Commentary
July 17, 2015

Glut of milk leads Vermont farms, co-ops to dump product

By Erin Mansfield, VTDigger.org

An oversupply of milk is bringing down prices in the Northeast and driving large dairy cooperatives to dump their product in manure pits, experts say. Although low prices for milk products can be a short-term positive for consumers, the low prices are causing a hard time for farmers who otherwise enjoyed the benefits of record high milk prices for the past five years.

That’s according to Doug Dimento, a spokesperson for the Agri-Mark dairy cooperative based in Massachusetts. The cooperative includes milk-processing plants in Middlebury and St. Albans and has been forced to dump skim milk at its processing plant in Springfield, Mass.

“There’s just too much milk around, more than the plants can handle,” Dimento said. “It’s not only a Northeast problem. If you look at the news clips, it’s happening around the country as well.”

Dimento said a hundred pounds of milk (hundredweight) sells for about $17.50 this summer, down from about $24 a hundredweight last year. But it usually costs farmers between $18.50 and $20 to produce a hundred pounds of milk, he said, so they are taking a loss when they sell their milk.

As a result, AgriMark is taking the cream off the top of milk to make butter, then dumping skim milk into manure pits on their property or at large farms, Dimento said. Rain washes the milk away, leaving little change to the manure pit, he said.

“Farming isn’t the best,” said Paul Percy, a dairy farmer in Stowe. “The weather isn’t great. It’s been very hard to get our crops in. Corn isn’t doing too well, and the price of milk is on the low side.

“Last year was an excellent year, one of the better years,” Percy said. “Right now, the butter market is real good. The value of butter is pretty high. So that’s what’s good.”

The U.S. Department of Agriculture measures dairy output by classes, product and grades; and in units that include pounds, hundred-pound measures, called hundredweights, and gallons. Data shows that fluid skim milk prices have plummeted, powdered skim milk prices have dropped and butter is doing better than milk.

Powdered skim milk went for 94 cents per gallon in April, according to the USDA, down from $1.71 in July 2014. Class I butterfat sold for $1.88 per pound in April, down from $2.47 in July 2014. Class I skim milk and regular milk are down 48 cents per gallon and 65 cents per gallon, respectively, over the same period.

“Farmers around the country are facing big drops in prices, so they’re compensating by trying to produce as much milk as possible to pay their bills,” Dimento said. “[Cooperatives] are dumping milk because there’s too much milk around and none of the milk processors can handle all of the milk that we produce.”

Dairy Farmers of America is another cooperative with members in the Northeast, including Vermont. Clark Hinsdale, a Charlotte farmer who also president of the Vermont Farm Bureau, is a member of the DFA who says the co-op should start paying farmers not to produce so much milk.

“I haven’t talked to folks during this dumping cycle, so I don’t know if they’ve changed their mind,” Hinsdale said. “We’ll all be glad to be paid some fraction of the cost of milk to not produce what we would otherwise produce.”

Dairy farmers also carry a type of crop insurance regulated through the USDA that would pay farmers when milk prices go too low. Prices aren’t low enough for the basic insurance through the federal government to kick in, according to Hinsdale.

Paul Doton, a farmer in Barnard and a board member of Agri-Mark, says the problem is exacerbated because the milk market has changed and consumer demand is lower.

“People are just not drinking as much milk as they were in the past. They’re switching to other things,” Doton said. “But the bottom line is this class I market is not taking as much milk as it was before.

“Dairy farmers have a way to keep producing milk to keep cash flow, and if the milk price is low, they produce milk to make more money,” he said. “It’s disheartening to have to go through all the labor and effort to have to produce milk and then to have to dump it.”

Doton said the market might improve slightly in September, when students return to school, because schools must offer servings of milk with school lunches.

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