Dairy Farming Crisis
WESTMINSTER WEST - Over the past few weeks, agriculture officials from Vermont and members of the state's Congressional delegation have been pleading with Washington to do something to help the region's struggling dairy industry.
Earlier this month, Vermont Secretary of Agriculture Roger Allbee met with U.S. Secretary of Agriculture Tom Vilsack in Concord, N.H., to ask for an increase to the Milk Income Loss Contract, which provides farmers with a cushion when prices fall below a set level.
Sen. Bernard Sanders, I-Vt., wants the U.S. Justice Department to look into possible antitrust activities among the nation's concentrated dairy processors and on Tuesday, Rep. Peter Welch, D-Vt., told the House Agriculture Subcommittee on Livestock, Dairy and Poultry that the state's dairy industry was on the brink of collapse.
Help might be coming, but if it arrives, it is going to be too late for one of Windham County's longest working dairy farms.
The 50 or so Jersey cows on the Ranney Farm are for sale and, after more than 200 years, the family has decided to get out of the dairy business.
The Ranney family has been working the land in Westminster West since 1796 and Philip Ranney is the seventh generation to try to support a family off the farm's high, rocky fields.
Ranney spent many sleepless nights weighing his options, but as he watched more money leave the farm every time the silver milk truck pulled away, it became clear that his future, and his family's future, was not going to be tied to what every day is looking more like a dying industry.
"It's the hardest decision I have ever made in my life," Ranney said earlier this week, before setting out to hay the fields on a rare, sunny summer day. "There's no money in this. I am in as much debt as I can handle. I don't see how anyone can make it."
Dairy farming is a notoriously volatile business and there are many reasons why more farmers like Ranney are calling it quits.
The money U.S. farmers get for their milk is tied to what critics call an antiquated and complicated national pricing system.
That system considers surplus milk powder, mega-farms in the West and Southwest with thousands of cows, and international economies, all of which have very little to do with Ranney's daily responsibilities of caring for and milking his animals.
Some experts point to a concentration in the number of dairy processors, which has left a handful of national and multinational companies in control of most of the milk in the country.
And the current worldwide economic downturn has cut into dairy sales, with national exports falling by more than 5 percent in the past two years.
Put all of this on top of the ever-increasing costs of feed, energy and living expenses, and Ranney said getting out of the dairy business was his only option.
"I am being paid less than what it cost me to keep going, and it was only a matter of time," he said. "I don't know how many farms are going to have to close before they do something."
Farmers are getting $11.28 per hundredweight and it is estimated that it cost between $17 and $18 just to break even.
When Allbee met with Vilsack in Concord a few weeks ago, the Vermont agriculture secretary asked the head of USDA to begin looking into the price support system.
Vilsack at the meeting admitted the system was not working for the nation's dairy farmers and said he would form an advisory group to recommend changes to the federal milk pricing system.
That group is coming together and an announcement is expected shortly on who will serve on the committee.
Allbee said Vilsack seemed willing to address the crisis, but he said the state's dairy farmers were in for some challenging times.
"These prices are something most farmers have not seen in their lifetimes," said Allbee. "Initially, some dairy economists said the prices would turn around, but now there is no indication they will turn around. It's very bad out there."
Allbee said the dairy crisis is his highest priority.
He called dairy processors from throughout the region to Montpelier this week to "gauge the seriousness of the situation."
"When you ask the people in Vermont what they want, they say they want a working landscape. Well, dairy farming is major part of that working landscape," said Allbee. "We have a national pricing system that is not working for our farmers and it is testing the ability of any farmer to survive."
Ranney understands that the problem has been brewing for a long time and there is no single solution.
He wonders, though, why the price in the store has remained relatively stable while his check was cut almost in half.
"Somebody has been making a lot of money during all of this," he said. "The companies are getting the milk dirt cheap. It's not just about production costs anymore."
Sen. Sanders agrees.
Sanders also met with Vilsack Wednesday and he held a conference call with reporters in the afternoon.
According to Sanders, Dean Foods, a giant multinational food corporation, controls about 70 percent of the milk produced in Vermont.
The company recorded $76.2 million in profits in the first quarter of 2009, a 147 percent increase, Sanders said, at a time when dozens of Vermont farmers like Ranney were making the hard decision to sell their livestock.
"It does not take Sherlock Holmes to figure that out," Sanders said. "They have enormous control. At a time when farmers were seeing a reduction in milk prices they were seeing a huge increase in profits."
Sanders was hopeful about his meetings with Vilsack and with U.S. Assistant Attorney General Christine Varney, head of the Department of Justice Antitrust Division.
But he said it is going to take a lot more work to save the state's dairy industry.
"It's serious and complicated and there are no magical solutions," Sanders said. "But I believe they are trying. The bottom line is that our dairy farmers are going out of business and our whole economy is suffering. It is imperative that we have a decentralized from of agriculture in America."
Through the years Ranney has listened to the politicians, economists and agriculture experts, but all of the plans and promises got buried under his mounting debt.
He considered switching to organic production, but that sector, too, is struggling with oversupply and rising costs.
Milk prices last year shot to about $20 per hundredweight, giving him a little cushion to get his head above water, but the recent and sharp downturn quickly eliminated any money he was able to save.
During the last few months, when Ranney grappled with his decision, the news only got worse.
"The future is so bleak," he said. "You go back and forth, and sometimes you forget about the finances but then it comes time to pay the bills and there is no money. Every time the milk truck pulled in, I just watched more money leave the farm."
Ranney is a member of the Agri-Mark dairy co-operative, a group that includes 1,300 Northeast dairy families.
The Agri-Mark board recently voted to pay its members a premium above the federally set price, but that only added 30 cents per hundredweight, which Agri-Mark spokesman Doug DiMento admitted would not go very far to stave off the crisis "These are serious, dire, financial times on the farm and it called for unprecedented action," DiMento said. "We didn't want to wait, because there was a feeling that, if we waited, many members would not be around if things continued."
Rep. Welch told the House subcommittee this week that Vermont farmers need both shortand long-term solutions.
Welch wants Congress to increase the MILC support payments, saying that the moneyfarmers are receiving is not enough to keep many of them in business.
"We bailed out Wall Street and we bailed out the car companies, why shouldn't we bail out the people who grow our food?" Welch said in an interview after he testified in Washington. "Congress has to be made aware that this is a perilous time for the dairy industry and we have to react."
An increase in the MILC payments will help farmers weather this storm, but Welch said bigger changes have to happen to save the largest piece of the state's agriculture economy.
Welch said it is unfair and unrealistic to tie Vermont's milk prices to giant corporate farms in other parts of the country.
There should be regional price floors set, Welch said, and a greater effort to stabilize prices so the swings between the highs and lows are not so dramatic.
"If we are unable to provide immediate assistance we are going to see more farms go out of business," said Welch. "And once a farm goes out of business, it's not going to return."
Ranney is not alone in his decision to get out of dairy farming.
In the past six months, 32 other farm families have sold their herds and there are 1,076 dairy farms left in the state, according to the agency of agriculture.
Since 2004, the state has lost 288 dairy farms.
Even large, corporate farms which have been somewhat immune to the low milk prices are starting to feel the pinch, and if there is any good news, it is that the situation may grow desperate enough to get some states to join together to demand change.
Until then, Ranney is trying to put together a plan.
He has hopes for a planned slaughterhouse in Westminster and said if things work out he wants to raise beef, pork, chicken and turkey next year.
He and his wife will likely have to find temporary work this winter and he'll assess his situation in the spring.
He plans to keep seven milkers, to sell milk locally, and 12 young heifers, so he can "get back into it" if things turn around.
His two boys, aged 6 and 3, don't know yet that the herd is for sale. Ranney said it was no small decision to stop producing milk and he always thought his sons would at least get the opportunity to decide for themselves if farming was in their futures.
"We're still hopeful and optimistic we'll be able to come up with a business model that works," he said. "We're keeping our fingers crossed. I'd love to see the eighth generation farm here."