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Dairy farmers hurt by government shutdown and expiration of farm bill

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Posted on October 10, 2013 |
By Zach Despart



WEYBRIDGE — The partial shutdown of the federal government and the expiration of the farm bill have put Addison County dairy farmers in a precarious position. Without a price stabilization program or access to crucial information like crop reports and other federal resources, farmers have to make important business decisions based on educated guesses rather than hard data.

But it’s not just the farmers who are suffering. Some of those who support farms and the farm economy are also closed out of jobs or frustrated by government shutdown.

The shutdown, which began Oct. 1, closed the entire Department of Agriculture, which employs 105,000 people.

In addition to the furlough of all USDA employees, some local non-federal employees who work on agriculture programs have been locked out of their offices.

The Food, Conservation and Energy Act of 2008, colloquially known as the farm bill, also expired Oct. 1. The bill, which is normally passed every five years, sets the nation’s farm, food and nutrition policy, including the Supplemental Nutrition Assistance Program (SNAP).

“The farm bill is very important,” said Cornwall’s John Roberts, chairman of the Farm Service Agency state committee and president of the Champlain Valley Farmer Coalition. “There are farmers out there expecting to close out on loans right now, and that’s not happening because of the shutdown.”

The expiration of the law covering the nation’s farm and nutrition policy, coupled with the government shutdown has stripped farmers of the information they need to make paramount business decisions.

“It’s a real crap shoot,” Roberts said. “You’re making guesses, and you hope they’re educated guesses, but there are a lot of ‘what if?’ questions.”

Roberts recounted the story of a Colchester farmer he spoke with whose crops were damaged in spring flooding. The farmer had insurance with the USDA’s Farm Service Agency. In order to get reimbursed, an FSA inspector had to look at the damaged land. However, since the FSA is closed, there is no one to inspect the land and no one to process the insurance payment.

Worse still, the farmer has to plant a cover crop on that land by Oct. 15 so it can be ready for the spring.

“He’s in a dilemma — he can’t get ahold of anyone at the FSA to ask, he doesn’t know what to do,” Roberts said. “He’s going to have to make a decision on his own.”

Roberts was critical of Congress for allowing the shutdown and farm bill expiration to occur.

“They’re not facing up to the realities of life for most Americans,” Roberts said. “They’re off in some twilight zone of their own making.”

THE DAIRY CLIFF

While Congress has until on or about Oct. 17 to avoid the fiscal cliff and raise the debt ceiling, which would authorize the United States to borrow funds to pay for expenditures already appropriated by Congress, another “cliff” looms on the horizon.

If Congress does not pass a new dairy program by Dec. 31 — be it the Dairy Stabilization Act as part of a new farm bill or a standalone piece of legislation — the government will revert to a 1949 federal statute, the last time a permanent farm bill was passed. Because farming methods were much less efficient then, the government would pay about double for milk surpluses than it did under the last farm bill.

“The price of milk would go to $30 per hundred weight,” Roberts said. “Right now farmers get $18, $19 — it depends on the region.”

The result, in theory, is a jump in prices for the consumer. But no one really knows, Roberts said.

“It sounds like a great idea for dairy farmers — suddenly milk is more expensive,” Roberts said. “But it really isn’t a good idea because people might just stop buying milk. The government might stop buying milk for school lunch or WIC (Women, Infants and Children’s) programs.”

By its very nature, dairy is a volatile industry. Milk has a short shelf life — it cannot be stored like other products like corn or soybeans. Instead, it must be sold or processed into different products like cheese, butter and milk powder.

Roberts said he thought dairy farmers were “reasonably vulnerable” right now, because there is an export as well as domestic market for milk. But he warned this could change rapidly, and pointed to 2008-2009, when the export market disappeared.

“That was just 5 percent, and it dropped the price of milk 50 percent,” Roberts said. “That happened in literally a month.”

In Roberts’ view, the need for a new farm bill is imperative.

“We need this thing solved; we need the Dairy Stabilization Act,” he said.

IMPACT ON LOCAL FARMS

John Rooney, co-owner of Monument Farms in Weybridge, said the shutdown has not hurt the day-to-day operations of his family’s farm, as it is not involved in many of the USDA’s subsidy programs. But the absence of a farm bill is another matter.

“We’re certainly concerned about the farm bill,” Rooney said. “As much as I think we live in a vacuum, we’re part of the big picture.”

Rooney noted that the WIC part of the SNAP program purchased a lot of dairy products, and that the industry as a whole would probably soon feel the effects of the shutdown.

Still, Rooney said it was business as usual at the farm.

“It’s not something we walk around worrying about,” Rooney said.

Pete James, Rooney’s cousin and another co-owner of Monument Farms, said he was frustrated by the government shutdown.

James offered the example of how his farm is trying to comply with Natural Resources Conservation Service (NRCS) regulations regarding soil erosion. But since the NRCS is shuttered, James cannot consult the agency with questions.

“With the NRCS shut down and my schedule to get the land tilled, I don’t have their services to help me out,” James said. “We’re holding out to see what happens, but if the shutdown doesn’t end soon, we’ll have to go it on our own.”

If the NRCS doesn’t reopen soon, James will have to till the land and hope what he does complies with regulations.

“I can’t wait an uncertain amount of time,” he said. “I have to till while the weather is good.”

James said the longer the shutdown lasts, the more farm programs will be affected.

Monument Farms participates in the corn deficiency program, in which the federal government subsidizes corn growers when crop yields are low. The farm also participates in nutrition management and manure management programs.

Because Monument Farms sells the milk it produces directly to consumers, as opposed to a co-op, it does not rely as heavily on “safety net” programs like Milk Income Loss Contract (MILC).

The MILC program subsidized farmers when the price of milk fell below a certain threshold. It expired with the farm bill.

James said he hopes the shutdown ends soon and that a new farm bill is passed.

“It does make it difficult to make decisions, not knowing what to do to move forward,” James said.

The farm, which opened for business in 1931, milks 550 cows and employs 34 people.

Bob Foster of Foster Brothers Farms in Middlebury said the partial government shutdown and subsequent closure of the USDA do not affect his business on a daily basis.

“The effect will depend on how long the shutdown lasts,” Foster said. “The USDA isn’t gathering any statistics because their offices aren’t open.”

Foster Brothers milks 430 cows and has been in the Foster family for five generations.

Bob Foster said he was anxious about the farm bill, noting that some farmers are enrolled in USDA programs whose future is now in doubt.

While milk prices are currently stable, Foster said he was worried about the expiration of the MILC program.

“Without the MILC program, farmers have no safety net,” Foster said. “It is very difficult to plan for the coming year if we don’t know what the milk prices are going to be, and we don’t know how much we can borrow.”

Ted Foster, Bob’s brother, echoed a similar sentiment.

“At some point we may need the safety the government provided in the past,” he said. “If that’s not there, the price could really crash on us.”

Bob Foster said he feared a return to 2009, when milk prices plummeted and forced a lot of dairies out of business.

“Some farms are just getting out from under that year,” Foster said. “It has been a slow recovery.”

Foster, who has been farming since 1972, said 2008 and 2009 were the worst years for dairy farmers. He said that the government shutdown has shaken consumers’ confidence and bred uncertainty about the economy.

“It keeps me awake at night,” he said.

Foster said he was confident that Vermont politicians are doing all they can to protect farmers.

“I know our congressional delegation is doing their utmost,” Foster said.

Vermont’s congressional delegation — Sens. Patrick Leahy and Bernie Sanders and Rep. Peter Welch — have all pledged support for a new farm bill.

LOCKED OUT

The closure of federal offices doesn’t just affect federal employees, but many workers that are subcontracted by these agencies.

Jill Arace is the executive director of the Vermont Association of Conservation Districts. Many on her staff work on NRCS projects, like nutrient management plans and archaeological site clearances. These workers are housed within NRCS offices throughout Vermont.

While not furloughed, as they are not federal employees, these workers have no place to do their jobs, as all federal offices are closed.

“They’re locked out of their offices, and most of their files are on federal computers,” Arace said. “They’re not allowed to remove these files, or any equipment from federal offices. They’re not even allowed to enter the offices.”

Some employees are working from home while others have moved into the University of Vermont Extension offices in Middlebury. Still, without access to software and data, these workers are flying blind.

“I’ve told them to do whatever they can, to do some research,” Arace said.

Michelle Smith, a conservation reserve enhancement planner for southern Lake Champlain, is one of these displaced workers.

“My job is more difficult because I don’t have access to federal resources,” Smith said. “I’m only able to do about a third of what I normally would in the office.”

To make matters worse, Arace does not know when the NRCS will resume funding for its contractors. Therefore, if the shutdown continues, Arace will be forced to reduce her workforce.

“I’ve given them sort of a grace period of two weeks,” Arace said. “If it extends beyond two weeks, I’m going to have to temporarily lay them off.”

“The shutdown is making life hard for a lot of people, not just federal workers,” Smith said.

RIPPLE EFFECT

Even employees that work in close conjunction with federal agencies, but have not been locked out of their offices, have been unable to complete their duties.

Jeff Carter is an agronomist with the UVM Extension. Most of the Extension’s funding comes from the university, and its federal funding has already been appropriated, so its employees have not been subjected to furloughs.

Still, Carter has been affected.

As part of his duties, Carter compiles reports on crop progress and files them with the National Agricultural Statistics Service, a branch of the USDA. Farmers scour the hundreds of reports the NASS compiles annually for information about prices, production, crop forecasts and a litany of other topics. Farmers use this data to make decisions for the coming year, such as what to plant and when, and how to best serve current market needs.

Due to the government shutdown, the NASS website has been taken down, and Carter is unable to submit his reports.

“Tracking weekly progress of crops helps farmers anticipate whether there will be a bumper crop or less of a crop,” Carter said. “I figure out how much of a lower crop yield we’re going to get because of the summer rains.”

Carter said it is especially important for farmers to be able to go to NRCS offices because this time of year is when they can sign up for the Environmental Equality Incentive Program (EQIP). The program, first authorized in the 1996 version of the farm bill, subsidizes the cost of making farms more efficient and environment-friendly.

Because of the closure of the USDA, farmers could miss out on these subsidies.   

“Farmers can’t receive payments for what they’ve accomplished, and they can’t sign up for new projects for the next fiscal year,” Carter said.

On Thursday, the government shutdown entered its 10th day.

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