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Vermont Commission Holds Off On Milk Surcharge

posted on December 12, 2008


MONTPELIER, Vt. (AP) -- A panel looking for ways to help Vermont dairy farmers is holding off on adding a surcharge on milk sold in the state, opting instead to continue studying the plan.

The Vermont Milk Commission, which is made up of farmers, legislators, the state agriculture commissioner and a dairy processor, has been hearing testimony on milk pricing - and a possible retail milk premium - since dairy farmers were hit with record-low milk prices in 2006.

The commission originally proposed a 39-cent premium on a gallon of milk but decided later to set the premium amount, if at all, on a monthly basis.

"What the commission has been trying to do is to say, is there any way a state can prevent what happened in 2006 with the cost of production being higher and farmer price being much lower," said Agriculture Secretary Roger Allbee, chairman of the commission.

Dairy processors and retailers are opposed to a retail milk premium in Vermont, citing competition from nearby states. The Vermont Grocers' Association has less of a problem with a regional surcharge program.

"We don't support a Vermont-only surcharge because it just makes costs to Vermont retailers more expensive than neighboring states and invariably will mean higher retails," association president Jim Harrison said.

If New York and Pennsylvania were to implement a pricing program, then Vermont probably could, Allbee said.

The challenge is that only 5 percent of Vermont milk is consumed in state and a lot of the milk is processed out of state, Harrison said.

A number of Northeast states have tried to help dairy farmers since the 2001 demise of the Northeast Interstate Dairy Compact, which offered emergency funding and other programs.

In Massachusetts, for instance, the Legislature passed a program that gives farmers a tax credit when the federal milk price falls below a certain level.

In Maine, a state milk commission sets the minimum prices that farmers get for their product. The difference is that most of Maine's milk is consumed in state, Allbee said.

In 2004, the Maine Legislature enacted a dairy relief program to provide an additional safety net of sorts for dairy farm, setting target prices for farmers based on the size of their farms and providing subsidies when milk prices fail to meet those levels.

In fiscal 2008, which ended at the end of June, the program paid out $1.07 million to farmers, said Tim Drake, acting executive director of the Maine Milk Commission.

But because milk prices have fallen, the program has already paid $1.6 million in the first five months of the current fiscal year, Drake said.

In Vermont, some commission members worry that more study will delay any action before milk prices are projected to fall to $14 in the spring. But other members said they wanted to be sure a premium, or whatever is proposed, is legally defensible and to review the impact it would have on consumers.

"I think we need to keep the process going and get all the information we can get," said Fairfield farmer Harold Howrigan.

Commission members also raised concerns about the disparity between the retail price of milk and what farmers are paid.

"There's a lot of money that's going somewhere that should be divided up a little bit more fairly," said state Sen. Robert Starr.


Tags: agriculture dairy milk money news Vermont