the dairy industry for the past 40 years. In spite of this, the industry will lose another $100 million from operations this year on top of the $100 million it lost last year. I do not need to tell you, either, that the dairy industry is still the leading cause of pollution in Lake Champlain. In addressing this, the Legislature is asking for an additional $35 million per year to fund the half of Act 64 intended to address pollution attributable to agriculture, or $700 million over 20 years. The Legislature asks taxpayers to continue throwing good money after bad.
As you know, conventional Vermont dairy is under duress right now due to low milk prices caused by a combination of factors out of our control. But the most important of these are over supply and steadily falling consumer demand for commodity milk, which we can control. But to control supply and demand, Vermont dairy cannot continue doing business as usual. It must change both its methodology and its product. I propose that the state redirect that $700 million to pay its 525 small and medium conventional dairy farmers to convert to organic.
I do not for a moment underestimate the difficulty of such a change. But to rationalize conventional Vermont dairy means a buyer must be found willing to pay $30 per hundredweight for 2.6 billion pounds of Vermont milk when the same product is available elsewhere for $15 per hundredweight. It means accepting that Act 64 will actually clean up that portion of lake pollution attributable to agriculture when patently Act 64 imposes no material constraints upon the dairy industry’s methodology or its commodity product. What this means is that after 20 years and $700 million spent, conventional dairy’s contribution to lake pollution will remain the same, its product and revenue stream will remain the same, the number of active Vermont dairy farms will have shrunk to perhaps 25, all milking in excess of 5,000 cows, all importing increasing amounts of high-phosphorus feed supplements, all applying increasing amounts of NPK fertilizer to corn land along our rivers and streams and all planning to consolidate their neighbors and expand.
The Economics Of Conventional Dairy and of Conversion to Organic in Broad Outline</em.
Vermont presently has about 725 dairy farms, of which 32 are large (over 700 cows), 138 are classified as medium (200-699) and 560 are classified as small (fewer than 200 cows). About 200 of the farms in the small category, housing about 15,000 cows producing about 2 million hundredweight, are already certified organic. We look first at the economics of conventional farms and then add the organic farms back in at the end.
Vermont’s 525 conventional dairy farms house 120,000 cows producing 23 hundredweight, which results in a net loss to the industry year in and year out:
• Gross sales (23M hundredweights at $15/hundredweight): $345,000,000
• Cost of production (23M hundredweights at $21/hundredweight): -$483,000,000
• Net Profit (loss): ($138,000,000)
Vermont’s 32 large and 133 medium farms (165 total) house 60,000 – or roughly half the state’s – cows. But farms over 200 head cannot comply with the National Organic Program, so conversion of the state herd to organic would send 60,000 cows to slaughter out of the watershed, and with them the manure they produce and the grain imported and grown to feed them. Conversion to organic is, however, possible for the remaining 360 small conventional farms, which with 45,000 cows had been producing 19,000 pounds per cow or 8.6 million hundredweights with the following results:
• Gross sales (8.6M at $15 per hundredweight): $128,250,000
• Cost of Production (8.6M at $21 per hundredweight): -$178,500,000
• Net Profit (loss): ($50,250,000)
Conversion to organic for these 360 farms will entail a loss of production of 20 percent. These 360 farms would then produce not 19,000 pounds per cow, but 15,000 pounds or 6.7 million hundredweights. Conversion would also raise unit cost of production by 25 percent from $21 per hundredweight to $26.25 per hundredweight. But conversion to organic also raises gross sales from $15 per hundredweight to $35 per hundredweight. These same 360 farms, if converted to organic, would then have these numbers:
• Gross sales (6.7 million hundredweights times $35 per hunderedweight): $234,500,000
• Cost of Production (6.7 million times 26.25 per hunderedweight): -$175,875,000
• Net profit (loss): $58,625,000
Adding the 200 certified organic dairy farms with 15,000 cows to the 360 farms recently converted would create a Vermont dairy industry comprising 560 farms and 60,000 cows producing 9 million hundredweights with these numbers:
• Gross Sales (9 million at $35 per hundredweight): $315,000,000
• Cost of Production (at $26.25 per hunderedweight): -$236,250,000
• Net Profit (loss): $78,750,000
In sum, converting Vermont’s entire dairy industry to organic would, in the second year, reduce the industry’s contribution to lake pollution by 50 percent, reduce state support for the industry and convert an industry losing $138 million per year into an industry making taxable profits of $79 million per year earned from the in-state sale of raw milk to their own co-op.
Organic farming will be resisted by those farmers with deeply ingrained and understandable fears of backing off on higher herd averages, greater corn acreage and steady production gains – all goals they have fought so hard to achieve in order to remain competitive. Yet, these goals are the very reasons commodity milk has lost its value. Moreover, continuing to resist organic in the face of $34 per hundredweight is hard to rationalize. We could spend years contesting the large farm/small farm thing and do nothing about $15 per hundredweight milk payments for Vermont’s 360 small- to medium-sized conventional dairy farmers as they disappear one by one. This, however, is incontestable: if they will but transition to organic, Vermont dairy farmers could have what amounts to a monopoly on the state’s brand name. But they need state support.
We all know that the market for Maine lobsters is wider and richer out of state than in, just as in Florida the greater, richer market for oranges is realized by adding value and exporting. In Idaho, this is true for potatoes; in Maryland it is true for crabs; in Botswana it is diamonds and in Friedrichshafen, Germany it is Zeppelins. Conventional Vermont milk, by comparison, is almost entirely (95 percent) shipped, in raw form, out of state where others add value, brand it, and reap profits. At present, the words “organic milk” are linked to no particular region or state: the phrase is available. If Vermont wants to attract workers, to strengthen its brand name, boost its land values and its appeal to tourists, the state should assist our farmers to:
1. Convert to organic production
2. Organize under a Vermont Organic co-op that owns a brand
3. Raise capital
4. Build infrastructure and distribution
5. Offer affluent, East Coast consumers a line of dairy products that will forever link in their minds the word “Vermont” to the words “organic milk.”
If the farmers were to add to those words the phrase “Fair Trade” and “glass bottled,” the product would speak clearly and loudly to urban consumers — the most prosperous demographic in the world lives within a 300-500 mile radius of Vermont — all familiar with, and eager to buy, products thus described and thus supplied. And, because farmers in New York, New Hampshire, Pennsylvania, Maine, California, Texas, Florida or Wisconsin cannot make Vermont Certified Organic Fair Trade Milk, the product can come from nowhere else. If 560 of Vermont’s dairy farmers will but take it — and if our chronically ossified Agency of Agriculture would reorganize itself and lead them to it—a share of the market for organic milk is theirs to claim and theirs to exploit.
Author’s note: With or without state help, those wishing to continue farming conventionally will offer strenuous objections. I address the three I hear most often here:
https://www.dropbox.com/s/ytop5dp599wmhaw/Objections%20to%20conversion%20answered.docx?dl=0
Converting Vermont dairy to organic would be the first step in a state-supported marketing plan. The second would be to organize Vermont farmers into a coop and the third would be to grow demand for their product. A very broadly described plan for achieving these three goals can be found at this link:
https://www.dropbox.com/s/dp068xc9sf8i740/Remedy%2C%20The%20updated%20180202.docx?dl=0
