Dairy Farmers Hope Milk Prices Remain High
01/09/12 7:34AM By Steve Zind
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(Host) Vermont dairy farmers benefited from rising milk prices last year, but there was continued fallout from the record low prices of 2009.
As VPR's Steve Zind reports, farmers are hoping the coming year won't see a return to the recent boom and bust cycle in milk prices.
(Zind) In the summer of 2009 milk prices were at a 30-year low and Vermont dairy farms were going out of business.
That's exactly when 23-year-old Joe Angell bought a herd of 40 Jerseys and started dairy farming in Brookfield. Angell figured if he could make a go if it when prices were that low, he'd be ok.
(Angell) "I wasn't losing money when it was $13. I wasn't making any. So if I could do that I think I could be fine."
(Zind) Angell was fortunate. He didn't have to take on a lot of debt to get started. He rents the barn and pasture land on an existing dairy farm and didn't have to buy expensive farm machinery.
A Vermont farmers cost to produce milk is about $18-20 per hundred pounds - and Angell needs to get that to achieve his dream of one day owning a farm.
In 2009 prices dipped below $12 per hundredweight. Compare that to the year just ended when they averaged about $20 per hundredweight.
(Bothfeld) "That's not the highest it's ever been, but probably about the second highest in the last 10 years. So it's been a very strong milk price year."
(Zind) Diane Bothfeld is deputy secretary of the Vermont Agency of Agriculture. She says last year's higher prices were driven largely by overseas demand for milk products, mainly from markets in Europe and Asia. Cheddar and the dried whey powder that's a byproduct of cheese making were among the Vermont dairy products in demand as exports.
Vermont ended the year with 984 dairy farms, down from just over one thousand at the start. Bothfeld says that decline is partly due to the residual impact of the 2009 crisis.
She says despite the drop in farm numbers, overall milk production has stayed about the same for the past five years.
As they prepare to gather for the annual farm show later this month, farmers are hoping prices won't drop too much in the coming year.
(Bothfeld) "We've got some early predictions for 2012 and it looks like the average will come in at about $18.25 to $18.50 per hundred pounds of milk. So a decline from 2011."
(Zind) Bothfeld says despite higher prices last year, rising costs - especially feed costs - cut into the profit margin for dairy farmers. That's something Joe Angell has had to contend with.
(Angell) "When milk prices were around $16 or $17 per hundredweight it was almost easier because grain prices have gone up about $100, $120 a ton and all feed prices have gone up for everybody. And that makes your margins a little tighter."
(Zind) In the coming year farmers are hoping that the end of subsidies for the production of ethanol from corn will mean more of the crop is available for feed and those prices will moderate.
But always lurking in the background is the volatility of the milk market and a boom-bust cycle that for the past 10 or more years has seen a return to leaner milk checks after a period of higher prices.
That's something both farmers and politicians have been trying to address. But so far they haven't been able to agree on an approach.
For VPR News, I'm Steve Zind.