Vt. Milk Commission meets over milk prices (Burlington Free Press)

Milk processors resist Vermont fee

BY DAN MCLEAN, FREE PRESS STAFF WRITER • AUGUST 6, 2009

MONTPELIER - Officials from about a half-dozen milk processors met with Vermont Agriculture Secretary Roger Allbee on Wednesday and attended a Vermont Milk Commission meeting dealing with the collapse of milk prices - and possible remedies.

The conversation included consideration of a fee the commission would impose on processors when buying milk from Vermont dairy farms to create an emergency fund to help local dairy farmers during price downturns. The commission has regulatory authority over milk prices in Vermont.

Allbee said creating the fund is "a fairly high priority."

Details of the plan are in the early stages. The processors have agreed to further discussions with Allbee, who is chairman of the Milk Commission, and Bruce Hyde, the commissioner of Tourism and Marketing, about how a fund could be developed.

Rich Stammer, president of Cabot Creamery, seemed skeptical that Vermont alone could make such a fee work. If neighboring states acted in concert, he said, the success of such a fee plan would be more likely. Otherwise, processors would buy milk from neighboring states to dodge the extra cost. To the processor, Stammer said, "whether it's Vermont milk or New York milk, it really doesn't make any difference."

"Our customers that we sell milk to would say, 'I'm not paying. Either you get milk from some other place or you suck it up,'" he told the Milk Commission.

Mid-Atlantic states developed a milk premium, which inspired milk processors to truck in milk from Indiana, he said. State premiums typically are ineffective "because milk moves," he said.

Because all of the processors compete on price with Dean Foods Co.  - the nation's largest milk processor - a fee on Vermont milk would likely work only if Dean Foods  agreed to pay it, Stammer said.

Dallas-based Dean Foods  was invited but did not attend Wednesday's meetings in Montpelier. Other producers, which included HP Hood and Ben & Jerry's Homemade Inc., met privately with Allbee before the Milk Commission meeting but declined to address the commission during the public forum.

Prices paid to Vermont dairy farmers have fallen 40 percent in the past year, reaching lows not seen in decades. Stammer blames the global recession.

"When the world economy collapsed, it impacted everyone," he said, noting milk exports dropped, creating a surplus in the U.S.

Dean Foods  buys the bulk of milk in New England, said Sen. Bernie Sanders, I-Vt., who has called for the U.S. Justice Department to conduct an antitrust investigation into Dean Foods  and the dairy industry.

Antitrust workshops

Wednesday, U.S. Attorney General Eric Holder and Agriculture Secretary Tom Vilsack announced that joint public workshops throughout the country will be held to explore competition issues affecting the agriculture industry and the appropriate role for antitrust and regulatory enforcement. The first workshops will be held early next year.

"These workshops will be an important step toward allowing farmers in Vermont and across the country the opportunity to tell the federal government the disastrous impact agricultural consolidation has had on their industries and their livelihoods," Sanders said in a statement.

"Nowhere else is this consolidation more evident than in the dairy industry where you have one company, Dean Foods,  controlling 40 percent of the fluid milk market nationally, and 70 percent in New England. We need to take a hard look at the dairy industry and other parts of the agricultural sector."

Before the Vermont Milk Commission meeting, Allbee said he supported Sanders' call to investigate Dean Foods  and said a breakup of the company is possible if an investigation finds it is controlling too much of the market.

Dean Foods' profits have skyrocketed during the first two quarters of the year. Thirty-two farms have ceased operation in Vermont from January through July, according to Milk Commission data.

Dean Foods  sells milk through more than 50 brands. Garelick Farms is the most common Dean Foods  brand sold in New England, according to the company's Web site.

In addition to short-term fixes to alleviate Vermont dairy farmers' current woes, Allbee and Vermont's congressional delegation are pushing for reform of the complex federal pricing system.

"Crises create times when people look at situations," Allbee said of the "complex, broken, outdated" federal milk pricing system. "Hopefully, the crisis will cause people to say, 'Let's do something differently.'"