Guest Blog Post by: New England Farmers Union Member, Britt Lundgren, Stonyfield’s Director of Organic and Sustainable Agriculture
This year has been devastating for many dairy farmers in the Northeast. Low prices for conventional milk and a severe drought have delivered a one-two punch that many dairies have been unable to withstand, with 16% of New Hampshire’s dairies going out of business so far this year. Conventional milk prices have long been cyclical, with prices regularly dropping below the cost of production and then climbing back up in a fairly predictable three year cycle. Many farms have learned how to weather these downturns, but this year is different. This time the drop in price has come at the same time that a severe drought is crippling forage and feed production. This is forcing many farmers to rely more heavily than usual on purchased forages and feed, right when they are least able to afford it. Even the best prepared farms are digging deep into their capital reserves to make it through this year.
This situation demands both short term interventions to save farms that are struggling, and long term strategies to help better prepare more farms to weather such storms. The first priority is for Congress to authorize emergency disaster payments to the farmers impacted by this drought. USDA has the authority to issue emergency loan payments, but loans are not going to work for farms that are already struggling under a pile of debt. Congress needs to either issue funds for disaster assistance or remove the restrictions on USDA’s discretionary spending that are currently preventing Secretary Vilsack from providing disaster payments to farmers.
In the longer term, Congress needs to overhaul the risk protection policy that is available to dairy farmers. The Margin Protection Program created in the last farm bill has been by all accounts a spectacular failure. In 2015, dairy farmers across the U.S. paid $73,000,000 to the USDA to enroll in the Margin Protection Program. The result? A little over $700,000 in payments to farmers, with the balance flowing back into the U.S. Treasury. Even now, with low prices and the drought driving feed costs up, the program still isn’t providing the safety net producers need because the formula used to calculate margins doesn’t reflect reality for most farms. It is time to go back to the drawing board with the dairy safety net.
Transitioning to organic may be an option worth exploring, especially for those producers who are already utilizing pasture or have the ability to turn some cropland into pasture. Unlike the conventional market, organic prices are relatively stable, and do a much better job of covering the costs of production. Indeed, many of the organic dairy farms we have today are organic because they transitioned to take advantage of this higher and more stable pay price.
Many organic dairy processors, including Stonyfield, provide payments to farms while they are transitioning to defray the added expense of organic feed. Stonyfield also provides technical support to producers who are transitioning to organic and plan to ship milk to our direct supply program. Organic transition is another place where Congress has done little to support farmers, despite the fact that farmers who have successfully transitioned are less reliant on things like emergency disaster payments.
As they seek solutions to the crisis facing dairy farmers today, Congress has to start by providing immediate financial assistance to producers who have been impacted by the drought. But it is equally important that they develop a safety net that actually works, and explore ways to provide organic transition assistance to producers who want to go that route. In the long run, a market that works for producers is the best safety net there is.