Dairy farmers throughout the country will split $290 million to help compensate for low milk prices. That amounts to about $8,000 for a 125-cow Vermont dairy farm.
The U.S. Department of Agriculture said Thursday it has begun processing payments under the Dairy Economic Loss Assistance Payment program. The money could be received as early as Dec. 24.
"It's helpful, but minimally," said Onan Whitcomb a co-owner of the North Williston Cattle Co. in Williston, which milks about 300 cows and should receive more than the $8,000 estimate. Whitcomb said his farm lost more than $100,000 in the past year.
That level of loss -- caused by plummeting milk prices -- is in line with the average Vermont dairy farm, Agri-Mark Inc. economist Bob Wellington said. Agri-Mark represents about one-third of Vermont's dairy farmers in its seven-state cooperative. The global recession played a large role in the collapse of milk prices, he said, allowing excess supply and decreased demand to sap prices.
"This has been the worst year for dairy farmers in last 40," Sen. Bernie Sanders, I-Vt., said in phone interview Thursday. "We have lost farmers. Others are deeply in debt."
Dairy farmers were devastated by the rapid fall in prices this year. In July, for example, Vermont farmers were paid 40 percent less than the $1.79 a gallon paid in July 2008, according to government data. Prices have increased by some 27 cents a gallon since then, but remain below the break-even mark.
Sanders pushed for the aid with the help of Sen. Patrick Leahy, D-Vt., and Rep. Peter Welch, D-Vt. The delegation said it recognizes the aid is not a fix-all to the persistent woes of the state's dairy farmers.
"We need long-term solutions for the volatility in the dairy industry," Sanders said. "We can't have a situation where prices one year are going way up and the next year they are plummeting."
A reform of the nation's antiquated milk pricing system will take time to develop as a consensus emerges, Sanders said, possibly not arising until 2012 when the farm bill is negotiated. Vermont Agriculture Secretary Roger Allbee said pricing reform needs to come sooner.
Although the federal aid will leave local dairy farmers with major losses, Allbee said the measure is particularly valuable because "it sheds light on the fact the system is broken and it needs to be fixed."
The price Vermont dairy farmers received for milk ranged from $1.07 a gallon to $1.10 a gallon for seven months this year, according to U.S. Department of Agriculture's New England Agricultural Statistics in Concord, N.H. The data includes premiums and incentives paid for quality and transportation. The cost of production is $1.47 to $1.55 a gallon, according to industry sources.
Wellington praised Sanders for landing the federal dollars. "We have a tremendous delegation in Vermont. But on this deal, Sen. Sanders took the lead and farmers throughout the nation should be grateful to him," he said.
Welch said the program "is a help, but it's not a solution. We all understand that," he said. "We all understand that farmers have to have a long-term sustainable price."
Leahy said the funds "will help stabilize operations hard hit by declining prices, bringing hope and some relief to dairy farmers."
Prices have begun to rebound, but remain below farmers' cost of production. In November, the USDA found that Vermont farmers were paid $1.34 a gallon. Wellington forecasts milk prices will approach $1.55 a gallon in the spring and might exceed $1.72 "if current conditions continue."
Sanders said he is hopeful momentum for reform won't wane if prices recover.
"You can't only look at long-term solutions in the middle of the crisis ... or else the trend is very clear: You will see the demise of small family farms," Sanders said.