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Can Small Northeast Dairy Farms Be Saved?

There is perhaps nothing more evocative of New England than dairy farms – old barns, contentedly grazing cows, and rolling green fields of corn and hay. However, that iconic vision is in danger of disappearing, to be replaced by mini-malls and subdivisions.

Since 2015, our local dairy farmers have been losing money – in effect paying to milk their cows.   The latest data from the USDA shows that the cost to produce milk in Maine per hundredweight is $25.15 (a hundredweight, or CWT, is 100 pounds, or 8.6 gallons of whole milk). The June 2016 price to the farmers was $16.39, or a loss of $8.70 per hundredweight. With the average herd size of 125 cows, and the average milk production per cow of 2,300 pounds, the total production of 287,500 pounds of milk will mean a loss of $25,012.50 per year.

In Vermont, the number of dairy farms has dropped from 1,200 five years ago to 800 now. In New Hampshire, the number of dairy farms have slipped from 137 ten years ago to the current 100 farms. Thirty years ago, there were more than 10,000 dairy farms in the northeast. Today there are fewer than 2,000.

This is the first in a series of three articles dealing with the dairy crisis. We’ll examine the causes of the crisis and look for solutions.

The Milk Price Roller Coaster

 When we entered the NH legislature in 2006, the state and the region were in the midst of a dairy crisis. At that time, the cost of production was just over $16 per CWT, but the farmer was getting only $11 per CWT for his milk. In 2007 and 2008 the prices rose to decent levels. Another fall in prices occurred in 2009, then back up to highs in 2015.   And now, the lows we are currently experiencing.

What is causing this extreme fluctuation? There are many factors, including the balance of international trade, the speculation in milk futures on the Chicago Mercantile Exchange, and the base price as set by the Federal Milk Marketing Order (or FMMO). Just what is the FMMO? For the past ten years we’ve been trying to get a handle on exactly what it is and who controls it, with no success. Here is a link http://future.aae.wisc.edu/publications/federal_orders.ppt to a Powerpoint presentation that explains the system. (Note:   The Powerpoint is 50 pages long)   No one understands it, and therefore no one knows how to fix it.

What we know is that the costs of production and inputs included in the FMMO formula are not sufficient to cover the real costs that our dairy farmers have to pay. One thing to keep in mind is that the FMMO price is a base price. Processors and retailers are able to pay whatever they would like over and above this base. The problem is they don’t.   The average retail price for a gallon of milk is $4.49. For that same gallon, the farmer receives $1.40, or 31%.

What can we do? One possibility is, working as a region, we can work with our congressional delegations to amend the Agricultural Marketing Agreement and change the FMMOs formulas to take into consideration the high input costs in the northeast.

Your state can also provide your farmers with a safety net of either cash infusions when the prices plummet, or tax credits and/or tax exemptions to allow them to weather the vagaries of federal dairy pricing. Massachusetts, Connecticut and Maine each have set up systems to assist their dairy farmers from these cyclical depressions.

Another way to help is to encourage diversification and innovation for your farms. Cheese and ice cream making, agritourism, timber harvesting, and maple sugaring help to augment the milk income and get farmers through downturns.

Our dairy farmers are a smart and pragmatic breed, used to planning for the bad times when the times are good. We can only hope that they continue to be the stewards of our land and open space.

The next installment of this series will deal with the Margin Protection Program, a newly-established safety net insurance plan that was meant to protect farmers when the price drops below a set level. Unfortunately, this did not work. We will investigate why, and what needs to be done to fix it.

Bob Haefner                                                                                 Tara Sad

Meet Senator ‘Mac’ Middleton

Meet State Senator Thomas McLain Middleton – ‘Mac’ to his friends. Since 1994, Mac has served the people of the 28th Senate District of Charles County (southeast of Washington, DC), and is now the last remaining full-time farmer in the Maryland legislature. He owns and operates 275-acre Cedar Hill Farm with his family, raising beef cattle and growing hay to feed not only his cows but the neighboring horses that make up the large Maryland equine industry.

As with most modern farms throughout the northeast, diversification and innovation are the keys to success, and Cedar Hill Farm is no exception. Mac’s daughter, Kelly, operates a thriving agritourism business on the farm, where cute barnyard animals charm the kids and their parents.   In addition, the farm has pick-your-own strawberries, a large corn maze, a pumpkin patch, and events like birthday parties and even weddings. (http://www.middletonfarm.com/)

Mac has a degree in Biology from Mount Saint Mary College and served his military obligation is the US Army Intelligence, which took him to both Italy and Germany. After his stint in the service, Mac was elected as a Charles County Commissioner. During this period he bought Cedar Hill Farm from his parents, and proceeded to raise tobacco, grains and strawberries. While the type of crops he grows has changed over the years, his love for the land has not. Mac has recently put the land into a conservation easement so that it will remain farmland in perpetuity.

Senator Middleton notes that the best farm preservation program is farm viability and profitability.   When asked what the biggest agriculture issues are in Maryland, Mac responds, ‘There are three right now.   First is low grain prices, second is the rules for Food Safety Modernization Act (FSMA), and third is some of the EPA regulations.’

We asked the Senator how CSG-ERC helps legislators. ‘I think the most important thing that CSG-ERC does is to enable legislators to discuss mutual concerns with other lawmakers from the region.’ He especially likes the tradition of taking the time at the annual conferences to ask each state for a brief update on what they are doing in agriculture and what the major issues they are dealing with.. ‘I always learn from his fellow legislators in other states that way,’ he adds.

The legislation Mac is most proud of in his 22 years in the Senate is the ‘Agriculture Certainty Program’ that he sponsored. This program allows farmers to set environmental goals, especially regarding the Chesapeake Bay. With those goals in place, that farm would then be exempt from new environmental regulation for ten years. He says, ‘This legislation enables farmers to have certainty that new regulations will not impact their ability to secure loans for new equipment and operations.’

We asked about the biggest changes in Maryland agriculture in the last twenty or thirty years, and Mac answered that it was the transition out of tobacco as the number one crop in the region.. ‘Much of the land that was tobacco fields has been replaced by greenhouse products – many Maryland farms raise plants that are sold at big box stores across the country.’

We asked Mac about changes in the legislature he has seen during his tenure. He noted how partisan it has become on both sides of the aisle. He also talked about the urban-rural divide in government. ‘We need to act as agriculture legislators. We need to educate our urban and suburban counterparts about the importance of rural issues and agriculture to the state economy, open space and our ability to produce locally grown food.’ He adds, ‘it is important for rural legislators to understand the urban issues and support what they need, in return for understanding and support coming back to the rural areas. We need to understand both sides of all issues and legislation, not just our own parochial views.’

Finally Mac is justifiably proud of his work on the Chesapeake Bay commission, where he has served for many years, and where he is serving his second term as the chair. When asked what he worries about, he says, ‘I’m concerned about where the next generation of farmer is coming from.’

Mac will be at the Annual CSG-ERC Annual Meeting at the Mohegan Sun Resort in Uncasville, Connecticut from August 13 through 17. We hope to see you all there as well.

Bob Tara and Cow

Bob Haefner and Tara Sad, Agricultural & Rural Affairs Policy

Disparity Between Ag Jobs and Millennial Interest

A recent report by Purdue University estimated that for graduates with a college degree or higher in the areas of food, agriculture, renewable natural resources, or the environment there would be an estimated 57,000 annual job openings from 2015-2020. With an average of 35,000 U.S graduates entering agriculture related careers, this still means over 22,000 positions will be left unfilled annually, highlighting the growing disparity between the Ag industry and millennials seeking jobs.

According to a survey conducted on behalf of Land O’ Lakes Inc., only 9 percent of millennials and 3 percent of college graduates would consider a career in Ag.

Read the report from Purdue.

Read the press release from USDA.

Read the press release from Land O’ Lakes Inc.