Wednesday, May 4, 2011

GROWTH OF THE FLUID MILK MARKET FOR VERMONT DAIRY FARMERS AND ITS CHALLENGES



This blog posting focuses on the decline of butter production in Vermont and the trend in production of fluid milk for the Boston and other urban markets.  This change over time led to many new challenges for farmers who shipped their milk to Boston and other cities on the milk trains.  It also led to the push to form farmer cooperatives as a way to better bargain for fair pricing from the milk dealers.  The period covered in this blog posting is from the late 1800’s until about 1930.  What happened with dairy pricing during this period was a prelude to federal action through the Agricultural Adjustment Act of the 1930’s that established many of the federal programs still in place today such as the Federal Milk Market Orders. 

THE SWITCH FROM CREAM FOR BUTTER TO FLUID MILK FOR URBAN MARKETS:

Many of Vermont’s dairy leaders were not in agreement that shipping fluid milk to the cities was better than using the cream in the State for butter and cheese production.  For example, in 1912 the President of the Vermont Dairymen’s Association said that it was better to keep milk at home as the whey by-product could be used on the farm to feed pigs and young stock.  (Agriculture of Vermont, 1912).  Others felt that the selling of milk would result in a scarcity of cows and pigs as a result of the loss of whey feed.  There was also the feeling by some, because of the loss of livestock and the manure they provided, that there would be depletion of soil fertility.  Others were visionary in their analysis of the dairy situation.  R.M. Washburn, a professor of dairy husbandry at the University of Vermont felt that the growth of the cities would force Vermont to become a fluid milk state, and that cheese and butter factories would be closed down for lack of support. (See 1910 Annual Report of the Vermont Commissioner of Agriculture).  He too felt that only by forming farmer cooperatives would the buyers in the city pay attention and offer a fair price for milk.

There were other factors at work too that led to the demand for fluid milk and the decline in butter production.  Professor Warren of Cornell University, in his economic analysis, stated that butter production was decreasing in the East.  It was cheaper to produce butter in the West since they had more grazing land for the cows and could produce feed for dairy animals much cheaper.  For example, Illinois butter in the New York Market could sell for 29 cents/lb whereas Vermont butter of the same quality would have to get 44 cents/lb. (Agriculture of Vermont 1913).  Also, as the major cities were growing, fluid milk buyers were reaching further out for their milk supply.  They were aided in this effort by the railroads.  In 1890, the first milk train left Bellows Falls, Vermont to Boston.  As the railroads grew, milk trains were added and farmers along the lines began shipping their product to Boson and surrounding cities. The Rutland Line, the Central Vermont Line, and Boston and Maine, the St. Johnsbury and Lake Champlain Railroad, the Barre and Chelsea Railroad, all had milk trains leaving Vermont and picking up milk cans along their routes at receiving stations.  Train 74 of the St. Johnsbury and Lake Champlain Railroad, with its 96 mile run, had 20 way stations along its route.  It took six and one-half hours to complete the daily run and was called the “sour milk limited” for good reason. (Life Magazine, August 17, 1942).  In comparison, The Boston and Maine Railroad, in 1916, had only one milk train.  This one train run started in Lyndonville with stops in St. Johnsbury, Wells River, and White River on its 193-mile trip to Boston.

COMPETITIVE PRICING CHALLENGES:

Some of the dairy farmer leaders had foreseen some of the challenges that lay ahead with fluid milk sales.  It created new dynamics with middlemen buyers from Boston and other cities.  Up until this time, the cream was often delivered to the creameries where farmers received a price based upon milk fat (Babcock Test).  It was for this reason that some of the leaders argued that farmers either form or join cooperative organizations.  By 1911 it was stated that fifty percent of the price of milk to consumers went to the milk dealers (Agriculture in Vermont, 1911).  In 1913, the then Commissioner of Agriculture for Vermont, E.S. Brigham, stated that the solution for dairy farmers in marketing was the formation of cooperatives and that the Department of Agriculture would assist in forming such organizations.  He further argued that the State of Vermont needed a cooperative law like Wisconsin, Massachusetts, and New York. The State of Vermont would aid in this effort, he stated, and would help the cooperatives to find markets for their milk. (Agriculture in Vermont 1913 and 1914).  In 1915 the Boston Chamber of Commerce released its report on Vermont milk for their market, and also recommended that Vermont farmers organize and build cooperative milk plants like Denmark as a way to assure a supply to the Boston Market (Agriculture in Vermont 1915). It was not just the milk buyers that created unfavorable pricing, but also railroads through their freight rates.  As a result of these pricing concerns, the following actions were taken:

  • In 1916 the State of Vermont petitioned the Interstate Commerce Commission for a hearing on rail rates. Large milk contractors participated in a Leased Car System that discriminated against small shipments, less than a carload, of milk and rates were not based upon the distance from markets.  Besides the Vermont Commissioner of Agriculture, the Master of the Vermont State Grange took an active role in the hearing.  In July of 1916, the Commission found in favor of Vermont with its ruling imposing rates based upon the distance from markets with a  per milk can rate.  This helped with making Vermont milk competitive with milk at a greater distance from the market.
  • In 1927 as a result of chaotic economic condition of fluid milk to the Boston and adjacent cities markets, the New England Council requested that its Committee on Agriculture study the situation.  The Commissioners of Agriculture in the six New England Sates were asked to develop a plan to stabilize milk pricing.  Temporary success was achieved (Agriculture of Vermont, 1926-1928).
  • Due to the further chaotic condition of milk pricing, the Commissioners of Agriculture in New England, the Governors and others submitted to arbitration on pricing to the New England Milk Board that was especially chosen for this purpose (Agriculture of Vermont, 1928-30).

Milk quality too was a continuing concern.  Massachusetts in the early 1900’s had begun to establish some quality standards for milk shipped into the State and within the State.  Three to four inspectors inspected the same milk facilities on farms in Massachusetts, and these standards were also being applied to milk shipped into the State.  The need for more stringent standards in Vermont was clearly recognized with interstate shipments, and this was one of the reasons that farmer cooperatives were advocated.  President Candon of the Vermont Dairymen’s Association stated in 1928 the profitability to Vermont dairy farmers was linked to the fluid market (two thirds of Boston’s milk came from Vermont), and if the market was to be held it depended upon quality, having supply and demand in balance, and that farmer cooperatives were needed for this. (Agriculture of Vermont, 1928-1930).  Efforts were made during this time to coordinate inspection standards and efforts between the two states and the cities into which the milk was shipped.

COOPERATION AMONG THE COOPERATIVES…the need for the marketing of milk through one channel as a pricing benefit to dairy farmers:

Many of the dairy leaders recognized that only through greater joint efforts among the cooperatives supplying milk to the Boston market and adjacent cities could prices be better stabilized.  One of the leaders in this initiative was my wife’s grandfather, Dr. E.H. Bancroft of Barre, Vermont.  A prominent veterinarian and dairy leader, he along with Commissioner of Agriculture E. H. Jones, his friend Deane Davis (later Governor of Vermont), and other dairy leaders argued that there was the need for one central marketing agency among the cooperatives in Vermont and only through this approach could milk pricing be stabilized.  Unless the cooperatives presented a united front, the chaotic price situation of the past would continue.  As the result of this effort, and work of the Governors of the New England States and other dairy leaders, the New England Dairies was Incorporated in 1931.  This functioned for a time as the common marketing agency of all producers’ groups.  This effort broke down at the end of 1932.

It is not surprising then that when the future study of Vermont was conducted in 1931 (The Vermont Commission on Country Life) that it’s subcommittee on dairy products, chaired by Dr. Bancroft, stated that the major dairy problems confronting Vermont farmers “was low cost of production to meet competition, adjustment of supply to meet demand (quantity and quality), and efficient marketing.”  Relative to efficient marketing, a single sales agency was again recommended.

OTHER INTERESTING HAPPENINGS IN VERMONT AGRICULTURE DURING THIS TIME:

  • Vermont General Assembly passed the Creamery Inspection Act in 1912, which required the inspection twice each year of plants where dairy products are handled.
  • The number of cow testing associations increased from 36 to 42 in 1916.
  • In 1904, according to the Agricultural Report of the State Board of Agriculture, there were seven canning factories operating in Vermont (Westminster, Northfield, Windsor, Brattleboro, Waterbury, St. Albans, and Essex Junction). Sweet corn represented 98% of the operations.
  • In 1907 it was stated in the Vermont Agriculture Report of the State Board of Agriculture that it was hoped that when Morrill Hall opened at UVM that there would be a course on cheese making as there was a need for greater uniformity on quality.
  • In 1910 and 1911, the Rutland Railroad and the Central Vermont Railroad placed a “Better Farming Special” train with cars at the disposal of the State Department of Agriculture and the State College of Agriculture for instruction of farming communities in the State.  It was discontinued in 1912 as the Boston and Maine would not participate.
  • Ice for milk trains, before refrigeration, was important.  Ice from Brookfield was sent to Randolph to cool milk on one of the milk trains to Boston (Vermont off the Beaten Path).
  • During the First World War, a Farmers’ War Council was organized and the State Department of Agriculture and the Extension Service cooperated to aid in increasing food production in the State.  James Hartness of Springfield was appointed State Food Commissioner.  He was assisted by John Cushing, editor of the St. Albans Messenger (Vol. 4, History of Vermont).
  • In the late 1920’s the New England States came up with a New England Quality Product label.  State Departments of Agriculture were allowed to give producers the use of the label for placement on a product as long as they agreed to abide by quality grades and state established standards.

BlOGGER”S COMMENTS:

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 transporting their milk, and they no longer directly dealt with the buyers having to go through middlemen, and they had to comply with new health and quality standards.  Pricing of their milk was thus further removed from their control, as was the marketing of the product.  In this type of environment much confusion resulted as to who was responsible for pricing that was often less than their cost of production.  There was a push for the formation of farmer owned cooperatives and a joint marketing agency to better control quality and balance supply and demand according to market needs.  Markets, the dairy farm sector, as well as cooperatives have changed significantly since this period, but many of the pricing issues still exist today.

REFERENCES AND SOURCES OF INFORMATION FOR THIS BLOG POSTING:

  • Twenty-Fourth Vermont Agricultural Report by the State Board of Agriculture, 1904.
  • Twenty-Seventh Vermont Agricultural Report by the State Board of Agriculture, 1907.
  • Agriculture of Vermont, First Annual Report, 1909.
  • Agriculture of Vermont, Second Annual Report, 1910.
  • Agriculture of Vermont, Third Annual Report, 1911.
  • Agriculture of Vermont, Fourth Annual Report, 1912.
  • Agriculture of Vermont, Fifth Annual Report, 1913.
  • Agriculture of Vermont, Sixth Annual Report, 1914.
  • Agriculture of Vermont, Eighth Annual Report, 1916.
  • Agriculture of Vermont, Eleventh Biennial Report, 1920-22.
  • Agriculture of Vermont, Fourteenth Biennial Report, 1926-1928.
  • Agriculture of Vermont, Fifteenth Biennial Report, 1928-1930.
  • Agriculture of Vermont, Sixteenth Biennial Report 1930-1932.
  • Rural Vermont, A Program for the Future by The Vermont Commission on Country Life, 1931.
  • Historical Sketch of the Granite City Cooperative Creamery Association, Inc. Barre, Vermont, by Juliane B. Eastman, 1949.
  • Traffic World, Vol. 18, No.5, by Traffic Service Corporation.
  • Life Magazine, August 17, 1942
  • Barre and Chelsea Railroad by Dwight Smith
  • Williams Street Extension Historic District, Rockingham, Windham County, Vermont, Sec. 8, Page 1 by U.S. Department of Interior, National Park Service, Register of Historic Places.
  • Vermont Off the Beaten Path by Barbara Radcliff Rogers and Stillman Rogers
  • History of Vermont, Vol. 4, by Walter Hill Crockett, 1921.

Answer to last blog question: 
The first shipment of fluid milk by train left Bellows Falls to Boston in 1890 (see U.S. Department of Interior, National Park Service, Williams Street Extension Historic District).

NEXT BLOG POSTING:
The historical events at the State and Federal Level during the 1930’s relative to agriculture and milk marketing


Trivia Question:
Who was President of the U.S. when the Agricultural Adjustment Act was passed that set procedures in place for orderly marketing of dairy and other agricultural products?

Edition 8, May 4, 2011






2 comments:

  1. I enjoyed reading about my grandfather and how he played a part in the history of dairy cooperatives in Vermont.

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  2. I enjoyed your most recent blog; a lot of research went into it. I was wondering if you know of the book by Edwin C. Rozwenc, 'Agricultural Policies of Vermont 1860-1945' (Montpelier, VHS, 1981). If not, several Vermont libraries have it and may be available via ILL.
    Betsy Curler

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