Go organic, Vt. dairy farmers need new business model

By Roger Allbee
The Vermont dairy industry is again reeling from low commodity prices, caused by overproduction, a glut of imports, challenges in our export markets, and poor economic growth. The stark reality is that the current pricing mechanism for non-organic milk, in place since the 1930s, and other constraints results in an unfavorable longer term prognosis for Vermont’s economically important and iconic dairy sector.
It is known that the number of Vermont’s dairy farms has been declining for many years because of low milk prices, price volatility, and the rising costs of milk production. Part of this decline is attributable to the hard fact that milk production has been shifting for many years now to the western half of the U.S. where milk can be made and shipped east for less than it costs to make here, and this will not change. Furthermore, globalization of the dairy industry will increase in the coming years, resulting in more volatility in dairy pricing. Also, increased emphasis on water quality and environmental compliance is placing additional financial burdens on farms today.
It is often said that to understand the future, one needs to appreciate the past. Vermont’s signature Merino sheep industry collapsed in the 1840s because farmers could not compete with farmers in the West or internationally. Many of the same conditions exist today for dairy that the federal government is not going to heal. While I remain an ardent supporter of Vermont farmers, I have come to the conclusion that our conventional dairy farmers need to change their business model or face further and continuing pricing challenges and declines in farm operations.
It is time that Vermont demonstrate that it can sustain and improve an industry threatened by economic decline and challenged by environmental constraints.
The rationale for this change comprises compelling economic, fiscal, ecologic and social advantages for producers, consumers, the environment and our state. It is known, for example, that the organic farm price, year after year, has been consistently three times higher and more stable than the conventional dairy price. It is driven by supply and demand, and has little or no government support. Over 200 Vermont dairies of the 870 or so have converted for this reason.
Based on what is known today about markets, competition, the environment, and consumer perceptions and preferences, Vermont should move as quickly with initiatives to emulate what Denmark is doing by becoming an organic milk-producing state. It will not happen overnight, and may not work for all but it will need to encompass an approach that assures higher pricing for producers going forward.
Implementing such programs and strategies will not be easy and will take cooperation and leadership from all elements of the dairy industry (processors, producers and their cooperatives) and others to include the next governor’s administration, but the alternative is worse or more disruptive to our state, the remaining conventional dairy farmers, the economy, the landscape. It is time that Vermont demonstrate that it can sustain and improve an industry threatened by economic decline and challenged by environmental constraints. Capitalizing on a brand identity for dairy linked to wholesome and healthy food and environmental compliance while having more predictable pricing is a laudable and achievable objective, I submit. Now is the time to act even though this change is monumental in scope and will not and cannot happen overnight.
Roger Allbee is the former secretary of Agriculture, Food and Markets for Vermont. He was a former staff member of the House Committee on Agriculture for then Congressman Jim Jeffords of Vermont, where he was responsible for dairy and soil and water conservation policies.