Milk prices paid to dairy farmers have plunged to their lowest levels in a quarter century.
The Northeast Dairy Compact expired last year, and the recently passed federal farm bill was designed to help.
But farmers in New England are losing tens of thousands of dollars a month.
And observers say that the situation could mean more lost farmland.
Maine Public Radio's Naomi Schalit reports.
sfx, shoveling bedding material 7/41
This is the calf barn on the farm that Harold Larrabee's father established atop a windy hill in Knox in 1942. A farmhand is shoveling wet bedding material out of stalls.....Larrabee's daughter is feeding the young calves tethered in the stalls. And while all looks busy and well at this dairy farm, Harold Larrabee says the operation is in trouble:
8/244 RIGHT NOW WE'RE PROBABLY A DOLLAR AND A HALF TO TWO DOLLARS CASH COST BELOW JUST WHAT IT TAKES TO PAY THE LABOR AND THE GRAIN BILL AND STUFF LIKE THAT. WE'RE DIGGING A HOLE. WE'RE PROBABLY LOSING TWELVE TO FIFTEEN.
Make that twelve to fifteen thousand dollars a month that Larrabee's farm is losing. And as anyone who deals with farmers can tell you, these aren't folks who have big bank accounts....Rodney Ingraham, just up the road on Knox Ridge, knows that fact all too well. Ingraham's family runs a farm equipment store that services more than a hundred farms in the region.
10/37 THE SALES ARE WAY DOWN, PARTS ARE DOWN, ACCOUNTS RECEIVABLE IS GETTING HIGHER, IT'S HARD TO COLLECT CUZ THE FARMERS JUST ARE NOT GETTING PAID ENOUGH FOR THEIR PRODUCTS.
The price paid to farmers for their milk has dropped to just under twelve dollars a hundredweight.
THE PRICE LEVELS THAT THEY'RE GETTING RIGHT NOW ARE ABOUT AS LOW AS THEY WERE IN 1978.
Bob Wellington is chief economist for Agri-Mark, the largest dairy farmer cooperative in New England.
AND OF COURSE ALL THEIR COSTS HAVE GONE UP SUBSTANTIALLY SINCE THAT TIME, SO I'VE NEVER SEEN THE LEVEL OF STRESS ON DAIRY FARMERS THAT WE SEE AT THIS MOMENT.
The problem is a national one, says Wellington. Every milk producing region is suffering. While there is a federal program to pay cash to some dairy farmers who are in trouble, many say that program is too little and won't last through the winter. And while there is a federally mandated limit on how low prices can go, one observer called that limit so low that it's , quote, a safety net lying on a concrete floor." The cause of the price drop is an oversupply of milk. That oversupply is the result of two converging factors: first, production of milk is up, but the demand for milk is down. Second, says Wellington, when prices drop, farmers can't just cut back on the amount of milk they're producing. When the price of an item goes down, says Wellington, most other businesses will cut their
production:
BUT DAIRY FARMERS, YOU CAN'T DO THAT, SO WHEN THE PRICE FALLS, MANY DAIRY FARMERS FIND THEMSELVES INCREASING PRODUCTION IN ORDER TO KEEP UP THEIR CASH FLOW, AND IT COMPOUNDS THE PROBLEM.
Some Maine dairy farmers have threatened to dump milk this weekend to protest the low prices. Most observers say that's likely to accomplish little more than getting some attention. State agriculture commissioner Robert Spear, a dairy farmer himself, hopes to find some way of raising the price.
318 WE'RE GOING TO SIT DOWN WITH THE COOPS AND INDEPENDENT PROCESSORS AND SEE IF WE CAN PULL TOGETHER AND HAVE WHAT WE CALL AN OVER ORDER PRICING FOR THIS FEDERAL MARKET HERE IN THE NORTHEAST; RIGHT NOW THAT'S THE MOST OPTIMISTIC THING I CAN SEE WE COULD DO.
That so-called 'over-order' would compel all processors in the region to pay all Northeast farmers an increased price for their milk. But Spear admits that's a long shot.....and there are others who fear that the real answer to the overproduction that's driving prices down is to cut
production.....by decreasing the number of farms. Agri-Mark's Bob
Wellington:
IT'S THE CRUELLEST FORM OF ECONOMICS THERE IS.
One Skowhegan insurance agent, whose core business is with farmers, says he expects that by the end of next summer, Maine will have lost another five to ten percent of its dairy farms. That's an optimistic prediction, says another dairy farmer. "We'll be lucky if that's all we lose," he says.
For Maine Public Radio, I'm Naomi Schalit.
