A new federal price protection program for dairy farmers took effect this week, aiming to offer farmers more stability. Milk is a commodity, notorious for wild price fluctuations. Under the provision, authorized early this year by President Obama as part of the federal Farm Bill, if the margin between the price farmers get for their milk and what they pay to feed their cows shrinks to below a certain dollar amount, the program will make up some of that difference.
The price protection program is voluntary, and farms have to pay enrollment fees based on output and the coverage amounts they choose. Enrollment is required by late November, so Vermont's Congressional delegation urged farmers to research the program and attend upcoming workshops designed for interested participants.
"2005 and 2009 really tried to put me out of business," recalled Mark Rodgers, who has a 200-head dairy operation in West Glover, Vermont.
Those years, Rodgers said, his operation lost $250,000 because costs outpaced the price of milk. "I can't sustain many more quarter-million-dollar loss years," Rodgers told New England Cable News. "This, now I know, will protect me from those catastrophic type losses."
Rodgers said he doesn't expect he'll experience those losses again, thanks to the new price protection provision. "It's really a no-brainer," Rodgers said of his participation in the program.
The margin protection program for dairy is voluntary. Farms have to pay enrollment fees based on output and the coverage amounts they choose. Rodgers told Vermont Public Radio reporter Steve Zind he expects to pay $20,000 in annual fees. The farmer indicated those fees would be well worth paying, if input costs rise, if commodity prices shrink, or both.
According to the Congressional Budget Office, or CBO, expenditures on the dairy provisions of the Farm Bill are estimated to top $900-million over the next decade. The new protections replace MILC payments, or Milk Income Loss Contract payments, which gave federal payouts to dairy farmers if commodity prices dropped beneath certain levels.
Overall, the CBO said the new Farm Bill will lower budget deficits by $16.6-billion over the next decade as compared to previous iterations of the spending package. Those spending reductions come because of cuts in other areas covered by the Farm Bill, including nutrition benefits.
Chuck Ross, the secretary of Vermont's Agency of Agriculture, said anything to make running a business more predictable and less subject to uncontrollable ups and downs of the market should strengthen the food production sector. "It has a big economic footprint," Ross said of farming. "And when we can help these farms be more viable, the community in which they're in is more viable, and the industry as a whole becomes more attractive."
The good news for dairy farmers is this is a boom year: milk prices have been at or near record levels. That means farmers have been able to pay off some of the debts they incurred in those bust years. This new program aims to smooth out those vexing fluctuations in costs versus prices for milk.
"If you work hard, you're going to be able to make money from it," Sen. Patrick Leahy, D-Vt., said of dairy farming under the new system. "You're going to be able to raise your family, you're going to be a major part of the community."
Leahy and the other two members of the state's Congressional delegation pushed hard for the provision. Leahy, Sen. Bernie Sanders, I-Vt., and Rep. Peter Welch, D-Vt., said they now want farmers to know if they're interested in enrolling in the price protection program, they have to do so by November 28.
"When rural America is successful, this country can prosper," Rep. Welch said. "We know in Vermont when our farmers thrive, the whole state is better for it."
The USDA has provided more information on the margin protection program on this website.
Vermont farmers may attend a series of enrollment workshops taking place in the state next month. The events, hosted by UVM Extension and USDA Farm Services Agency, run from 10:00 a.m. to Noon in five locations:
St. Albans: Monday, Oct. 13, American Legion, 100 Parah Drive
Middlebury: Tuesday, Oct. 14, American Legion, 49 Wilson Road
Rutland: Wednesday, Oct. 15, Holiday Inn, 476 Holiday Drive
White River Junction: Thursday, Oct. 16, Fairfield Inn, 102 Ballardvale Drive
Newport: Friday, Oct. 17, East Side Restaurant, 47 Landing Street