In the next 18 months, recent buzzwords like "tipping point" and "perfect storm" may be applied to Vermont agriculture.
That is how long that various knowledgeable observers expect milk prices to stay close to or below the average cost of production for Vermont dairy farms. At the least, this will be challenging; at worst, as one farm supplies business owner tersely put it, "The farmscape will change."
Some say it is always changing, and point to promising signs that the state's ingenious and adaptable farmers are finding new ways of staying viable. But complicating that outlook is the way national issues are influencing the situation, adding their difficulties to ongoing Vermont problems like how to keep young people interested in careers that involve hard physical labor and how to control farm runoff.
Like the famously variable weather that comes over New England's horizons, these factors are largely beyond control, and simply must be weathered, as the saying goes. And like the more intense and less predictable weather brought on by human-induced global warming now broadly accepted by scientists - the farm scene is now going through upheavals because of unforeseen things like a phenomenal escalation of petroleum prices, the wildfire international spread of bird flu, a crisis in immigration policy, out-of-state pressure on Vermont property values, another boom in western states' milk production, and major corporations weighing in as sellers of "organic" products.
A glance at the long-term graph of milk prices win show a consistent rollercoaster pattern, and old hands are confident that what goes down will once again come up as prices have done since the early part of the decade. To the extent that family farming is endangered, it is also considered a picturesque contrast to the way most people live along the Eastern Seaboard - which is helping to fuel a growing agritourism industry. Organic farming, once widely considered the province of "health nuts" and hippy-dippy New Agers, is emerging as a growth sector - recognized and promoted by state government.
But right now, in practice, at the individual level, getting from here to a new and better future somewhere out there has a, "Hold on tight, here we go!" feel to it. There's a bumper sticker that might apply: "Oh, no - not another learning experience."
Four-footed Heavyweights
Vermont agriculture is too diverse to sum up easily. Horses and horticultural businesses have done well lately, llamas and alpacas have joined the sheep that have been around since the 19th century Merino "sheep craze," deer and elk and even water buffalo inhabit parts of the landscape, food co-ops sell homegrown organic wheat - the list could go on and on.
But dairying continues to lead in economic value, bringing in about threequarters of the agricultural sector's receipts. Secretary of Agriculture Steve Kerr said that when he hears people proclaim that dairy farms are a dying breed, he points to Vermont's strategic geographical position, within relatively easy reach of the Boston, Hartford and the New York/New Jersey markets.
According to the National Agricultural Statistics Service, the total number of farms of all kinds in Vermont went from 6,600 in 2002 to 6,500, then 6,400, then 6,300 in 2005. But acres in agriculture only dropped from 1,260,000 to 1,250,000 - in the midst of an unparalleled real estate boom - perhaps reflecting the way neighboring dairy farms often acquire the holdings of one that "went out."
The real question may be whether there is still a place for regionalized food production. Many in the industry believe that could hinge partly on allowing regional pricing, especially those who believe large food processing corporations can manipulate milk prices by dumping some of their products at key times. In this regard, the fuel price escalation that has slammed farmers this year has its positive side: Those who suggested that all the state's milk might someday be trucked in from more efficient farms in the Midwest have been keeping very quiet lately.
Those who have studied dairy science textbooks know an equally strong rationale: So much solar energy is tied up in plants' production of cellulose that humanity, worldwide, has long depended on the microorganisms in dairy animals' complex stomachs that help them convert such roughage into food that humans can use (milk and honey are the only foods that are, technically, foods themselves). Obliterating New England's dairying, in this perspective, would be a horrendous and unacceptable energy waste.
Consolidation, not elimination, seems more likely, Kerr said. He quickly added the caveat that paradoxically, small farms are often thriving, finding efficient means of production like producing milk seasonally on pasturage, or finding niches like supplying small organic cheesemakers.
But there has been a decline, and the Dairy Task Force, which Kerr and Governor James Douglas assembled, said in their 2005 report that the decreases in farms, cows and milk production are "of great concern to milk processors, (dairy) cooperatives, and the agriculturerelated businesses that serve dairy farmers."
To put it another way, if red barns and cows at pasture have helped to define the Vermont image for tourists, the number of dilapidating farm outbuildings and machines lets those who come here know the landscape is anything but serene.
Between 1995 and 2005, the number of Vermont dairy farms dropped from 2,047 to 1,259, with major drops in prices in 1997, 2000, and 2002 the biggest factor, the Task Force found. (The regional Federal Milk Market Administrator's office put this figure at 1,201 farms.)
The number of cows rose from 157,000 in 1995 to a peak of 161,000 in 1998, and by 2005 was down to 143,000. One of the goals suggested by the Task Force is to bring that number back up to 150,000, in large part to keep from losing the milk processors that are a key to getting better milk prices.
Milk production, at 2.545 billion pounds in 1995, peaked at 2.170 billion in 1999 and has since shrunk to 2.520 billion for 2005 (US Department of Agriculture estimates; the Market Administrator's office says Vermont's production has only dropped from 2.651 billion in 2000 to 2.613 billion in 2005). The lesser rate of decline for production indicates that per-cow production has risen - scientific nutrition and genetic management have been primary factors but that kind of productivity increase is behind the surges in milk supply that have helped bring on the steep price declines.
In the larger picture, Vermont is a small player, producing about 11.1 percent of the milk in a 12-state "Northeast" area that goes down to Delaware, Maryland, and West Virginia. New York put out 41.8 percent of that, and Pennsylvania 33.8 percent; Vermont was on a par with West Virginia and New Jersey.
And from a national perspective, Vermont's huge percentage growth in average farm operation size from 75 cows on about 1,500 farms in 1995 to 114 cows on around 1,200 in 2005 is not only modest but downright quaint. In the ArizonaLas Vegas, Nevada, market order area, by way of contrast, in 2005 there were 89 producers accounting for 2.947 billion pounds of milk. The Task Force found that more than about an eighth of Vermont farms now have more than 200 cows; out West, Kerr observed, it is not uncommon to have tens of thousands of cows on one milk spread.
As will be seen, however, "quaint" is related to "picturesque," and a growing number of urbanites looking for their farming roots has translated into a burgeoning agritourism sector.
Agriculture Means Business
The Task Force's Government, Community Relations and Information Committee, as its first recommendation, suggested "Agriculture Means Business for Vermont: Use this slogan as often as possible" including "have mini-signs for legislators' desks on the first day of the session this year." More consequentially, the Douglas administration as part of its avowedly pro-business stance has worked for measures that may help in what Kerr calls an upcoming "dairy recession."
In Montpelier, Agriculture is now an Agency, not a Department, meaning that Kerr takes part in cabinetlevel gubernatorial meetings. The agency budget has gone up as well, with $1.6 million of the $2.5 million in additional money of Vermont origin.
In 2003, Kerr observed, an emergency loan program helped keep about 100 farms going, and such money will be there again. Though the processor-funded Northeast Dairy Compact did not survive the change to a Republican administration in Washington, Vermont joined the successful push for the Milk Income Loss Contract (MILC) program, funded by the taxpayers. It will be "a very critical financial safety net," said an Ag Agency release warning farmers to sign up by May 17. However, the recent federal Deficit Reduction Act slashed the percentage of the difference between floor price and market price below about $13 that the program will pay (farmers are expected to get about $1 per hundredweight of milk when prices hit bottom).
The feds could make a positive difference by upping the cheese plant allowance for costs, as Agri-Mark and other processing cooperatives have requested. Currently, they said, those costs are too low because the 1998/99 estimate relied too much on cheap new Western plants. Agri-Mark took a $1.6 million hit last year, largely because of cheesemaking expenses, and since 2003 there have been 11 processing plant closures in the Northeast.
Assistance with new pollution controls (best management practices) being mandated first for large farms and now for medium-size farms has demonstrated Vermont's commitment to agriculture, though the anti-runoff effort is still a work in progress. In the long run, the Ag Agency has estimated that "to fix all of the manure waste storage, silage leachate, roof runoff and milkhouse waste issues on all farms would cost $61,361,126."
Municipal sewer plants got huge grants to upgrade, farmers argue, so state aid should come to them along with new standards.
Dealing simultaneously with manure and milk prices won't be easy, especially since one of the main ways of coping with the crisis that the Task Force recommends is investment in on-farm as well as off-farm dairy processing infrastructure. Lately, though, the environmental situation has generated fewer headlines than the attempt by Vermont farmers to reduce their labor costs by hiring perhaps 2,000 illegal Mexican laborers.
How Ya Gonna Keep Em down on the Farm?
Labor issues rank second only to milk prices as a longterm factor in dairy farm decline. The problem has accelerated recently because the current generation of young workers is disinclined to take up careers that involve heavy physical work and working outdoors - an issue impacting the construction industry as well. Add the trend toward smaller families, and there is a recipe for problems with family farm succession.
Through much of the past decade, forward-looking agricultural extension agents and farmers have attempted to set up a Farm Labor Service comparable to those in European countries. From a pool of trained workers, farmers would be able to get help during illnesses, vacations, or crises, and the laborers might well find permanent jobs as well as good temporary, pay. (Farm wages have consistently been over $10 an hour, NASS found, and newspaper ads have posted higher numbers.)
The Farm Labor Service disbanded last year, according to former business manager Paul Seiler of Cornwall, for lack of perhaps $75,000 a year to cover administrative and insurance costs.
"It was up and coming," he said, with its workers never paid less than $15 an hour, but, "There was unfortunately no promotion, financial or otherwise, from the Department of Agriculture... It was always kind of a challenge, but it could have and should have still been up and running."
Kerr said he didn't know about that situation - the labor service effort came "before my time" - but he speculated that high administrative costs and the fact that "the labor just isn't there locally" had much to do with it.
Tim Buskey, administrator of the Vermont Farm Bureau the state's largest ag organization - said he had just been to a Vermont Law School conference on the labor situation, and how federal immigration legislation might impact it.
"Dairy farms depend on foreign labor now," he said, and though the conference saw many problems, "I'm not sure anyone came up with any solutions."
Further federal intrusion may come if avian influenza continues to spread, and especially if it mutates into a form that results in a human pandemic. A proposed state program to register farm sites with animals, though not yet to track individual animals, has been about as popular with farmers as the idea of paying union dues. But emergency managers - and Kerr, when he came on Vermont Public Radio to discuss the issue have insisted that knowing where all the possible locations of bird flu are is a necessary precondition to preparing for something that could eclipse Hurricane Katrina as a disaster.
New Hopes
Addison County Senator Harold Giard, a former dairyman, knows how hard it will be for farmers to face prices at a 30-year low when many have not fully recovered from the last price plunge. But at the same time, he and others contacted see this is a pivotal moment when Vermont agriculture, including dairying, could be entering a highly dynamic era.
Behind such a positive outlook are a number of developments:
- Young, enthusiastic, innovative farmers keep entering the field. Kerr said he feels energized by their willingness to think outside the box. At Vermont Technical College, Chris Dutton, an assistant professor of agriculture, is setting up a program under which graduates (and eventually maybe other young farmers) can pair with older farmers nearing retirement age and gradually build the equity to take over their operations.
- From three organic dairies in the mid-1990s, the number has grown to about 100 - and the demand is so great there is room for 100 more, the Task Force found. Producers do not have an easy time making a profit, a recent study found, but getting more than $30 per hundredweight doesn't hurt - at a time when prices are dropping toward $12 for conventional milk.
- The effort to add processing has been particularly successful for on-farm operations, such as those aided by UVM's new Artisanal Cheese Institute. From nine such processors in 1995, the number had grown to 38 by 2005. There is still a need for a big plant to handle the skim milk left when butterfat goes to make ice cream and other specialty products, but those seeking such an investor were heartened to learn recently that a soybean processor (the leguminous soybeans have come along strongly as a dairy feed crop) wants to set up business near the Northeast Kingdom.
- The "Cow Power" initiative (led by Rutland-based Central Vermont Public Service) is already adding four more farms to those producing methane from cow manure and using that fuel to generate electricity.
- The visitor-oriented Vermont Farms Association is up to 70 members and is steadily growing, said Beth Kennett of Rochester's Liberty Hill Farm, their executive director for 22 years. Department of Tourism and Marketing spokesman Jason Aldous agreed that agritourism is growing, and said, "It's part of the things we focus on."
Darlene Franzen of the 24-year-old Billings Farm (prize-winning Jersey cows) and Museum in Woodstock said people are "intensely interested" in how farms work, and "the Interest has Intensified and grown, without any question."
- The Pasture Network has shown that making milk "on grass" is viable, for at least a segment of the industry.
- The farmland that land trusts preserve - which farmers have suspected of being headed for disuse due to lack of farm viability - is concentrated in the three agricultural counties, and operators there are getting help from programs to optimize farm management, said the Vermont Land Trust's Darby Bradley.
- At the national level, farmers have shown unprecedented willingness to band together with Cooperatives Working Together, which has worked to voluntarily reduce herd levels and thus avoid overproduction.
There are some stealth threats on the horizon as well, factors whose significance only time will tell. One is a cheese plant being built in Texas that Giard said will be able to handle seven tractor-trailer loads of milk - about 350,000 pounds - every hour ("It's going to be a buyer's market," he predicted.) Another is Monsanto's development of sex-segregated semen for artificial insemination, which they claim can result in 85 percent female calves; at least one AI (artificial insemination) operator, who will not be identified, thinks only large farms will be able to afford it, and the competitive advantage the technology will give them may put out small farms the way the bulk tank did.
But generally, the mood is spring-like rather than cold and overcast.
"It's a very exciting time to be part of," Giard said.
"We've just got to keep changing," said veteran Franklin County extension agent Glenn Rogers.
Kerr said he has confidence in the dairy industry's ability to adapt to changing conditions.
"Vermont farmers are pretty damn good at seeing market trends and taking advantage of new opportunities," he said.
Extended MILC Program payments begin
Roger Allbee, executive director of USDA's Farm Service Agency in Vermont announced April 18 that payments under the extended Milk Income Loss Contract Program (MILC) began on April 17. The program's final rule was published in the Federal Register.
"The MILC was recently extended through September 20, 2007," said Allbee. "For the period October 1, 2005, through August 31, 2007, a dairy operation's monthly payment will equal the milk quantity sold in that month multiplied by 34 percent of the difference between $16.94 per hundredweight and that month's domestic Class I milk price."
USDA makes payments on an operation-by-operation basis up to a maximum of 2.4 million pounds of milk produced and marketed by the dairy operation per fiscal year.
Producers may sign up for fiscal years 2006-2007 MILC during an initial sign-up phase ending May 17, 2006, or during an extended sign-up phase from May 18, 2006, through September 30, 2007. Eligible dairy producers can apply for program benefits anytime during either sign-up phase according to the production start-month selection rules applicable for each sign-up phase.
Participating dairy operations must select the month they want to start receiving payments for eligible production. Producers may retroactively select any month beginning October 2005 through May 2006 if they sign up on, or before, May 17, 2006. After May 17, 2006, producers will not have the option of selecting a retroactive month for payment.
Eligible dairy producers are those who commercially produce milk in the United States. To receive program approval, producers must enter into a contract with CCC to provide monthly marketing data. Dairy producers can apply for MILC at local FSA offices and online at: www.fsa.usda.gov/dafp/psd/.
© 2006 Boutin-McQuiston, Inc. Provided by ProQuest LLC. All Rights Reserved.
Source: Vermont Business Magazine
