June 4, 2020

 

US' Vermont considers US$50M for dairy aid

 

 

The government administration of Vermont is proposing US$50 million in support for the dairy sector, with US$40 million for farmers and US$10 million for processors, Milton Independent reported.

 

The funding comes from US$410 million that the state will receive for COVID-19 relief as a result of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act.

 

For dairy farmers, assistance has become urgent. At the beginning of the year, it appeared as though dairy farmers would have a milk price that would allow them break even for the first time since 2014. Then the pandemic hit, closing schools and restaurants and causing a 10% drop in demand for milk nationwide, according to dairy economists. Brad Keating of Dairy Farmers of America (DFA) said the drop has been closer to 15% in the northeast.

 

In addition to the drop in prices, dairy cooperatives have asked farmers to reduce production. DFA is telling farmers it will only pay full price for 85% of their production, based on how much milk they produced in March. Agrimark has instructed its members to reduce production by 6%.

 

Amanda St. Pierre, executive director of the Vermont Dairy Producers Association (VDPA), has calculated that Vermont farmers will collectively lose US$14 million a month for the next three months.

 

Last year, farmers made an average of US$17.46 per hundredweight of milk, below the cost of production on most farms.

 

"Pre-COVID things were looking actually pretty decent. We were heading for US$20 milk," Vermont Secretary of Agriculture Anson Tebbetts told the House Agriculture Committee on Tuesday. Now, however, the most optimistic projections place the price of milk at US$15 per hundredweight average for the year.

 

In May, the pay farmers received for Class I—the highest paid of the four classes of milk—was US$12.95 per hundredweight. "Lower than you could ever imagine," Darlene Reynolds of Cross Winds Dairy and Daughters in Alburgh told the House Agriculture Committee.

 

The loss to Vermont farms could total as much as US$65 million, Secretary of Agriculture Anson Tebbetts testified, with an average loss to farms of US$268,000.

 

"Within two months I've gone from feeling confident to barely making payroll again," Denna Benjamin of Riverview Farm in Franklin told the committee. "In a couple of months, I'm not really sure what the need is going to be or if we'll even be here."

 

Benjamin said that currently she is able to make payroll, but not to pay any of her vendors. It was a common refrain. Reynolds said she has been focused on paying employees and the grain bill.

 

"This next milk's check is going to be extremely low. We're not going to be able to pay our vendors," Will Gladstone of Gladstone Farm, testified.

 

They make their profits off of the last few percentage points of production, the farmers said. The very milk they're being asked not to produce.

 

Agrimark, Gladstone said, has told members the cop will charge a US$14 per hundredweight penalty for any milk in that 6% that should have been cut. A lot of farmers will be dumping milk as a result, he said. "That's just a huge blow."

 

Asked how he was trimming production, Gladstone said his family had purchased the milk base of other farmers who were going out of business. But Agrimark only lets half of the base transfer to the purchaser. "It was like prepaying your losses," he said.

 

The challenge in cutting production, he explained, is that after investing in creating strong producers they don't want to then cull those cows.

 

St. Pierre said the 15% DFA is asking them to cut is typically where their profit is. At her farm, they are cutting as close to that as they can without hurting their cows. They don't want to harm their top producers, she explained.

 

All of the farmers who spoke to the committee agreed that documenting their losses won't be difficult. They also agreed that the need was urgent and that any money they receive won't stay with them, it will go to pay their vendors.

 

St. Pierre said she had heard from grain dealers that they are collectively holding debts of around US$200 million from farmers.

 

Tebbetts' agency is already preparing to send out the funds, gathering needed information from farmers in anticipation of the program being approved by the legislature, Tebbetts testified.

 

He also described the amounts the agency has calculated farms could receive based on their losses and production: small uncertified farm around US$42,000; certified small farm, US$60,000; certified medium farm, US$90,000; certified large farm, US$110,000.