ST. ALBANS — The combination of low prices and the need to cut production in an effort to bring supply and demand for milk into alignment are cutting dramatically into farmers’ incomes.
Clara Ayer of Fairmont Farm told Rep. Peter Welch on Thursday that every year she does projections of the farm’s revenues. After the coronavirus pandemic sent milk prices tumbling, she redid her projections. They were $1.2 million lower than they were at the beginning of the year.
Welch and Ayer spoke during a meeting the Congressman held with the members of the board of the Vermont Dairy Producers Alliance (VDPA).
VDPA Executive Director Amanda St. Pierre shared projections she did using the price estimates from Agri-Mark and data from the Vermont Agency of Agriculture, Farms and Markets (VAAFM) on milk production in Vermont. She concluded Vermont farms will lose $14 million per month solely as a result of the price decline.
“That $14 million is what circulates in our communities,” St. Pierre said, noting that each dollar dairy brings in to the state circulates seven to eight times. “That dollar goes to the local store and people who live off that income.”
Or, as VDPA Chair Bill Rowell put it, “If the farmer doesn’t have enough to keep the lights on, then they can’t pay the vendors.”
At the same time prices are dropping, Dairy Farmers of America (DFA) is paying farms full price for only 85 percent of their March production. Agri-Mark has asked farmers to decrease production by 6 percent.
“While we understand the necessity to do something, it’s like a double whammy,” St. Pierre said.
Alburgh farmer Darlene Reynolds said her farm had been gearing up to increase production, so the 15 percent cut is more like 25 percent for them. They are, she said, “drying off cows and getting rid of cows on a daily basis.”
Welch said that what farmers need most immediately is direct payments. The CARES Act, passed by Congress on March 27, contained more than $23 billion in direct aid to farmers. Seven weeks later none of that money has gone out the door, even as farms of all kinds are enduring huge income losses.
However, staff from Sen. Patrick Leahy’s office said the forms for the program are now available at farmers.gov/cfap. Rules still need to be posted and it’s not clear when checks will be cut.
In the meantime, the U.S. House of Representatives is on the verge of passing an aid bill with another $16 billion in direct assistance.
Vermont Deputy Secretary of Agriculture Allison Eastman said work is continuing on a plan to send direct aid to farmers from the state. The agency is preparing so that once the legislature passes a bill and the governor signs it, they will be ready to get funds out to farmers.
Farmers have had mixed results accessing the other federal assistance programs for small businesses. Some VDPA members have been able to get Paycheck Protection Program loans, St. Pierre said. But others have no payroll on which to base a loan, as the farm is worked entirely by family.
VDPA has advised those farmers to apply for Vermont’s Pandemic Unemployment Assistance (PUA), an unemployment program for those who were self-employed. So far, none have received payments or even been told their claims are being processed, she said.
Economic Impact Disaster Loans (EIDL) has been another challenge for farmers. Initially, the Small Business Administration (SBA) said it couldn’t make loans to farms. Congress removed that barrier. The low interest loans come with a $10,000 grant, which is supposed to go out to the applicant within three days.
“The way it’s been interpreted by SBA is that $10,000 is only up to $1,000 per employee,” Welch said. And SBA won’t count farm workers who have come from outside the U.S. on a work visa.
In addition to direct payments, Vermont’s Congressional delegation has urged USDA to hold a hearing to establish a temporary floor on the price of Class I milk.
That was an idea which appealed to those on the call.
“The biggest thing that gets my attention is the floor under Class 1. That would do a lot,” said Rowell.
The delegation is also advocating for paying farmers for dumped milk. On that option, Ayer cautioned, “Dumping is happening at the co-ops, and we have to make sure the money goes straight to the farmers.”
In addition, the delegation continues to push for a reopening of enrollment in the dairy margin coverage program to allow farmers to purchase insurance against a drop in milk prices or a rise in feed costs. Welch said, however, that it’s clear USDA Secretary Sonny Perdue is unwilling to do so on his own. If enrollment is to be reopened, Congress will have to do it.
The coronavirus, St. Pierre said, has highlighted the importance of regional food systems and infrastructure.
She also brought up a contradiction farmers frequently raise — while they are dumping milk, there are people going without food.
“We’re providing a food source in a country where one in five children go to bed hungry,” she said.
Last Friday, her farm, Dairy Farmers of America and Bourdeau Brothers, Inc. partnered to give away nearly 4,000 gallons of milk. Some families who came hadn’t had milk in several weeks, she said. Some people were in tears.
Asked how farmers can assist the delegation, Welch replied, “It’s kind of you to ask me, but your hands are full.”
“We know what we have to do, which is stabilize the price and get some money in your pocket,” he said.