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FEELING THE PINCH

November 19, 2012

NEWPORT, VT - When the 2008 Farm Bill expired on Sept. 30, farmers across the country were put into a financial limbo until Congress takes up the bill during the lame duck session. Renewing the bill for another five years will provide stability for growers and milkers as it allows them to plan for the future, the Farm Bureau says. For local dairy farmers, the problem isn't milk subsidies, but the cost of feed.
The Joint Select Committee for Deficit Reduction was not able to agree to a plan that would cut an excess of $1.2 trillion over the next ten years. As a result, an act called “sequestration” will be triggered on January 1, 2013, which will require proportional, across the board, cuts to more than 1000 federal programs, including agricultural programs. The cuts will include conservation programs, crop insurance and crop subsidies, education and Extension services, food safety, marketing and inspection, and research, among other programs.
Vermont Senator Bernie Sanders is especially concerned that fluctuating milk prices and higher grain costs will hurt family-based dairy farms, noting, “The family based dairy culture is on the collapse, and this is not a Vermont issue, but a national issue.” He added, “As we talk about reviving the economy, remember that rural communities are suffering and we need to help them.”
The Milk Income Loss Contract Program (MILC) is administered by the Farm Services Agency (FSA) and compensates dairy farmers when the price of milk goes below a specified level based on the cost of production. Funding for the program comes directly from the dairy farmers based on their production and is paid back to the farmers when dairy prices fall. Fortunately for the dairy farm industry, funding for MILC is not part of the sequestration that will occur to other agricultural programs.
If the price of milk drops, dairy farmers will be protected as 100% of the funds will be available.
“If the price of milk goes up over $18/hundred weight then the subsidy ends,” says long time dairy farmer Marcel Guillette of Derby. “Farmers are getting $18/20 right now, so we haven't had a MILC check the past few months.”
But the problem for Guillette is the price of grain. “The drought out west cut supply and increased cost. That means our grain bill has gone up,” he states. “We may be getting more for the price of our milk, but with the cost of grain, I'm losing money.”
The mid-west was struck with a drought this year and farmers in the region felt the full brunt of it. Congress and the President were battling over spending cuts and balancing the budget, during an election year to boot, and did not appropriate emergency funds to help mitigate the damages. As a consequence, grain prices have gone up.
Guillette has steadily increased the size of his herd to 240 milkers and 200 heifers, but without enough land to raise his own corn, he can't afford the grain bill. So Guillette is downsizing his operation to 100 milkers more or less, and 100-plus heifers. “There's a lot of reasons to make this decision: my age is a reason; I can't afford bigger, better equipment; and I don't have enough land to support a herd this size,” Guillette said.
A smaller but still sizable operation can sustain itself and reduce the farm's reliance on buying feed and other costly commodities. Guillette said there would not be an auction because “we (he and his wife) like the animals too much.”
Anyone interested in purchasing milkers or heifers can contact Guillette or stop by the farm on Salem-Derby Road in Derby.

 

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