What a difference a years makes
June 25, 2007
By JOHN FLOWERS
ADDISON COUNTY — What a difference a year can make down on the farm.
Last summer, farmers’ finances and collective patience were being stretched to the limit by anemic milk prices and a weather-beaten hay crop.
On Thursday, however, many farmers were making room in their barns for a fast-growing second cut of hay and were celebrating soaring milk prices that Agri-Mark Cabot Economist Bob Wellington said could climb beyond $22 per hundredweight before the end of the year.
“We’re right in that transition where milk prices are starting to move upward pretty dramatically,” Wellington said. “For farmers in Vermont, the (price of milk) will be well over $22 per hundredweight.”
That’s a far cry from the $12.61 per hundredweight farmers had been receiving for milk in May of 2006. But while the rising milk prices are a welcome sight for farmers, it’s not like they’re rolling in money, cautioned Addison County Farm Bureau President Bill Scott.
“I think farmers are beginning to think they may be able to keep up with the increasing costs of production,” Scott said.
WORLD DEMAND UP
Still, farmers finally have cause for a little optimism, as worldwide demand for milk has finally begun to exceed supply for the product, according to Wellington.
“Our supply, nationally is up only 1 percent compared to last year,” Wellington said. “Usually, it’s up by around 2 percent.”
He added there is much more competition for this year’s coveted supply.
“International demand is up,” Wellington said.
Some of that demand is coming from China, which — with its growing wealth — is seeking more nutritious products for its citizens. The country is also considering a school lunch program for its kids, which could really ratchet up demand for non-fat dry milk — a nonperishable product brimming with protein that is easily exportable.
Speaking of milk exporters, Wellington noted that India has stopped sending its milk abroad in order to better meet the needs of its growing population. India is currently the world’s largest producer of milk.
Australia, too, hasn’t had as much milk to spare for foreign markets, due to a series of serious droughts. That nation’s 2007 milk yield is expected to be around 25 percent below last’s year’s take.
Europe has also turned off its external milk spigot.
“They got rid of their quotas and are not exporting,” Wellington said.
The resulting tight market is expected to push the price of milk up by $2 to $20.60 per hundredweight for June and by an additional $2 for July, according to Wellington. Those prices are based on the Boston market. The Middlebury-area price for milk fetches 72 cents less per hundredweight due to its distance from Boston.
Agri-Mark/Cabot’s Middlebury plant is expected to be a key player in providing products to meet the nation’s — and world’s — dairy needs during the months ahead. The plant produces non-fat dry milk and whey powder, both of which are currently in high demand on the international market. Both products have more than doubled in price during the past year, according to Wellington.
Cheese prices, meanwhile, continue to fetch a high price of $2 per pound, up from around $1.25 per pound last year. Wellington does not expect that price to go much higher.
CROPS ARE GOOD, TOO
Farmers’ current prosperity is extending beyond the dairy stall. Rain, which was overabundant last year, has proved more moderate and conducive to good crop growth this spring, said Scott and Jeff Carter, a field crops and nutrient management specialist with the University of Vermont Extension System.
“Things are going fairly well this year,” said Carter, who interacts with dozens of farmers throughout Addison County. “It was a nice spring for planting. The corn looks good. The first cut of haylage and the first cut of dry hay has been harvested and looks to be in very good condition.”
Good condition often translates into a high nutrient content in the hay and corn. Last year’s crop was lackluster, in terms of nutrient value due to poor weather conditions.
“This was a nice, mild winter, which allowed the alfalfa hay crops to come through the winter in good condition and rebound for good growth this spring,” Carter said.
Scott noted that during an average year, many farmers feel good to get either a decent hay crop or an above-average corn crop.
“This year, they may get both crops,” Scott said.
Officials cautioned, however, that farmers are still living on a tight financial margin.
“Yes, it’s been a good season for crops this year, but the price of fertilizer, fuel and farm inputs has risen significantly,” Carter said. “The higher price of milk is a good thing, but you have to realize that the price of milk today is helping to pay off the debt they incurred from the poor milk prices of last year.”
Scott noted that dairy farmers have greater expenses than many businesses when it comes to producing their products.
“Farmers always pay retail for (supplies and equipment) and receive wholesale prices for their milk,” Scott said.
Bridport dairy farmer Tim Howlett is cautiously optimistic about the latest surge in good fortune for farmers.
“It’s been a good rebound from last year, and we’ll be able to catch up on some of the extra debt we incurred from last year,” Howlett said.
He is now looking at wise ways to spend some of the extra money that is coming in.
“I am thinking of anything we can spend the money on now that will help us when the milk prices go down,” Howlett said.
For now, he and other farmers are enjoying the good times while they last.
“It’s a really good time to be in agriculture and it invigorates and excites me that things are going so well this year,” Howlett said.