Vermont dairy farmers continue to experience a volatile milk market and once again must choose whether to enroll in an insurance program to protect themselves against falling milk prices.
The official enrollment period for the Dairy Margin Coverage (DMC) program ends this Friday. The program was created as part of the 2018 Farm Bill to provide a safety net for the dairy industry.
“As a result of the low dairy prices early this year, signing up for the DMC program now will assure most farmers of payments this year,” reads a statement from the U.S. Department of Agriculture’s Farm Service Agency.
FSA says more than 500 eligible Vermont dairy producers have already signed up and received payments.
U.S. Senate Agriculture Committee member Sen. Patrick Leahy, D-Vt., played a part in ensuring that the payouts are sufficient and that there would be discounts on premiums for small farms.
In a joint statement from Vermont’s congressional delegation, Leahy along with Sen. Bernie Sanders, I-Vt., and Rep. Peter Welch, D-Vt., stated that Vermont producers “can enroll now to be assured of net payments that will greatly exceed their required premiums for this year.”
Their statement adds that the program is “an important risk management tool for years like 2019, when the price falls too low.”
The approaching deadline comes as a recent report by regional dairy co-op Agri-Mark indicated that milk prices might see a steady rise in the coming year.
According to the report, milk prices have been flat for the past two years, and Vermont lost 25 dairy farms between January and July. Agri-Mark predicts that the average price per hundredweight of milk should go up from about $18 to $19 over the next year.
The future of Vermont’s dairy operations remains in question, especially as new environmental legislation makes farming more difficult.
Wendy Wilton, Vermont state executive director of the U.S. Farm Service Agency, spoke with True North about the program and market trends. She said just because farms have been closing doesn’t always mean that the production dropped off.
“Some went to other producers that bought their assets, some of the animals went to auction, some went for beef, some got out of the business but are still using their land to produce hay or corn, some may have gone to another enterprise entirely such as beef cattle,” she said.
Still, Wilton said farm closures ultimately will impact prices.
“There has been a trend definitely towards dairies closing and, ultimately, I think it will affect our milk production in smaller states,” she said.
Wilton added that big producers out West are affecting the market.
“I think the U.S. as a whole is probably over-producing milk for the market,” she said. ” … There are a bunch of really big players out in the West, states like Idaho, Arizona, California that have huge farms. Like I’m talking 15,000 cows.”
She noted an infusion of federal money into the DMC program, meaning that payouts generally have been much greater than the premiums paid into it, sometimes by as much as a 4-1 ratio. But if prices do rise as predicted, the payouts will drop.
“Going forward, as the milk price is expected to rise over the next couple of years, we may be in a situation where there is little or no payout,” Wilton said. “But it ensures you against a loss if you enroll.”
Another insurance program for dairy farmers is available if tariffs from other countries start to hurt Vermont milk sales. To inquire about either program, farmers can contact the Farm Service Agency office online, or by phone at 802-658-2803.
Walter Dunstable Jr., a farmer at the Dunstable Farm in Cabot, says this year the Dairy Margin Coverage program paid out funds at about a 2-to-1 ratio for his farm.
“The money helps, let’s put it that way. It’s not as much as we would like or need but it helps, and it keeps a better balance,” he said. “They are going to continue to have to do something of this nature until milk prices get up to where they need to be.”
Dunstable said his latest premium was around $2,000, and that he’s collected about $4,000 to $5,000 already this year.
“This year has been much better than last year,” he said, adding that in his first year he “got very little of anything.”
Dunstable agreed prices are beginning to rise, but slowly.
“The good and bad of it is that prices are going up slowly,” he said. “And it’s regulating itself better than if we had a big jump and then some of these bigger farmers are going to start adding more cows, and then we will be right back where we started from. We’re in better control, I think, than things have been in the past.”
Bernie Guillemette, a farmer from Guillemette Farm, located in Shelburne, says he thinks the program is helpful.
“I do use it, and I encourage other farmers to do it as well,” he said. “It’s quite simple — the money is not coming where it should come from, and that would be the market. Somehow or another the processors know that we’ve got too much milk and they are going to take advantage of that ride, and they are doing a damn good job at it.”
Guillemette noted that non-milk products that market themselves as milk — such as popular almond milk — are a big problem for the dairy industry.
“If we can’t get them to take that name off of there, then we ought to be collecting some money from them,” he said. “They are claiming people know the difference. No, people don’t know the difference.”