Dairy farmers breathing a little easier, but...

A few months ago the outlook for milk prices - and thus for Franklin County' s important dairy industry - looked rather bleak. The base price being paid to farmers was lower than it had been in years, with the only saving grace being the premium coming from the Northeast Dairy Compact. But the Massachusetts Legislature was determined to pull that state out out of the Dairy Compact. And St Albans Cooperative had just learned that its quarter-century partnership with Stop & Shop was ending.

The last year has been a difficult one for Dairy industry. Uncertainty about markets coupled with rapidly declining mill prices produced a lot of anxiety and could have been the final straw, in prompting a few farmers to sell their herds. Through much of 1999, farmers enjoyed excellent milk prices. The October/November price for class fluid was $19 a hundredweight.

Then in just one month the price plunged by more than $4. The only saving grace was that in November. Congress agreed to extend the Northeast Dairy Compact at least through September 2001.

But then Massachusetts threatened to withdraw from the Compact. a decision that would have effectively gutted the Compact. The argument advanced by the Bay State lawmakers (with a lot of lobbying from the International Dairy Foods Association which bitterly opposed the Compact) was that Massachusetts's farmers derived too little benefit from the program that is designed to increase the price farmers receive for their milk when the prices are low.

A multi-million media campaign sought to persuade Massachusetts consumers that they were paying more for their milk in order to support out-of-state farms. Instead the Massachusetts Legislature wanted to appropriate $3 million to make direct payments to their state's dairy producers. But in July Governor Paul Cellucci vetoed that measure, leaving, Massachusetts part of the Compact.

Meanwhile, restructuring by Stop out Shop left St. Albans Co-op dealing with the successor of this longtime customer. In February the Co-op notified its 540 member farmers - that Stop out Shop, which has been processing Co-op milk for sale in its stores for 25 years. was turning that responsibility over to Garelick, a subsidiary of the Texasbased Suiza Foods.

The letter to its members, the majority of whom are in Franklin County, reflected the concern with the change. Stop out Shop, it said. has - supported and recognized the importance of the Northeast Interstate Dairy Compact from its early initiative. Stop out Shop values the strong relationship that has been developed between both the people and the organizations. This is a very difficult time for everyone involved. Stop out Shop had accounted for about 30 percent of the Co-op's total production.

But by, August, Diane Bothfeld, spokesperson for tire Co-op, sounded much more optimistic about the new relationship, which, she said, had now been extended with a seven-year agreement.

Also new this year is a supply management system. Beginning July 1, per agreement of the farmers themselves, thee compact system began withholding 7.5 cents per hundredweight from each farmer's compact premium. Over the course of the next year, this is expected to produce a pool of between $4 and $5 million. (The money is withheld only when the compact premium is 32.5 cents per hundredweight or more the premium payment is larger when milk prices are lower.)

At the and of the fiscal year, June 30, those farmers who have produced no more than 1 percent more milk than they

did in the previous year will be eligible for die distribution, Half of the pool of money will be divided equally among the qualified farms, regardless of their size or total production. The other half will be paid according to the amount of milk produced, so much per hundredweight of total production.

Although the program is designed to create some incentive not to increase production, it is unclear how much impact it will have, "It is not a tremendous amount of money," said Bothfeld. "If a farm is going to expand, this isn't going to change things."

The free stall systems and technology available today can make expansion the most efficient and cost effective course, said Colleen Helenek, extension service dairy specialist. Just five years ago, she said, the average number of milking cows per farm was between 70 and 75. Today that number is just above 90 animals. "It's still a continuing trend."

Production is also continuing to climb, even as the number of farms continues to decline. Bothfeld said the Coop processed 1.025 billion pounds of milk from its member in fiscal 1998, and 1.085 billion pounds in fiscal 1999, an increase of almost 6 percent in just one year.

And Franklin County continues to produce more milk than another STATE in New England, Meanwhile, it appears that milk prices are beginning to edge up just a little. According to Helenek, the blend price for milk in September was expected to be about $13.78, more than 40 cents higher than the August price. And the October/November price was forecast to be in the $14 range.

With the compact premium, this will be giving farmers a little better milk checks than they have seen in recent months. That premium is "really important to the smaller farms," said Swanton dairy farmer and Selectman Earl Fournier, who milks fewer than 100 cows.

But the national outlook is for continuing increases in production, he said, And with good grain crops and lower feed costs he expects farmers elsewhere in the country to increase production, which will once again put downward pressure on prices. "It's going to be a tough 12 months," he predicted.

Copyright Boutin-McQuiston, Inc. Sep 01, 2000
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