Vermont Farmers Grapple with Significant Drop in Milk Prices
Milk prices paid to Vermont dairy farmers have plummeted this winter from a record high last year as farmers head into the spring planting season when they need to buy seed and fuel.
Following an all-time high in September of 2014 of around $25 per hundredweight — 100 pounds of milk, or a little more than 11 gallons — prices paid to farmers have dropped to around $16 and are forecast to continue to fall through the spring.
"It's going to be a tougher year for sure for everybody," said Diane Bothfeld, deputy secretary of the Vermont Agency of Agriculture.
This year some farms could get a help from a new price protection program that offers financial assistance when the difference between the price of milk and national average feed costs falls below the coverage levels selected by individual farmers.
In Vermont, 582 dairy farms, or 67 percent, enrolled in the program created by the 2014 Farm Bill. An additional 28 Vermont dairy farms took part in another program that offers protection based on the margin between the cost of feed and the average dairy income, Vermont's congressional delegation said in January.
Farmers who chose the highest margin to ensure — or when the difference between milk price and feed costs gets below $8 — could end up with a payment. Predictions show that the month of March may get below the $8 margin, Bothfeld said.
"Times are a little tight now. Some farms may end up with a payment from their milk margin protection program but not all farms depending on what they chose," she said.
Lower gas and diesel prices have helped but feed prices, which have leveled off, are still high, she said.
Dairy farmers are used to price fluctuations.
Based on history, when farm prices are at the highest points they've ever been, farmers are going to react with more supply and consumer demand may also go down.
"So we knew this year was going to be a lower-priced year, and probably significantly lower. Not as bad as it's gotten though," said Bob Wellington, an economist with the Agri-Mark Inc. dairy cooperative, which includes the Vermont-based Cabot Creamery.
Milk prices took a dive in January due to global factors and increased production.
The price is expected to drop to the high $15 range per hundredweight through May and June, then rebound a little bit into the fall to the mid- to low-$18 range, Bothfeld said.
"It's under the cost of producing milk easily into June," said Tom Audet of Ledge Haven Farm in Orwell.
Audet and other farmers planned ahead, prepaying for grain, fertilizer and seed that they knew they were going to need this year, which also provides tax advantages.
Swanton dairy farmer Richard Longway said the family farm bought some equipment it knew it would need this year, such as a skid steer, and prepaid for a couple months of grain.
"We're probably going to lose a little money out of it but we prepared ourselves," Longway said of the price drop as the farm prepares to plant about 500 acres of corn in the spring.
"So this time of year, once the fuel tanks start to take a hit, it's going to get expensive," he said.
To make up for the price drop, Ledge Haven Farm is now focusing on its maple syrup business.
"If it was important last year it's more important this year to have the extra dollars from another entity," Audet said Wednesday. "So we had a really good boil yesterday and made some really good syrup."
