Tuesday, March 28, 2017

A TRIP THROUGH HISTORY WITH VERMONT’S CELEBRATED DAIRY INDUSTRY

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

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