New Hampshire consumers pay about three dollars for a gallon of milk.
Yet New England's dairy farmers see only a third of that money.
As a result, many Vermont and New Hampshire dairy farmers face financial disaster.
They met earlier this week to look for answers.
NHPR correspondent Michael Krauthamer reports.
More than 150 New England farmers met in West Lebanon, earlier this week to discuss the financial future of the regions dairy farms.
The University of New Hampshire Cooperatvie Extension hosted the conference.
The audience listened intently as economics, marketing and legal experts discussed the weakened state of the New England Dairy market.
But most of the farmers didn't need the academic experts.
The topic is painfully familiar.
Dairy farmers have watched wholesale milk prices tumble to a twenty-five year low.
Vermont Dairy Farmer Sharon Bogie:
Sound byte A:
I own the family farm. I've, been on the farm all my life; my family, my father, my grandfather, and were in trouble, simple as that. Us ordinary family we talk about this all the time.
Many farmers are in a catch 22 situation.
Low milk prices force famers to increase production to cover their operating costs.
At the same time, farmers know that a greater supply of milk will drive down the price even further.
The lower price again forces farmers to produce even more.
Sharon Bogie
Farmer sound byte 1
We're just going so far behind every month. Oh I'm sure that retail prices will drop eventually but these processors and these handlers have got so much power and so much control, they can change it overnight if they want to.
The farmers accuse large diary processors of maintaining a stranglehold over retail milk prices.
They charge these companies artificically inflate retail value to price gouge customers, increase supply, and underpay dairy farmers.
And they fear this problem will only get worse.
Hood, New England's second largest diary processor, is planning to merge with National Dairy Holdings, the nation?s second largest.
Phillp Renolds works on his newphew?s farm in Langston, New Hampshire.
He believes that such mergers infringe on his democratic rights.
Sound byte2:
I think its bad when you get down to one bidder, I?ll tell you right now, on the milk. We?ve let it get monopolized too much. We?re supposed to be a free country and now we?ve taken all the freedom right out of it. Right? To me you have.
Processors argue that the retail market is just what they call "sticky."
They predicte it will eventually reflect wholesale prices.
However Michael Stumo disagrees.
He is with the organization of competative markets which litigates anti-trust suits on behalf of farmers.
Sound byte 3:
There is no data to support the theory that consumer prices will in fact follow the lowering of the farmgate prices. It's an intellectually atractive theory, the problem is that it's patently false.
Local Farmers complain that other factors complicate the issue.
The slow economy has meant fewer people dining out.
That means restaurants are purchasing less dairy products like butter and cheese.
That may seem like a tiny part of the diary market.
But industry analysts say a loss of 3% in consumption can cut wholesale prices by 30%.
In the past, New England farmers had the Northeast Dairy Compact to fall back on.
The program set a minimum price for milk at just under $17 for a hundred pounds.
If the price fell below that, processors paid the differences.
But the Compact expired last fall.
The Farm bill uses federal tax dollars to reimburse farmers when the prices falls.
But the rate is lower than the Compact paid.
And it reimburses farmers only for their first 2.4 million pounds of milk.
So larger operations enjoy few benefits.
What?s more, independent minded dairy farmers don?t like the taste of what seems like a Government handout.
Mr. Bogie.
Sound byte 4 of the farmer:
We don't want a welfare check, all we want is a living-pay our bills and make a living.
Those attending The UNH Conference arrived at no one single answer.
Some called for farmers to stop producing so much milk.
Others wanted to lobby politicians.
Still others said local governments should press for better enforcement of anti-trust laws.
And then there were those who wanted to focus on better local marketing tactics.
They argued that consumers would be willing to pay more for local high quality products.
However others insisted that when it comes to choosing between high quality or a great bargin, the wallet wins.
Clearly all those attending the UNH conference are feeling the financial squeeze.
And for those on Bogie Mountain there are no easy answers.
Sound byte 5 farmer:
It's not gonna be a good solution. We're in trouble and a lot of us won't be there come Spring, it as simple as that, if they don't do something.
For NHPR News this is Michael Krauthamer in W. Lebanon.
