Even with recent improvements in profit margins from higher milk prices and lower feed costs, dairy farmers know all too well the struggle of tough years. This reality has hit small and medium-sized farms especially hard, where every decision can make the difference between staying afloat or sinking under the weight of challenges.
To combat this, Ag Secretary Tom Vilsack recently announced that $11.04 million in new funding will be issued to help support dairy businesses and producers under the Dairy Business Innovation Initiatives (DBI) grant program. According to the USDA, these initiatives will help support small and mid-sized dairy businesses in the development, production, marketing, and distribution of dairy products.
“[Roughly] 88% of farm families in the country today require off farm income to be able to keep the farm,” Vilsack recently said to the attendees at World Dairy Expo. “The question is are we satisfied with that? I don’t think we are. I think there’s a genuine desire to figure out ways in which we can help small and mid-sized farming operations that sell less than $350,000-$500,000 in sales. They’re not only important to agriculture, but they’re also really important to rural communities. Because if you lose farms, you lose the farm family.”
Building on that point, Vilsack emphasized the need for new strategies to support small and mid-sized farms. He believes it’s not enough to rely solely on support programs; instead, the focus should be on empowering these farms to create multiple income streams directly from their operations.
“We’ve got to create an opportunity for these small and mid-sized operations to be able to profit,” Vilsack noted. “And it can’t just be support programs. It’s got to be a new and creative model in which we essentially challenge ourselves to figure out ways in which those same farm families can generate more than one source of income from their farming operation. So, we’ve attempted to do that with some several basic strategies.”
Capitalizing on Sustainability
Vilsack sees the Climate Smart Agriculture Commodity partnership as one of these key strategies for farmers to generate additional income. He explained that this initiative began with the dairy industry with the idea that farmers who adopt climate-smart practices should not only be encouraged to do so, but also rewarded with market premiums for their efforts.
“We’re beginning to see value-added opportunities being created,” Vilsack said. “There are markets that will pay for environmental results —it could be a carbon market, a water market, or even a biodiversity market. That creates a new source of income.”
Vilsack also highlighted the widespread impact of these efforts, noting that 136 climate-smart agriculture contracts have already been signed across all 50 states to date.
Developing Local and Regional Food Systems
Vilsack also emphasized the importance of developing local and regional food systems, explaining that farmers can earn significantly more by selling directly to consumers or institutions compared to commercial sales.
“When you sell commercial, you sell milk that ultimately goes to the grocery store,” Vilsack stated. “Essentially, farmers get anywhere from 15 to 20 cents of that food dollar. But when you sell directly to your customer - directly to a school, a farmer’s market or to an institutional purchaser of food in a local market - that farmer can potentially generate 50%- 75% of that food dollar for their operation.”
Vilsack stated this can be done through the Value-Added Producer Grant Program, which has approximately $30 million in total available funding.
“We’re directing a portion of that money to be spent with local and regional food producers so that small and mid-sized farming operations have a new market opportunity where they get a bigger bang for their buck,” Vilsack noted.
Dairy Innovation Center Investments
Across the nation, the USDA has consistently supported the country’s four Dairy Innovation Centers. This commitment is now being strengthened with $11.04 million in new funding for farms and producers through the DBI grant program, as highlighted by Vilsack.
“USDA is committed to helping America’s dairy industry remain competitive as they work hard to provide necessary, nutritious dairy products to communities nationwide,” Vilsack said. “Through DBI, we aim to help the dairy industry access new and better markets, spur innovation, and create economic growth. To date, the initiatives have invested over $64 million into more than 600 projects that are increasing dairy supply chain resiliency, creating new markets and expanding economic growth in rural economies.”
This year’s funds are being awarded noncompetitively to the four current DBI Initiatives at California State University, Fresno, the University of Tennessee, Vermont Agency of Agriculture, Food & Markets, and the University of Wisconsin. The initiatives will use the funding to provide valuable technical assistance and subaward funds to dairy farmers and businesses across their regions, supporting them with business plan development, marketing, and branding, as well as increasing access to innovative production and processing techniques to support the development of value-added products.
This year’s DBI projects include:
- West - In California, Oregon, and Washington, the Pacific Coast Coalition will use $690,000 in new funding to continue revolutionizing the dairy sector by helping farmers tap into higher-value uses for milk, such as artisanal cheeses and organic dairy products. The Coalition’s workforce training program will ensure dairy businesses remain competitive, allowing producers to diversify markets and income.
- Southeast - The University of Tennessee will use $3.45 million to support farmers across 12 states, enabling them to integrate innovative practices such as on dairy innovation, product safety, farm sustainability, and workforce development to improve financial outcomes and diversify the dairy supply chain.
- Northeast - The Vermont Dairy Business Innovation Center will use $3.45 million to extend its reach. As of August 2024, this initiative has provided $31 million in support for 333 projects, ranging from farm modernization to energy efficiency improvements, all aimed at boosting resilience and efficiency across the region’s dairy sector.
- Midwest - The Dairy Business Innovation Alliance in Wisconsin will use $3.45 million to continue to empower dairy farmers and processors in the Midwest with grant programs and technical assistance, focusing on expanding market opportunities and supporting value-added dairy product innovation.
“We’re adding another $11 million to those four dairy innovation centers, because we know that they can leverage significant investment and that they can create new opportunities for farm families across the country,” Vilsack added.
According to the USDA, dairy farmers and businesses who interested in the program must contact the appropriate initiative to be considered for direct technical assistance or a subaward.
