Businesses feel pinch of low milk prices
08/10/09 7:34AM By Melody Bodette
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(Host) It's fair season in Vermont. The annual celebration of farming is also a place where agriculture companies meet with their customers-dairy farmers.
And in this time of low milk prices, many grain companies, equipment dealers and agricultural service businesses also have to change the way they do business.
VPR's Melody Bodette has more.
(mooing, A Goat!)
(Bodette) The Addison County Fair and Field Days claims to be Vermont's largest agriculture fair. And it's not hard to find appreciation for farmers here:
(Norris) A farmer is a very special breed, he really needs to be worshiped, there aren't many people who get up everyday and say if nothing breaks today, I'm still going to lose money.
(Bodette) Diane Norris isn't a farmer, but as a representative for Poulin Grain, she knows the pressure they're under. Poulin is one of the many agricultural businesses trying to work with farmers to keep their operations going when they're not making enough money to pay the bills.
Norris works with farmers to maximize nutrition from farm-grown crops to cut back on the amount of feed they have to buy. And when they are having trouble paying bills, she sends them to a bank:
(Norris) If they get behind with us then the interest, along with losing their cash discount versus just going to the bank and refinancing on their equity, it's not fun anyway you look at it and at the end of the day to know that you did everything right, and you're not being paid for your product and that's why you're borrowing money, there's something wrong with that picture.
(Bodette) Some estimate farmers are borrowing $75 to $100 per cow per month to simply stay in business. The agricultural lender Yankee Farm Credit says it's seen an increase of 18 percent in dairy borrowing over last year, largely due to low milk prices.
Luke Hotte and his brother Jesse own Addison County Harvesters.
(Hotte) Right now everybody's running red ink, even the guys who've got the farm paid for, they're borrowing money to stay in business.
(Bodette) The Hottes' company is a custom field work business in Bridport. Farmers hire them to cut haylage, corn silage and to make round bales. Luke Hotte says this year, farmers who can are trying to do more work themselves:
(Hotte) Those who are calling up they're making arrangements for paying up front with a cash discount or a multi-payment program, and they might not do a second cut they might say we don't have the money for it and they'll do the best they can to put the second or third cut up to try to eliminate some production costs.
(Bodette) Standing near some new John Deere tractors is Wilson Korth, a salesman at Hendy Brothers in Middlebury. He says his company works with farmers to keep them going, whether it's repairing older equipment or searching for used equipment:
(Korth) Obviously people that are in agriculture production need machinery so we've tried to come up with solutions for people that will keep them going, keep them producing their crops so they can take care of their animals. That's a given, that has to happen.
(Bodette) But he says when farmers start prioritizing their bills, the industry feels the ripple effect:
(Korth) If the farmers are hurting, that's where the income stream starts, of course everybody that works with them is going to feel that pinch and they're going to have to deal with it.
(Bodette) Korth says equipment dealers, like farmers, are hoping for higher milk prices and better luck next year.
For VPR News, I'm Melody Bodette in New Haven.