Starr is working on new milk plan

by Bethany M. Dunbar

MONTPELIER — Senator Bobby Starr of North Troy is working on a new plan to get dairy farmers more income when federal farm milk prices drop.

The plan would involve milk regulations by single states in a method that echoes the Northeast Interstate Dairy Compact.

The six-state dairy compact boosted the milk price for farmers from 1996 to 2002 without raising taxes. Instead, it assessed a fee on milk processors and sent that money back to farmers to help cover the cost of production when the federal milk price for farmers was low.  Processors could pass along some or all of the price increase to retailers, who could pass some or all of it along to consumers.

The Northeast Interstate Dairy Compact collapsed when an attempt was made to expand it to include 26 states, and it was not renewed by Congress.

“It won on the law and lost on the politics,” said Dan Smith, a lawyer who helped create the compact and served as its executive director.

The new plan, Mr. Smith said Tuesday, would avoid the need for Congressional approval by having single states adopt plans without putting them together into an interstate compact.  He said Congress has total control over interstate commerce, but states are allowed to take actions if they don’t adversely affect interstate commerce.

Mr. Starr said the Vermont Milk Commission already has the authority to set up a Vermont program, and he believes it should go ahead and do it.  Setting up a Vermont program would require a piece of housekeeping legislation by the Legislature and action by the Vermont Milk Commission.  Mr. Starr said he’s hoping that can be accomplished before the end of the legislative session.

“About every state has a milk commission or a milk control board,” he said.  “We met with Massachusetts and they were, I would say, really excited about this.”  Some of the same people who worked on the dairy compact in Massachusetts are around and interested in working on a new program initiated by the states individually, Mr. Starr said.

“In Vermont we should do it first and show the others the way,” Mr. Starr said.

The Massachusetts Legislature meets year-round, he said.  If Massachusetts passed a similar program, it would help Vermont farmers because a lot of milk sold in Massachusetts is made in Vermont.  Mr. Starr said most of the Vermont milk goes to Massachusetts and Rhode Island.

He hopes to see Connecticut and New York get involved as well.  Mr. Starr has a friend, Darrell Aubertine, who is currently serving in the New York House and is running for a seat in the Senate there.  He is interested in working on this project if elected.

If the new plan brought $1 a hundredweight back to farmers, whose cost of production is up around $17 or $18 these days, it would be “a buck more than starving to death,” Mr. Starr said.

A dollar a hundredweight is about nine cents a gallon.  The cost of production price of $17 a hundredweight would be about $1.46 a gallon.

Based on milk price studies by the federal General Accounting Office and by Ron Cotterill (a milk price analyst at the University of Connecticut) and others, the gap between the farm price and retail price is currently high enough to cover production costs and processing costs and still return a rather large chunk of income back to dairy farmers.

A chart included with these studies shows the average farm milk prices for the years 2003 through 2007 in the Boston market, the average co-op charge, the average processor cost and return, the average retail cost and return, and the average reported retail price. According to that chart, the average actual cost for those years was $2.82 a gallon, and the reported retail price was $3.24 — an average difference of 42 cents a gallon. 

Another chart as part of this study showed a total of $125,840,000 difference over those five years — which would be $31,460 per farm for every farm in New England and New York State.

Asked who is getting that money now, Mr. Starr said, “The retailers are getting the lion’s share but Suiza’s doing very well.”

Mr. Starr said he would not like to see a cap put on the program to limit the help to small farms.  Large farms have a high cost of production as well as small ones, he said, and they get hurt by the federal Milk Income Loss Contract, which is paid for by taxpayers and has a cap.