Editorial: Dairy woes (Rutland Herald)

Agriculture Secretary Roger Allbee was bluntly truthful Wednesday when he said the state would have no emergency funds to help bolster the bottom lines of Vermont dairy farms this year. Three years ago, the Legislature and governor managed to find $11 million in emergency support, but this year's budget meltdown makes that impossible.

Vermont's congressional delegation has been surprisingly successful in joining with members from other dairy states to press for federal help. Last week Agriculture Secretary Tom Vilsack agreed to boost the price the federal government pays for surplus dairy products, which could add about $1.50 per hundredweight to the price received by farmers. Then on Tuesday the Senate approved an additional appropriation of $350 million through an amendment offered by Sen. Bernard Sanders to raise that federal price even further.

Boosting the support price helps, but it does not solve the problem. With farmers earning as low as $11 per hundredweight, more will be needed to get the price up to $17, which is roughly the cost of production.

Sanders won another concession from Vilsack and Attorney General Eric Holder this week. They agreed to hold what are being called "public workshops" to examine the issue of monopoly control of the food sector. The workshops will provide opportunities for farmers and others in the business to give testimony about anticompetitive practices by dairy processors and other businesses.

These workshops, which will not begin until sometime next year, appear to be aimed at raising public pressure for antitrust action by the Justice Department. Ordinarily, the Justice Department doesn't hold hearings to determine whether infractions of the law have occurred. In any case, the inquiry into monopoly power in agriculture is long overdue. Sanders has been raising the alarm about Dean Foods, which controls 70 percent of the fluid milk in New England and 40 percent nationally. Sanders alleges that Dean has been earning high profits during the present milk crisis at the expense of dairy farmers.

Bringing more competition to the agriculture sector is a long-term remedy for the kind of crisis Vermont's dairy farmers are experiencing. But some dairy farmers are looking for other reforms.

The perennial problem for the dairy industry is that of swings between supply and demand. Dairy farmers cannot simply turn off the spigot to curb supply when surpluses depress the price. That's why the federal government over the years has tried to buoy the industry through a variety of support programs that are designed to put a floor under the price.

The present surplus has been attributed to the recession, which has led to dwindling demand for dairy products all around the world. Also, the growth of corporate dairy farms in states such as California, Idaho, and Texas has contributed to a surplus at the national level, even as the production from New England dairy farms sticks closer to the region's demand.

Oversupply and low prices often give rise to demands for a supply-management program that would discourage excess production. Some Vermont dairy farmers are pushing such a program, which would impose a two-tier pricing system, effectively penalizing farmers for producing above a targeted amount.

Supply management makes sense, but the dairy industry is famously conservative, shrinking from programs it sees as excessively bureaucratic or which give too much control to government. It remains to be seen whether the present crisis creates conditions desperate enough that a critical mass of dairy farmers will be willing to support supply management.

As members of Congress consider ways to help the dairy industry survive, they ought to look at the record of the Northeast Dairy Compact, now defunct, which worked to keep prices from falling too low by extracting a premium from dairy processors and sending the money back to the farmers. If processors are earning excess profits through monopoly power, it is a good way of sharing those profits with those who are furnishing the product that is earning the profits. And the premiums do not require money from the government.

Vermont depends on a healthy dairy industry. So does everyone in Boston and environs who enjoys a glass of milk or a bite of fine Vermont cheese. Got milk? We hope so, and for some time to come.