More bad news for farmers: milk co-op lowers payments to cover losses

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(Host) Dairy farmers facing the triple threat of rainy weather, low milk prices, and high fuel costs have more bad news to worry about. The major milk co-op that serves Vermont is losing money, and it’s asked its farmer-members for help. That means members of the Agri-Mark cooperative will see less money in their milk checks.

VPR’s John Dillon reports.

(Dillon) Agri-Mark chief economist Bob Wellington says the co-op is losing money on its cheese and milk powder plants. He said the losses amounted to more than $7 million last year, and that the money has to come from members

(Wellington) “Our co-op is owned by its farmers. There’s no other place to go if we have a loss.”

(Dillon) Agri-Mark is based in Massachusetts and has about 400 members in Vermont. The co-op is charging those farmers about 60 cents per 100 pounds of milk they produce to cover the ongoing losses. With milk prices at 1970 levels, the Agri-Mark assessment is another blow for co-op members.

Steve Taylor is New Hampshire’s agriculture commissioner. He also runs a dairy farm in Plainfield, New Hampshire, and is a longtime Agri-Mark member. He says members already pay to cover trucking fees, equity payments, and milk promotion costs.

(Taylor) “And then to have a very substantial deduction for the repayment of debt – in other words, the failure of the marketing organization that you’re participating in to make enough money to cover its needs. It’s pretty frustrating. Looked at another way, it’s like adding up to an additional $2,000 debt per cow.”

(Dillon) Wellington, the Agri-Mark economist, blamed the losses on a federal system that doesn’t allow the co-op to cover its costs of manufacturing dairy products.

(Wellington) “It’s primarily because our plants that are making, cheese, butter and powder are forced to receive a manufacturing allowance under the federal orders that are based on 1998 costs. And we’re just losing money on every pound of cheese we make, and pound of butter, dried milk, dried whey powder. That’s our worst case scenario.”

(Dillon) The St. Albans Cooperative Creamery also lost $4.4 million last year because a local cheese plant went out of business and owed the co-op money. The co-op has not asked farmers for payments to cover the loss, but it has lowered premiums because of the financial pressure.

For Vermont Public Radio, I’m John Dillon.

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