Milk Commission looks for ways to boost farmers’ profits

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(Host) The Vermont Milk Commission wants to capture some of the profits made on retail milk sales – and send the money back to the farm.

But representatives of the dairy industry and the Vermont Grocers Association warned that the plan could backfire, and that consumers could end up paying more.

VPR’s John Dillon reports;

(Dillon) The Milk Commission has the legal authority to regulate milk prices within the state.

It’s a power that’s rarely used. But Agriculture Secretary Roger Allbee – who also chairs the milk commission – said the regulation may be needed because retail prices have stayed high, even when prices paid to farmers have fallen.

(Allbee) "The evidence that the Milk Commission has collected by doing surveys of stores across the state is that while farmer prices have decreased over the last year, consumers prices have not decreased so there’s been that ratcheting effect."

(Dillon) The plan is designed to capture what the commission calls "surplus profit margin" in the milk market and return some of that money to farmers.

The regulation would allow the commission to levy an assessment on fluid milk sold at retail. The data collected by the commission shows the profit margin is especially high on milk sold by chain supermarkets. The commission said that while prices for fluid milk paid to farmers dropped about 40 cents a gallon last year, retail prices only fell seven cents.

(Allbee) "And if that is in fact happening, why cannot the farmers not share in that price that the consumers are paying higher prices for?"

(Dillon) But representatives of the dairy processing industry and the Vermont Grocers Association warned against government interference in the market.

Jim Harrison represents the Vermont Grocers. He says the cost of the premium would be passed on to consumers.

(Harrison) "We are all struggling with the high cost of energy and food today. The last thing we need is an order from the commission adding new taxes, premiums and fees onto Vermonters now. Politicians often talk about affordability her in Vermont. Clearly, this order goes in the opposite direction and adds to our cost of living."

(Dillon) The proposed price regulation got a mixed reaction from the dairy cooperatives that represent many Vermont farmers.

Robert Wellington is an economist for Agri-Mark, the region’s largest dairy co-op. He said retail price regulation is difficult in Vermont, because the state produces over 60% of the milk in New England, yet it has less that 5% of the population.

(Wellington) "At the end of the day, if you give farmers a very little bit of money but you’re charging consumers a lot, what have you accomplished? Maybe there’s a better way to get that money. So we’re supportive of the concept, we’re always trying to increase Class 1 prices, we just have concerns, most of them relating to how you can price milk, particularly that flows across the border."

(Dillon) If the milk commission decides to go ahead with the price regulation, it would then have to be approved by a referendum of dairy farmers.

For VPR News, I’m John Dillon in Montpelier.


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