Help on the farm
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Published: July 10, 2009
In an appearance in New Hampshire on Monday Agriculture Secretary, Tom Vilsack offered a glimmer of hope for suffering dairy farmers, saying he was appointing a special commission to look at the damaging volatility of the dairy market.
Vermont Agriculture Secretary Roger Allbee took heart from Vilsack's apparent sensitivity to the needs of farmers in New England. And in New England it is dairy farmers who have been hit hard.
Milk prices have plunged in the past year from a high around $18 per hundredweight to about $10, which is below the cost of production. Lately, the price has risen to about $12.
The Vermont dairy industry is an essential component of New England's agricultural sector. The urban centers of New England — Boston, Hartford, Providence — get most of their milk from Vermont. And yet the decline in milk prices this year is driving more farmers out of business every month.
Vilsack will look at short-term fixes, such as increased support through the federal Milk Income Loss Contract program, which is designed as a milk price floor.
Allbee is hoping Vilsack also looks at the trend toward market consolidation in the processing and retail sector. He said that in New England there are only two principal milk processors and only five major retail outlets. The concentration of market power in these few hands has robbed farmers of the power to secure a favorable price for their product.
The history of the government's program to manage the price of the milk goes back to the early 20th century.
Congress passed a law in 1922 that allowed farmers to join into cooperatives, exempt from antitrust laws, in order to bargain for a better price. In the 1930s market orders were set up to try to bring stability to the markets in the nation's different regions.
In 2009, the power of co-ops has been diminished by the concentrated power of retailers and processors, and the market order system does a poor job of protecting Vermont farmers from oversupply generated by corporate farmers in California, Texas or Idaho.
Allbee noted that the new Justice Department official in charge of antitrust has said she intends to look at the spread between the price that retailers charge and farmers receive. Farmers have long complained that retailers do not tend to pass on the profits when the retail price of milk goes up.
The key to reforming the system will be a mechanism for bringing moderation and balance to the problem of supply and demand. Reformers often talk of instituting supply management.
One way to achieve it would be to establish a lower price for milk produced above a desired level. In the past, the federal government has bought out whole herds to lower production, which is a way to curb production in the short term, but which does not resolve the problem of wide price swings in response to swings in supply.
Dairying remains an integral segment of Vermont's economy. But because it is tied to the national and world economy, Vermont farmers remain vulnerable. Thus, the worldwide recession has filtered all the way down to the farmyards of Pawlet and Bridport.
All farmers want is a dependable price that covers their costs and provides them a living. Vilsack was letting it be known he wants to help. We hope it's true.
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