Rise in milk prices may not erase farmers’ debt

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(Host) Vermont dairy farmers will soon get more money in their milk checks. A leading dairy economist predicts milk prices will rise this month and through the fall. But farmers say it won’t be enough to erase a year and a half of rock bottom prices.

VPR’s John Dillon reports.

(Dillon) For about 18 months, the wholesale price paid to farmers has hovered around $11 for 100 pounds of milk. That’s about 95 cents a gallon, and it’s roughly what farmers were paid two decades ago. But there’s some good news on the horizon.

(Robert Wellington) “Well, it’s classic supply and demand.”

(Dillon) Robert Wellington is the economist for Agri-Mark, the region’s largest dairy cooperative. He says a drop in cheese and butter supplies, plus higher demand from restaurants and consumers, will send prices higher.

Wellington expects farmers to see a boost in their milk checks this month. And he says prices should be up more than $3 a hundredweight by the end of September. At that point, he says farmers will get paid about what it costs them to produce the milk.

(Wellington) “The problem is farmers have been receiving below – well below – the cost of production for the last 18 months. So it’s clearly not going to make up for the last 18 months. At best, they’re going to get their cost of production into this fall.”

(Dillon) Dairy experts had predicted that 200 Vermont dairy farmers would go out of business this year because of the record low prices. That didn’t happen. Instead, about 30 farms have closed since January. But Wellington says the reason why so few farms went out of business is that the farmers didn’t have many other alternatives for employment. He predicts that as the economy improves, farmers will decide to leave the dairy industry because they know milk prices will soon plummet again.

He says Agri-Mark is working with other cooperatives to try to stabilize prices into the future:

(Wellington) “Our goal now is not to raise the price because that takes a tremendous amount of time and money. But what we have to try now is to maintain these higher price levels.”

(Dillon) But Maureen Lehoulier, who farms in Irasburg, says prices have to go up more than $3 a hundredweight. Lehoulier works with a group called Dairy Farmers of Vermont. She says the price increase is welcome, but more is needed.

(Lehoullier) “It will help, absolutely, but it’s not going to erase anything for any length of time. Eighteen dollars a milk for a solid year might get us out of half of the debt that we’ve incurred for the last 19 months.”

(Dillon) Lehoulier says her organization represents about 300 farmers, who produce about one third of the state’s milk supply. She says the group will meet with dairy co-ops in early fall to bargain for higher and more stable prices.

For Vermont Public Radio, I’m John Dillon in Montpelier.

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