Farmers facing economic trouble

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(Host) Economic trends have begun to move in the wrong direction for Vermont dairy farmers.

Milk prices are projected to fall in the next couple of months just as grain and fuel costs rise. Experts say it might be difficult to make much money on the farm this winter.

VPR’s Ross Sneyd reports.

(Sneyd) Feed is the big issue for Vermont dairy farmers.

Bob Parsons works for the UVM Extension Service and he keeps track of farm costs.

(Parsons) "There’s a lot of people that are really concerned about what long-term implications are because there are so many things changing all at one time. Farms that in Vermont that might be more forage-based might be in a better position to survive than those that import a lot of grain.”

(Sneyd) Just this week the cost of a bushel of soybeans jumped 60 cents to better than $12.

Corn is more than $5 a bushel and could rise to around $6.

Here’s some of what’s driving up prices.

Some investors hurt by the turmoil on Wall Street have shifted their money to commodity markets. This puts upward pressure on prices.

A growing share of the country’s grain crop has been diverted into making ethanol-based fuel. That leaves less for dairy cattle and drives up the cost.

And it takes a lot of fuel to plant and harvest grain – or to truck it from Midwest farms.

Diane Bothfeld of the Vermont Agriculture Agency says farmers’ balance sheets don’t look very promising.

(Bothfeld) "We really are getting to the point where the price to be paid out in October and November will probably dip below a farmer’s just plain operating cost, no return on investment, no profitability. … We’re going to see a tough times in the last few months of 2008 for dairy farmers.”

(Sneyd) Right now, just to paid for feed and fuel, it costs a dairy farmer almost $17 for every 100 pounds of milk he or she produces. That’s what economists project the farmers will be paid for that same 100 pounds of milk this winter.

Farmers will still have to pay their utility and labor costs, so they may have to take a loss, at least for part of the year.

The situation is worse for organic farmers. Their feed prices are two to three times higher than what it costs a conventional farmer.

UVM Extension already knows of a couple of organic farmers who’ve quit the business. And a handful have moved back to conventional farming because they can’t keep up with the costs.

For VPR News, I’m Ross Sneyd.

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