Dairy Farmers Facing Increased Stresses Including Low Payments and Export Restrictions

Sep 22, 2016

Milk production in the region is up as the payments farmers are receiving have dropped to unprofitable levels.  Meanwhile the federal program intended to buffer the low points is coming under increasing criticism.  This is occurring at the same time an export market that might aid the dairy industry could be blocked.

The National Agricultural Statistics Service’s latest reports show that milk production in New York in June was up 4.2 percent over the previous year.  In Vermont, production rose  1.3 percent during the same time frame.   But in both states the average price received by farmers for their product dropped.  Vermont farmers got $16.00 per hundredweight in May, 40 cents less than in April and down $2.00 from May a year ago.  In New York dairy farmers are getting $1.80 less per hundredweight than they were paid a year ago.

Agrimark Economist Bob Wellington says the safety net that the federal government created in the latest farm bill - the Margin Protection Program or MPP – isn’t working as an adequate buffer.   “Farmers signed up for it last year when the prices first started collapsing and hardly any farmer got any money despite spending, I think $75 million dollars farmers spent on premiums,  and I think they gave out less than a million dollars in payments last year. But the trigger price wouldn't trigger in for most farmers. It was like right on the edge and so farmers looking at 2016 most of them didn't buy up coverage. Those that did, did get a payment during the springtime. And the period covered the costs of the premiums but not much more than that. And not all farmers qualify for it anyway. So it hasn’t been a good program overall for farmers.”

Sam Dyer operates a small dairy farm in Clinton County New York. He calls the Margin Protection Program a farce.   “I don't know of any farmers in Clinton County or for that matter in any county in New York State that have collected from the program at all. I think before we talk about a program we need a price. You know two years ago, or a little over two years ago, we were getting $28 a hundred for our milk. Last month we received $15.50 at the farm. You have to take another fifty cents out for hauling so you’re down to $15 a hundred. I cannot produce milk and make a living at $15.  Maybe at 18 or 19. Twenty-one and 22 we would be good. But at $15 a hundred I don't think anybody can make a living at that price.”

Another issue of critical concern to the region’s diary industry is a move by Canada to implement a National Ingredients Strategy.  It would bar dairy imports from the U.S. Senator Charles Schumer is concerned because two plants in New York export milk protein concentrates and ultrafiltered milk. He is asking U.S. Secretary of Agriculture Tom Vilsack to determine if the move by Canada is in alignment with trade agreements. Northeast Dairy Farmers Cooperatives Senior Dairy Policy Advisor Robert Gray says it’s a huge issue across the region.   “We've got two plants in New York that have developed a very good market in Canada for ultra filtered high protein milk. It used to be called MPC's: milk protein concentrates. But there were very few plants that made this kind of product. Now we have them. And these two plants have developed a very good market into Canada and if we lose those sales into Canada that milk will come back on the domestic market and it will lower prices for all dairy farmers, not just New York, but for the whole Northeast even further because it's putting extra milk on the market.”

A decision is expected by November 1st regarding Canada’s National Ingredients Strategy.