A new forecast by regional dairy co-op powerhouse Agri-Mark may come as good news to Vermont dairy farmers, but dark clouds remain over the state’s dairy future, with prices and environmental legislation making it more difficult for farmers to thrive.
While the decline in milk production regionally is driving up the cost of Vermont milk, it’s not so good for consumers and the future of small family farms.
Milk production in the Green Mountain State has been flat since 2017, according to Vermont and USDA data. The state has lost 25 dairy farms between January and July of this year.
Catherine de Ronde, senior economist at Agri-Mark and a former agricultural economist for Massachusetts, is predicting that wholesale milk prices will increase in 2020. However, after five years of decline, such improvement is weak.
As Agri-Mark reported last week, June milk production in the 23 major states totaled 17.3 billion pounds, down 0.1 percent from June 2018. At 18.1 billion pounds, May production was down slightly year over year.
Production per cow in the 23 major states averaged 1,976 pounds for June, which was 15 pounds above June 2018.
De Ronde expects the average price per hundredweight of milk to increase from approximately $18 to $19 — a modest boost for farmers.
“There’s a lot of uncertainty out there particularly surrounding trade, but declining milk production is what’s driving all of the positivity,” de Ronde told TNR in an interview.
“In some instances, where the decline in milk production is coming from is the loss of farms,” she added. “If we didn’t have the geopolitical things out there, such as China and the flip-flopping back and forth of USMCA (United States-Mexico-Canada Agreement), we’d probably see a stronger price response with prices even higher. Right now, there’s a level of discomfort that is hard to swallow. Fundamentally speaking, things are moving in the right direction.”
While it’s hard enough forecasting what will happen in Vermont’s dairy industry next year, de Ronde doesn’t see much sense in prognosticating what prices will be in 2021 and the years beyond. She said dairy prices follow a three-year cycle in which there is one year of high milk prices followed by two or three low-price years.
“We are now in our fifth year of (flat) milk prices so this cycle has been broken,” she said. “In the past, if we had a period of high milk prices, I would say, ‘yeah, I think things will come down and we’ll rebound again.’ But I just don’t know what’s going to happen now. Will this cycle return eventually or are we in a new playing field out there? I just don’t have a good sense of what’s going to happen beyond 2020.”
State Sen. Christopher Bray, D-Addison, says Agri-Mark’s forecasted higher prices, after four years of low prices, was welcome news.
“The fundamental challenge remains, however, the U.S. produces more milk than it consumes, and as a result, farmers are being paid low prices generally,” Bray told True North in an interview. “While Vermont is important to the New England market, our prices reflect national and international milk pricing, where there is also excess supply, so we will remain vulnerable to continued low pricing.
Bray said Vermont’s only advantage in the marketplace is when it can “build on the Vermont brand” based on quality.
“The commodity dairy marketplace strips away the place of origin for most products, and so we are left competing more on price than on our tradition of quality, and competing on price means lower prices to farmers,” he said. “The exception to this trend is when Vermont producers can produce value-added Vermont-labeled products, and I think this remains our brightest future for the long run.”
Rep. Harvey Smith represents the rural towns Bridport, New Haven and Weybridge. In addition to being a member of the House Committee on Agriculture and Forestry, Smith also operates a family livestock farm in New Haven.
The lawmaker is cautiously bullish about the Agri-Mark forecast, but said not all family dairy farmers will be helped by the projected milk price increase.
“I am pleased to hear that milk prices are finely headed in a positive direction for our dairy farmers,” Smith told TNR. “They have had a very difficult time over the last several years as the price they have been receiving has been below the cost of production. I think this modest price increase will be beneficial for many dairy producers, but it may be too little and too late for some.”
While serving on the House Committee on Agriculture and Forestry during the 2019 legislative session, Smith not only had dairy prices to worry about, but he also kept an eye on legislative action that could harm Vermont farmers.
Smith has been expressing his concerns about lawmakers “piling on” dairy farmers with more land-related regulations and restrictions in ways that amount to an agricultural bait-and-switch — such as making more Vermont agricultural lands off limits by categorizing them as protected wetlands for natural flood control as well as wildlife protection.
In December, Smith told TNR “most of the [Addison] county agricultural lands would be considered wetlands” under some new thinking.
“I’ll be paying close attention to this. We have to go slowly on this one because it will hurt farmers,” he said.
Lou Varricchio is a freelance reporter for True North Reports. Send him news tips at email@example.com.