Tuesday, March 28, 2017


Since the mid 1800’s dairy farming has been Vermont’s major agricultural enterprise. It is today.  Dairy farming has never been easy due to the many changes on the farm, in the markets, and in the public policy arena over the years.

At one time, after the demise of the position as the leading merino sheep state, Vermont became the butter capital of the world, winning prizes in international competitions. Starting in 1854, an iced butter train left St. Albans for Boston once per week and the region was known as one of the greatest  butter producing centers in the world.  Vermont butter was considered the acme of perfection in New England markets.  By 1899, Vermont was producing 35 million pounds of butter. Whole support industries like the Bellows Falls Machinery Company (maker of butter churns and equipment), and the Montgomery butter box firm, existed to support this trade. Eventually the butter trade, as well as the businesses that supported it, largely disappeared. This was due to competition from the West (cheaper to bring butter into New York from Chicago than from Vermont, it is recorded).  From 1890 on, competition with western butter became increasingly acute.  Other events that led to its decline included the introduction of margarine (see the stories about the butter and margarine wars), and the increasing demand for fluid milk from cities like Boston. 

Becoming a fluid milk producing state had its challenges too. These included fair pricing from buyers, shipping rates and fees, sanitary regulations with interstate shipments, management on the farm, and better animal genetics.  Due to the concerns, relative to fair pricing, numerous studies were conducted.  For example, in 1915 the Boston Chamber of Commerce did a thorough analysis of the marketing constraints faced by Vermont dairy farmers, and recommended that farmer cooperatives be formed to guarantee better pricing for farmers.  Federal legislation to include Capper-Volstead Act in 1922 gave these farmer cooperatives limited anti-trust protection against price fixing.

In 1927, thirty percent of Vermont’s population was engaged in farming, and there were twenty-seven thousand farms in the state.  By this time, Vermont was a major supplier of fluid milk to the Boston Market.  The depression, however, brought a period of great economic turmoil to agriculture in Vermont as well as nationally. With the passage of the federal Agricultural Adjustment Act of 1937, marketing orders were established and dairy farmers in Vermont, New England, and elsewhere voted for federal control of pricing through these orders.  After World War II, a parity system was instituted to provide better pricing to dairy farmers that equated to the period 1910-1914.  This was considered one of the better times in the farm economy.  The pricing system was advocated and supported by dairy cooperatives throughout the United States.

Since 1982, and the elimination of the parity concept, dairy pricing in the United States has moved toward more market orientation and greater pricing unpredictability.  While there have been several attempts since 1982 to better control or influence pricing ( a national whole herd buyout, and followed by the Northeast Dairy Compact), today greater pricing unpredicapitcaly and volatility exists for the convential dairy farmers in Vermont and elsewhere.  Vermont and other Northeast conventional dairy farmers are faced with an unstable and unpredictable demand for dairy products in international markets; a declining demand for fluid milk in regional markets and its depressing impact on the Marketing Order pricing; a Westward migration of U.S. milk production; and finally, increased costs associated with water quality environmental compliance.

The early leaders of Vermont agriculture stated in the 1894-95 Report of the State Board of Agriculture that “our own state has seen one industry after another go down under the fierce competition of cheap western land.  Our sheep, beef, and grain production have all been borne down through this course, and today our dairymen are contesting the ground with these same forces.”   Yes, time and technologies do change, but as others recently have concluded, while our advantage in Vermont and the Northeast is being near large markets, it is an advantage that will continue to erode without an aggressive strategy. U.S milk production will continue its shift to large dairies in the West.  It is known that dairy product manufacturers look to where production is growing and not declining in siting facilities.

While there continues to be debate over the direction of Vermont’s valued conventional dairy sector, I believe it is understood by many that the strength of Vermont agriculture is the entrepreneurial ability of farmers to solve problems.  However, the magnitude of the problems faced today requires that there be informed dialogue among and between farmers, and their cooperatives, consumers, processors, environmentalists, policy officials and others to consider and debate feasible options for the longer-term sustainability of the dairy sector in Vermont.  It is too important an industry to do otherwise as the market will likely continue to erode Vermont’s position as a valued milk producing state if action is not taken soon.


Roger Allbee is a former Secretary of Agriculture, Food and Markets for Vermont. He has been Executive Director of the USDA Farm Service Agency for Vermont; he has served on the U.S. House Committee of Agriculture; he has been Chair of the Animal and Animal Products Advisory Committee to the U.S. Trade Ambassador and the U.S. Secretary of Agriculture; he has participated in the Seattle Around of Multinational Trade Negotiations; and he has been on the Senor Management Staff of the Former Farm Credit Banks and Bank for Cooperatives for the Northeast.  He does a blog on Vermont’s agricultural history at www.whatceresmightsay.blogspot.com

Sunday, May 15, 2016


There are many reasons to celebrate Vermont’s dairy industry, and many facts bear that out.  We know that dairy brings in $2.2 billion to Vermont’s economy and accounts for 70% of agricultural sales.  Six to seven thousand jobs in our state depend on dairy.  In addition, New England depends on the state’s milk production with sixty-three percent of the region’s supply coming from farms in Vermont.  There have been many changes in Vermont’s dairy industry over the years.

History shows that dairy started slowly in Vermont.  The commercial dairy industry in Vermont did not begin until the demise of the world-renowned Marino sheep sector in the mid-1800s.  It started slowly at first with butter being the main product produced on the farm. Dairy, from the beginning, has been well suited for our state’s grassland economy. By the mid to late 1800’s there was a growth in local creameries due to the fact that milk could not be shipped long distances. For example, by 1900 there were 186 creameries and 66 cheese factories in the state.  By the mid to late 1800’s St Albans was known as the butter capital of the world, with one butter train per week leaving for the Boston Market.  Buyers from as far away as New York and Boston came to the town each week to bid on blocks of butter, and by 1880 one-forth of the state’s butter production came from that area.  There was increased attention to dairy cow genetics as many farmers came to realize that making good butter required good milk and more than milking the old family cow.  Entire new support industries, like the butter tub factories in Montgomery and Stowe, Vermont, and the Vermont Machine Factory in Bellows Falls that made butter churns, grew up around the butter trade.  During this period, Vermont butter won international awards for best butter in the world.

Laws were enacted at the state and national levels to protect this industry.  For example, it was unlawful to serve any butter imitation product at any place of business in the state.  When margarine was introduced, it was illegal to sell the product except in its original white color or form (some might remember the yellow coloring sold separately from the margarine in the way distant past.)

Changes in demand and in the industry itself took place when nearby cities reached out for fluid milk in the late 1800’s and early 1900’s.  Producing and shipping fluid milk to urban markets in other states created some new challenges for dairy farmers in Vermont.  They now depended on others for shipping and for marketing and they had to comply with new health requirements.  This led to the establishment of dairy cooperatives within Vermont and nationally to better control pricing and quality standards.  The first milk train left Bellows Falls, Vermont for Boston in 1890.  By 1928 the profitability of Vermont’s dairy farmers was linked to the fluid market.  Today about $400 million of sales come from fluid milk and $650 million from cheese, with the remainder of the $1.3 billion in sales from other products like yogurt and ice cream.

A lot has changed over the years and continue to change as in any industry sector linked to national and international markets. Today the 850 plus dairy farms are family owned with the majority having less than 200 cows.  Five percent of the 321 million gallons of milk sold is certified organic, and dairy cooperatives are important to those sales.  It is no wonder that dairy still is so revered in our state with 97% of Vermonters saying that this industry is important to the state, its beauty, and way of life. 

In 1937, June was designated as National Dairy Month as a way of promoting the drinking of milk. As we think about Vermont’s dairy industry and its importance to our state today, join your neighbors across the nation, as well as the state, in celebrating June as dairy month.

By Roger Allbee, former Vermont Secretary of Agriculture, Food and Markets

He does a blog on the History of Vermont Agriculture at: whatceresmightsay.blogspot.com

Saturday, May 18, 2013

In Vermont Agriculture and Food Systems, Understanding the Past Reinforces the Future

It is being called the Renaissance of the Past, the renewed interest in agriculture and food systems within our state. It manifests itself in many forms to include growth in CSA’s, or community supported agriculture, farmers’ markets, food hubs, and the further diversification of agriculture production with an array of products from the land and animals that are raised on the land. This re-birth or renaissance further reinforces Vermont’s past, its present, and its future.
Vermont’s agriculture, forests, and working landscape have always defined the state. The early settlers who came to Vermont from Southern New England after the French and Indian War were looking for productive soils. While they were subsistence farmers in the beginning, planting a few crops and keeping a few animals for their own use, increasingly many began raising items for sale or barter as towns and nearby cities grew in size. They found markets for grain, potatoes, and livestock in Montreal, Quebec, Troy, Albany, and Boston. In the early 1800s significant cash-crop exports included potash, pearl ash, whiskey, pork, beef, wheat, flour, grain, butter, cheese, lumber and horses. In the Champlain Valley, before 1820, growing grains was a very important agriculture enterprise and those grains were either distilled locally or hauled to markets in Albany or Troy.
Land and water transportation played integral parts in the development of industry and trade in agriculture and other products. Road building began in the late 1700’s with private turnpikes chartered by the state legislature. Canal and water transportation became as important as overland routes. In Bellows Falls, located on the Connecticut River, the construction of the first canal built in the U.S. began in 1792. This canal made it possible for our state’s producers to ship several tons of products to Hartford, CT on flat-bottomed boats in 3 days.
On the West side of the state, Burlington became a flourishing center of commerce after the completion of the 64-mile Champlain Canal in 1823. The access provided by these transportation networks to new markets grew increasingly important to the economic health of Vermont farms as the farm economy evolved from subsistence and a barter economy to cash basis. These new transportation networks also exposed products from the state to new competition. Railroads also proved to be a mixed blessing to Vermont farmers who witnessed dire economic realities as competition from western wool, beef, butter, and grain forced changes in the farm economy.
As agriculture continued to change in response to market conditions and competition, specialization grew and farmers focused on specialty crops, livestock, and livestock products. In the early 1800s when disease, pests and increased competition undermined grain production in the Champlain Valley, many farmers
adapted by raising Merino sheep. Grass was “king” in the hills and valleys of Vermont and this proved ideal for these sheep. Many towns had flocks of one thousand or more, and Vermont became known as the sheep capital of the world, home to over one and a half million. These sheep were envied for their fine wool and fleece and were in great demand worldwide. Nevertheless, Vermont and its Merino sheep fell captive to tariff regulations, international events, and competition from the western U.S. and abroad. While this specialization was taking place, other products continued to be produced. The 1850 agricultural statistics illustrate the following product diversification: butter, cheese, oats, beef, wheat, barley, rye, buckwheat, field beans, potatoes, hay, orchard products, flax, hops, hemp, silk, maple sugar, maple syrup, honey, and wool.
Vermont had already established itself as an important maple producing state, and the same was true for its apple production. Many farms produced maple syrup in the spring, providing important income diversity. Orchard farming began as early as the 1810’s on Isle La Motte. Beginning in the late 1800’s, large-scale orchards were established along Lake Champlain, and Vermont shipped its maple and fruit products throughout the U.S. and abroad, enhancing Vermont’s agricultural diversity.
Following the decline of the Merino sheep Industry, there was a slow migration to the specialization in butter and cheese production. These products had traditionally been made on the farm, with skills passed down from one generation to the next. As cities and towns grew in size, merchants reached out for these products and demand outstripped the capacity and the uneven quality of on-farm production, leading to the development of creameries and cheese factories. St. Albans had the world’s largest commercial creamery, and Vermont butter became known for its quality, and a product from the state won a gold medal for the best butter in the world. As demand for products grew, creameries sprang up in many towns and communities around the state. By 1900, 186 creameries and 66 cheese factories operated throughout Vermont. Whole industries sprang up to support this production to include cheese and butter box production, and specialty churns. This too changed as cities further south reached out for fluid milk and the first milk train left Bellows Falls, Vermont for Boston in 1890.
Commercialization of dairying and the interstate shipment of milk and milk products created renewed economic challenges and farmer cooperatives became important in bargaining for fair pricing for their members. Federal actions relative to dairy price supports and parity pricing could not forestall the pressure for change and the eventual beginning of the deregulation of the dairy industry in the early 1980’s. Many of the early farm leaders, who had witnessed these changes in Vermont agriculture over time (loss of Merino sheep, butter markets, grain production, beef trade), and had been part of it, recognized the competitive advantages of farming in Vermont. An important advantage was being near emerging markets in the Northeast and growing and producing products of the highest quality to meet changing consumer needs. Others saw the advantage in
growing grass and raising animals that could convert grass to energy. All agreed that Vermont farmers could never compete with the west on a commodity-pricing basis.
Through the years, farmers have had to adapt to changes. Today, there is a renewed interest by consumers in local and regional foods. Vermont farmers are taking the lead in many areas, to include, being known for organic and other locally produced food products. This renewed interest in local foods has resulted in the growth in farmers’ markets, food hubs, CSA’s or community supported agriculture, farmstead cheese production, farm raised beef, new maple products and production, new vineyards, pick your own fruit operations, and many other products from the farm. Maple, however, is still considered the soul, and dairy, the anchor of Vermont agriculture.
Vermont today is increasingly known for its food systems and connection to the land and the Vermont brand. This working landscape helps to support and define our state, its past, present, and future. It helps support a vibrant tourist industry, and connects people to places. National Geographic, just a few years ago, stated that Vermont was the number five place in the world to visit and the number one in the U.S. and that this was due to its working landscape and quaint villages. It is a true Renaissance, reinforced by the many products now being produced on or from the land.
By Roger Allbee, Townshend, Vermont
Former Vermont Secretary of Agriculture, Food and Markets 

Thursday, December 20, 2012


The farmer cooperative movement has a long and varied history in Vermont. Over the years farmer cooperatives have come and gone, influenced by the need for better pricing through joint marketing, collective buying of supplies, changing demographics, and challenges brought about by the ever changing market environment. At the state, regional, and national levels, the politics behind this cooperative movement has always been significant.  This blog reviews, very briefly, the history of the farmer cooperative movement, and its status in Vermont today. An entire book could be written on this rich history.

Why the European Model was Appealing to U.S. Agriculture and Rural America:
It is said that the model for the cooperative movement in the United States came primarily from Europe, and the heritage that many of the original settlers brought with them.  Often cited is the Rochdele Cooperative (weavers) and the resulting Rochdele cooperative principles, the primarily ones being “member owned, member controlled, and for member benefit.”  These principles, and the development of U.S. cooperatives are rooted in the upheavals that characterized the Industrial Revolution in England during 1750-1850 (see Univ. Wisconsin Center for Cooperatives, Cooperatives in the U.S.). Accordingly it is stated that dairy cooperatives were among the first type of agricultural cooperatives organized in the U.S. with the first creamery being built in Goshen, Connecticut in 1810 (see Cropp and Graf, History and Role of Dairy Cooperatives).

In the United States a very extensive infrastructure has been developed at the federal level around the cooperative model for farmers and rural America.  Under the American and U.S. Commission of 1913 (see Senate Doc. No 214, Parts I, II, III, 63rd Congress) several U.S and Canadian representatives made an extensive trip throughout all of Europe in the spring and summer of 1913 to investigate the cooperative structure for rural credit. The Federal Loan Act of 1916 resulted, creating the Federal Land Bank (part of the Federal Farm Credit System) for farm mortgage lending. Other federal laws were also enacted.  These included the Clayton Act of 1914, and the Capper-Volstead Act of 1922 (giving limited anti-trust immunity to farmer marketing and bargaining cooperatives).  The Cooperative Marketing Act of 1926 created a division within USDA to promote cooperatives. The Agricultural Marketing Act of 1929 was created to deal with the supply and demand imbalance that existed in the United States at that time. It was seen as a way to increase farmer prices during the depression period.  It did this by creating a Federal Farm Board, which saw cooperative marketing as being essential to bring about economic relief to agriculture.  One quote from that time stated “at the present time nearly everyone from President Coolidge down is talking of Co-operative marketing as a cure for the ills which American agriculture faces.” (See: Fourteenth Biennial Report of the Vermont Commissioner of Agriculture, 1926-1928.)  Other laws soon followed to further aid rural America and cooperative development.  Some of these such as the Rural Electric Administration and the Rural Telephone Act are easily recognized. Both helped to bring electricity and communications to rural parts of the United States that were not well served by privately owned utilities, and thus encouraged further development in these regions.  Others, such as the Farm Loan Act of 1933, created a structure, through the Farm Credit System, to provide immediate short-term credit to farmers and a process for lending to farmer cooperatives (Bank for Cooperatives were established in the twelve Farm Credit Districts in the United States).

Support and Advocacy Structure:
Besides the infrastructure created through federal laws, a strong trade organization structure still exists that embraces the cooperative model as a way to transact business.  For example, the dairy cooperatives across the United States organized the National Milk Producers Federation (NMPF) in 1916. Diary cooperatives are said to be among the first type of agricultural cooperatives organized in the U.S. (see Cropp and Graff, History and Role of Dairy Cooperatives)).  The National Grange and the Farm Bureau Federation have been strong advocates for farmer cooperatives from the beginning of these two organizations.  The National Council of Farmer Cooperatives, and the National Cooperative Business Association are likewise strong advocates for their member cooperatives, as is the National Rural Electric and National Rural Telephone Association, and the National Farm Credit Council, and the National Credit Union Association. In the Northeast region, Cornell University has established a Cooperative Enterprise Program; there still exists the Northeast Cooperative Council that grew out of the N.Y. State Council of Farmer Cooperatives that was organized in 1940. The dairy cooperatives have the Council of Northeast Farmer Cooperatives that primarily represents its members on national dairy policy issues. In Vermont the Green Mountain Dairy Cooperative Federation represents the dairy cooperatives on legislative issues within the state.  This list is not meant to be exclusive as there are other support organizations at the national and regional levels such as state and regional cooperative councils that also support the cooperative model.

Brief History of the Farmer Cooperative Model in Vermont:
The first cooperative market statute or state law was passed in Michigan in 1865 (see Univ. WI Zeuli and Cropp), and other states soon followed. The twenty-Sixth Annual Report of the then Vermont State Board of Agriculture in 1906 (before the establishment of the State Department of Agriculture) states that “unity of action ought or should be the watchword all along the line of farmers today.  Is it not possible for farmers of Vermont to unite to such an extent as to establish a market under their own supervision and in their own New England markets? The State Grange and State Farm Bureau were strong advocates behind the farmer cooperatives, as were Commissioners of Agriculture during this early period. “ For example, E.S. Brigham, Vermont Commissioner of Agriculture in 1914, stated in Sixth Annual Report of Agriculture for that year that “…it is good business for the state to assist in the formation of producer associations of permanent character, and to assist the associations in finding a market which will pay the highest price for good produced. The first step should be the enactment of a law similar to laws of Massachusetts, New York, and Wisconsin defining how cooperatives shall be organized.”  In 1915, the Vermont legislature enacted a law authorizing cooperative market association of farmers. Numerous local cooperative creameries (many towns had one or more) were formed in Vermont from 1915-1923. Cooperatives around other non-dairy products were created as well, such as the Vermont Maple Products Co-Operative Exchange, and the Shoreham Apple Cooperative. As cities reached out further for their milk and other farm-produced products, farmers joined together to leverage higher pricing for their products. 

There has been an attempt over a long period of time to build better cooperation among farmer cooperatives.  Cooperative organizations that existed in the past to provide joint marketing for price enhancement and market stabilization included the New England Milk Producers Association in 1922, Vermont Cooperative Creameries from 1920-1924. The New England Governors and many dairy leaders in the past worked to establish New England Dairies Inc. in 1932 as a way to eliminate destructive competition that deprived milk producers in the region of their “rightful share of the profit.”  The Boston Chamber of Commerce, in a study of the New England Dairy Industry during this time, recommended joint cooperative marketing as a way to assure better farmer prices.  Some of these challenges for the Vermont dairy industry have been discussed in past Whatceresmightsay blog postings (see May and August of 2012).

Cooperation among farmer cooperatives has often remained a challenge.  Commissioner of Agriculture E. H. Jones stated (see Thirteenth Biennial Report of the Commissioner of Agriculture, 1924-26) “…Vermont producers must cooperate in delivering products of high quality if we expect to receive good prices.”  He went on to say, a few years later (see Nineteenth Biennial Report of the Commissioner of Agriculture, 1937-38) “with eighty percent of dairy products exported from the state, the most important issue at stake is a system of marketing that is both equitable and workable.  This is a matter which has confronted Vermont dairymen for two or more decades and is still far from being settled.” (At that time there were twenty-two cooperative creameries in Vermont operating fifty-three plants).

Today’s Vermont Dairy Farmer Cooperatives and the Challenges Ahead:  Cooperatives have been an essential part of the marketing of milk and further processed dairy products in Vermont and the region for many years.  Consolidation has continued within the cooperative community at the state, regional, and national levels as the number of dairy farms have continued to decline.  Examples include the formation of Dairy Farmers of America and its affiliated DMS (dairy marketing services, and its relationship with St. Albans Cooperative), the acquisition of Cabot by AgriMark Cooperative in the 1990’s, and the growth of the organic dairy cooperative, Organic Valley.  Serving both large and small producers continues to be a challenge for the remaining cooperatives (treating members equally or equitably based upon size and milk volume), as does the need for additional capital beyond what is available from member equity.

There have been many studies and reports on agricultural cooperatives throughout the years. Some of the more recent studies have dealt with those cooperatives that still exist today.  (See USDA Cooperative Information Report 60).   For example, these and other reports state “consolidation of firms at the processing, wholesale, and retail levels of the U.S. food marketing system continues unabated and the market influence and bargaining strength of even the largest cooperatives are limited as a consequence.”  Other studies have reached similar conclusions relative to the challenges.  “The ability of cooperatives to access sufficient capital for their operations is of course, one of the most discussed issues among co-op leaders and researchers.  As agriculture becomes more industrialized, the need for capital at the processing and marketing levels increases.  The question by case studies is whether cooperatives are able to access sufficient capital from their members to be able to compete in these markets.”(See Centre for the Study of Cooperatives Report).

Vermont and regional cooperatives are not immune to these and other challenges.  Cooperatives continue to provide an essential role in marketing their member-owner’s milk (all size farms in all locations, and 86 percent of all milk marketed to plants and dealers in U.S. was by cooperatives in 2002). Nevertheless, securing milk while providing member benefits as envisioned by cooperative principals, especially in a more deregulated marketing structure, continues to be a major challenge.  Other forces are in play as well.  The larger producers who supply the majority of the milk, may seek other outlets to include longer term contracts with processors, bypassing their cooperative all together thus reducing the pricing advantage of the cooperatives. Larger producers may also feel that they are unfairly subsidizing the transportation costs of the smaller producers.  Some smaller producers may elect to further diversify into value added.  This has been a growth sector in Vermont with eighty-six plants now processing less than five hundred pounds of milk per day.  Cooperatives, however, continue to provide an important marketing and balancing function in the market that cannot be easily over looked or ignored.

Much is expected from dairy cooperatives today, as in the past, but shielding dairy farmers from pricing risks in a more deregulated market is not easily achieved as has been noted by many studies.  The trends are not new, especially in a more deregulated market, and as milk production has been moving westward for many years, and the Northeast continues to be a milk deficit area.  Cooperatives continue to be challenged to demonstrate to ALL their members that the benefits of cooperatives membership and thus producer returns, outweighs alternative marketing structures or strategies and financial returns to the members themselves.

The June 14th, 2011 whatceresmightsay blog addressed many of these challenges.  As stated in that posting, markets and consumer needs are constantly changing. “In a future driven by technology, cooperatives face many challenges to include the need for more research and development, more aggressive product development and marketing, new manufacturing processing and technology, and equity financing to fuel these changes.  While Vermont dairy cooperatives are critical in the marketing and balancing of milk, they too lack the necessary capital for research and development of new products and their marketing. Entities such as O-AT-KA dairy cooperative in New York are often looked at as examples of the type of facility and the type of research and development in new products that should be coming from Vermont, with its brand recognition.  Some suggest that the current marketing approach by Vermont based dairy cooperatives may possibly lead to more fracturing of the milk supply within the dairy industry in the state as producers seek other outlets or alternatives to include direct long term contracts with processors, more on the farm value added production, and further movement to organic production.  Others may elect to discontinue operation due to costs and market volatility. To overcome these ever present challenges, many have suggested that the cooperatives need aggressive strategies that address an equitable balance between member and cooperative financial needs, as well as new forms of equity capital that does not take away from the farmer member control (these forms of equity ownership are now possible under new farm cooperative laws in many states). An extensive review of the literature and other studies and reports available, and cited in the reference section of this blog, raise many questions around the future role of dairy cooperatives in Vermont and the Northeast region, particularity around member financial benefits longer-term.  Cooperative members and others are asking many of the following questions today.

* Do the Cooperatives have a strategic plan or vision for the longer-term profitability of the cooperative that financially benefits their member owners? What is the strategic plan that addresses these issues in the next 5-10 years?
* How does the cooperative model, going forward, best benefit all sized producers in light of changing consumer demographics, changing consumption patterns and product demand as well as the impact of more open markets internationally?
* If dairy trade were opened between the U.S. and Canada, how would this impact dairy production and manufacturing in Vermont and the region?
* Do the cooperatives have sufficient capital to do the research, development, and marketing around value added products that can best financially benefit member owners going forward, and how does strategic partnerships with others work to the financial benefit of member owners?   If not what plans do they each have to secure such capital?
* What new initiatives are warranted to best assist in establishing and maintaining a viable dairy industry in Vermont going forward and are these advocated and supported by the dairy cooperatives?
*  Are the dairy cooperatives capable of reacting to market and other economic changes and reinventing their business strategies for financial success that benefits both their members and the cooperative?  What are these strategies?
* How does the continued consolidation within the dairy industry nationally, regionally, and within the State impact the current cooperative processing and marketing structure in Vermont and the region and how do these changes hinder or help, financially, their farmer members in the state and region?
*How can the cooperatives help their members as well as potentially new farmers to grow the region out of being a milk deficit area?
*  What role if any does or can the Land Grant System and Vermont Technical College provide in supporting dairy farmers and their cooperatives relative to new product research as well as related work around dairy farm and cooperative economic viability?
* What are other sources of equity besides member capital that a cooperative might access to achieve longer-term economic viability; and are these being considered?
Note: it has been stated in the USDA Report Agricultural Cooperatives in the 21st Century “perhaps the most important challenge facing cooperatives is accumulating equity capital.  Without sufficient equity, cooperatives cannot meet the external challenges they face or continue to grow and offer services members and consumers need.”
* Are there joint ventures and other forms of business structures that should be considered by cooperatives going forward in order to financially benefit their member owners in the future? (O-AT-KA model, for example).

The Vermont dairy sector is an essential part of our farm economy and, by references, its working landscape.  While there is no silver bullet, there are some encouraging signs to include the fact that many consumers today are interested in knowing where their food comes from and how it is grown, hence the interest in local and regional food systems.  An example of this is the growth that has occurred in farmstead cheese production over the last few years.

The Vermont farm leaders of the past recognized these challenges and concluded in the late 1800’s that the future was not in competing with the West, but in developing those products for the growing markets of the East…. but it would take continued study and work…and today other sources of capital.  The solutions are not ultimately in Washington, D.C. or in competition with the West.  It will continue to take bold and visionary leadership to address these issues going forward.  The majority of dairy farms in Vermont are dependent upon their cooperatives for supply chain management and the cooperatives on their members for product. New and invigorated approaches are needed around the cooperative Rockdele principles, as the landscape is full of those industries to include farmer cooperatives that ignored or failed to embrace change or to reinvent themselves as viable business entities. One international study addresses these challenges (see Cooperative Conversions, Failures and Restructuring).

“As agriculture becomes more industrialized, the need for capital at the processing and marketing levels increases.  The question by case studies is whether cooperatives are able to access sufficient capital from members to be able to compete in these markets.”

Blogger’s Comments: 
Farmer cooperatives have been a large part of my professional life.  My grandfather shipped his milk and bought his feed grain through a nearby cooperative, as did other neighboring dairy farmers.  My wife’s grandfather, a respected Vermont vet in the 1930’s and early 1940’s, managed the Granite City Cooperative Creamery in Barre, Vermont.  He was also the President of New England Dairies, an organization that strived to coordinate joint marketing of milk in the Northeast in the late 1930’s and early 1940’s “…through one centrally controlled channel and with the elimination of destructive competition that deprived milk producers of rightful share of profits”.  I saw the changes and challenges to the cooperatives when I was a member of the senior staff of the former Farm Credit and Farmer Cooperative Banks for the Northeast, and again when I was Secretary of Agriculture, Food and Markets for the State of Vermont.  The challenges are not new in one sense (need for better farm milk pricing), but more complicated in other ways (consolidation at retail and wholesale levels and inability to leverage for higher farmer pricing). There has been greater deregulation in the dairy industry (parity concept was eliminated in 1982), and the federal price support level has been significantly reduced moving the dairy industry to more unregulated marketing.  Consolidation within the dairy industry continues both nationally and within Vermont. One research report states “as the dairy industry moves into the next decade, growth in milk production will come from large-scale agricultural enterprises located predominately between the Rocky Mountains and the Mississippi River.  Expanding operations in the Northeast and Upper Midwest may not be able to make-up for the number of exits of smaller operations.” (See Outlook of the U.S. Dairy Sector The Next Decade). 

Attempts to stabilize milk production within the state with dairy profitability teams and other initiatives have been met with mixed success.  Initiatives to provide over-order pricing incentives through changes in state laws have not been possible for various reasons to include challenges to the Commerce Clause of the U.S. Constitution. Buyers at the wholesale and retail level have immense market power today that make it difficult to leverage higher pricing for cooperative milk and milk products. “Consolidation of firms at the processing, wholesale, and retail levels of the U.S. food marketing system continues unabated and the market influence and bargaining strength of even the largest cooperatives are limited as a consequence.”(See Agricultural Cooperatives in the 21st Century). Even in 1929 this challenge was recognized nationally when there was less consolidation at the wholesale and retail marketing levels (see Agricultural Marketing Act of 1929), when it was stated “that the Farm Board (created by the Act) is not blind…that unless producers are able to formulate and carry out a program of producer stability, much of the efficiency of cooperative marketing is bound to be wasted.”

Dairy cooperatives provide an important function for their members, as farmers do not have to concern themselves with the marketing function or supply chain management and the costs and knowledge associated with gaining access to markets today. However, the expectations today, as in the past (see the Milk Problem), by members for fair and adequate pricing still exist.  Larger dairy farmers desire to be treated equitably based on size and volume, and not equally with all members regardless of volume or size. Cooperatives in a more deregulated and volitale market structure may not be able to depend upon member equity as in the past either.  Numerous studies on the future of farmer cooperatives in the 21st Century indicate that new and innovative business approaches will be needed in order to be successful in ever changing marketing structures that are occurring today and are likely to continue.


  • A Paper, “The Vermont Farmer’s Future”, by Rev. G. F. Wright of Bakersfield, Vermont, presented to the State Board of Agriculture at a meeting in St. Albans, March 6-7th, 1872.
  • A Paper, “Eastern and Western Farming”, by Lyman W. Peet of Cornwall, Vermont.  See Eight Report of State Board of Agriculture, 1883-1884.
  • First Annual Report, Agriculture of Vermont, 1909.
  • Agriculture of Vermont, Sixth Annual Report of the Commissioner of Agriculture, 1914.
  • Agricultural Cooperation and Rural Credit in Europe. American and U.S. Commissions, 1913. Senate Doc. No. 214, Parts 1, 11, In 63rd Congress.
  • New England Grades and Standards Act, 1927, see Biannual Report of the Commissioner of Agriculture, 1926-1928.
  • Thirteenth Biennial Report of the Commissioner of Agriculture of Vermont, 1924-1926, E.H. Jones Commissioner.
  • Fifteenth Biennial Report of Commissioner of Agriculture, State of Vermont, 1928-1930.
  • Nineteenth Biennial Report of the Commissioner of Agriculture of Vermont, 1937-1938, E.H. Jones Commissioner.
  • A Detailed Survey of Leading Markets for Vermont Products, see Eight Annual Report of the Commissioner of Agriculture, 1916.
  • Rural Vermont, A Program for the Future, The Vermont Commission on Country Life, 1931.
  • This Milk Problem, by Harry R. Varney, The Vt. Agricultural Extension Service Cir. No. 95, June 1937.
  • Dairy Farming in the Northeast, Now and in the Future.  Springfield District Farm Credit Service, Nov. 1984. By James N. Putnam 11 and Raymond J. Nowak.
  • Agricultural Focus Group, Report to Governor’s Commission on The Economic Future of Vermont, November 1989.
  • The Northeast Interstate Dairy Compact Public Hearings Report, March and May 1989, by NY State Legislative Commission on Dairy Industry Development, June 1990.
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  • Vermont Farmstead Cheese Marketing Study, January-March 2006, Report by Jane Sakovitz-Dale.
  • Foundations for a Consumer-Driven Dairy Growth Strategy, by McKinsey & Company for the California Milk Advisory Board, Spring 2006
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  • The Impact of Globalization on the U.S. Dairy Industry: Threats, Opportunities, and Implications. Innovation Center for U.S. Dairy, August 2009.
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  • The Impact of Globalization on the U.S. Dairy Industry: Threats, Opportunities, and Implications, Innovation Center for U.S. Dairy, August 2009.
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  • See Synergy LLC
  • Dairy Farm Crisis 2009, A Look Beyond Conventional Analysis, by John Bunting, Delhi, NY.
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  • An Evaluation of Cooperative’s Comparative Strengths and Weaknesses in a Vertically Differentiated Agricultural Product Market, Discussion Paper for the University of Wisconsin Center for Cooperatives, by Tina L. Saitone and Richard J. Sexton.
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  • New Strategies for Mobilizing Capital in Agricultural Cooperatives, in FAO Corporate Document Repository, Economic and Social Development Department.
  • Dairy Cooperatives and Their Role in the United States, by Robert Jacobsen and Robert Cropp, Dairy Markets and Policy Issues and Options, Cornell University, August 1995.
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  • Remarks to the New England Dairy Promotion Board by Roger Allbee, Nov. 19, 2010.
  • Seeking to Ensure the Future Viability of Vermont’s Dairy Industry, Report of the Thirty-Third Grafton Conference, The Windham Foundation, Grafton, Vermont, March 6-7, 2008, and December 15-16, 2008.
  • “Wisconsin Facing a Dairy Deficit,” by Ann Marie Ames, April 25, 2011, in GazetteXtra.com, May 27, 2011.
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  • “Upstate Niagara”, by James Dudlicek, in Dairy Facts Corporate Profile, August 2008.
  • “A Perspective on the Northeast Dairy Industry”, a presentation by David Galton, Cornell University.
  • See “Farm to Plate”, the Vermont Sustainable Jobs Fund.
  • See “The Working Landscape Initiative”, the Vermont Council on Rural Development.
  • Program on Dairy Markets and Policy Briefing Paper Series, The Chobani Paradox, Briefing Paper Number 12-03, Andrew M. Novakovic, Cornell University.
  • Choices Magazine, 3rd Qtr 2011, and Theme Overview: Critical Issues for Agricultural Cooperatives by Phil Kendel and John Park.
  • Rural Cooperatives, USDA Rural Development, January-February 2003, Agricultural Cooperatives in 21st Century, Are You Ready for Tomorrow.

Date of Blog Posting: December 20, 2012