National dairy agreement may reduce milk supply

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(Host) Representatives of 60,000 of the nation’s dairy producers meeting in Chicago are expected to approve a new program that will enable them to raise milk prices. It’s the first time farmers have banded together to increase prices, which have recently dropped to historic lows.

VPR’s Steve Zind reports.

(Zind) The new program is a first for the dairy industry. Unlike past efforts to buttress milk prices the plan doesn’t require the government’s blessing or its money. The “Cooperatives Working Together” idea was devised by the National Milk Producers Federation. The federation is made up of cooperatives from around the country. Their members produce 70% of the nation’s milk. The group includes Vermont’s two major dairy cooperatives – the St. Albans Co-op and Massachusetts based Agrimark. Roughly 80% of Vermont’s dairy farmers belong to the cooperatives.

The dairy industry is fiercely competitive, pitting co-op against co-op and region against region. But low milk prices nationwide have fostered a spirit of cooperation among producers. The plan would establish programs to increase the sale of U.S. diary products here and abroad. But more importantly, it would cut back on the milk supply using herd buyouts and other incentives for farmers to produce less milk. Vermont Agriculture Commissioner Steve Kerr says focusing on reducing the supply of milk is the most important element of the plan.

(Kerr) “The root of the problem is the fact that there are more cows on farms in this country than there is demand for the milk that those cows make. Until we reduce the supply of dairy cows, we’ll have too much milk.”

(Zind) Unlike the Northeast Dairy Compact, which was funded by consumers, or dairy price supports funded by the government, this program will be paid for by farmers. Kerr says he’s optimist the plan can work, but there are some concerns.

(Kerr) “There is no government involved. There’s no way to compel people to participate or to act honorably if they do participate. This is going to be a grand experiment amongst dairy farmers.”

(Zind) Clark Hinsdale of the Vermont Farm Bureau agrees. Hinsdale says the plan amounts to a milk OPEC.

(Hinsdale) “If this is successful, our friends the processors will start calling us the Milk Cartel. It’s totally legal for farmers to get together and set the price of their product. They just haven’t been very good at it, that’s all.”

(Zind) While the goal of the program is to produce more money for their milk prices, farmers are also hoping it will bring more stability and predictability to milk prices.

For Vermont Public Radio, I’m Steve Zind.

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