Many dairy farms were already struggling with low milk prices and high fuel and feed costs as the worst drought in decades dried up grazing land and pushed up the price of hay and feed. Dozens in states like California, the nation's leading milk producer, have filed for bankruptcy.
In Vermont, which saw more closings this year after gradually losing farms for decades, the end of the milk income loss contract, or MILC, program, which paid dairy farmers when milk prices fell below a certain level, has created another wave of panic.
“The last couple of months, that's what's been keeping us going,” said Myles Goodrich, who runs Molly Brook Farm in West Danville after taking over from his parents. “Otherwise, it'd be losing battle.”
A milk glut sent prices tumbling below the cost of production this summer. They have since rebounded as farmers sold off cows and cut production. But hay and grain prices skyrocketed at the same time as demand for feed increased, all at the same time the drought cut into production.
Now is the time when producers need the MILC payment or something akin to that to allow them to get through this very difficult time, U.S. Agriculture Secretary Tom Vilsack said.
“Of all the producers that have been negatively impacted by the drought, the dairy producers are probably in the most difficult situation at this point in time,” he said. “Livestock producers have suffered but their prices are reasonably high and the hope is that when the food, farm and jobs bill gets passed that that disaster program will be reinstated and they'll get some help and assistance. Dairy producers have no such assurance.”
Goodrich's last MILC check for about $2,300 came in just as the farm received another 16-ton shipment of grain. The farm has been spending about $4,000 more on feed each month — $16,000 compared to about $12,000 last year — for 120 milking cows and other heifers and bulls.
“The milk price is good, but expenses are terrible,” Goodrich said.
He figures he'll have to borrow to stay afloat, and Goodrich's mother, Sally, 84, said they're still paying off debt from when milk prices fell in 2009.
MILC paid $346 million to dairy farmers from October 2011 to September of this year. Of that, $75 million went to farmers in Wisconsin, $34 million to New York, $30 million to Pennsylvania and $9 million to farmers in Vermont.
While all dairy farms are eligible for the aid, the program includes a cap on the amount produced, so farms with more than 150 cows maxed out earlier in the year. Smaller farms, like those more often seen in Vermont, New York, Pennsylvania and Wisconsin, were still getting monthly payments when the program ended. They are the ones who are feeling the loss now.
Dick Gorder, vice president of the Wisconsin Farm Bureau, said some farms in parts of southern Wisconsin that usually grow all their own feed couldn't in the drought and now have to buy feed, at double the cost of three years ago.
Gorder's neighbor in Mineral Point, Wis., bought all of his feed and once the bill was due he realized he couldn't make ends meet.
“Within months, the herd was gone,” said Gorder, who usually sells some feed, but this year had only enough for his 50 or so cows and might even have to buy some.
He said he's confident Congress will pass a farm bill but the gap “is impacting people, especially people that don't have, one, feed, their own feed source, and, two, those with low equity. Those are the ones, the beginning farmers I'm most concerned about,” he said.
Each five-year farm bill includes money for a host of agricultural programs ranging from crop insurance to soil conservation, but the largest chunk of money, roughly 80 percent, is for food stamps. That has been a sticking point in passing a new one. Republican leaders in the House have wanted to avoid a fight between Democrats, who oppose cuts to food stamps, and Republicans, who want bigger cuts than have been proposed, close to the election. Vilsack believes the farm bill was stalled to avoid a debate about the depth of cuts to farm programs that the House leadership is envisioning.
“The risk is that nothing happens and then we end up going back to 1949 ag law which would substantially impact the market and ultimately create some serious consequences, particularly in dairy in terms of the price of milk, cheese and butter which would potentially drive customers away from those products,” Vilsack said.
The USDA has neither the authority nor the resources to help these folks out, Vilsack said of the dairy farmers.
A version of the farm bill passed by the Senate in June and a similar one approved by the House Agriculture Committee in July would replace MILC with a program that aims to stabilize milk prices by controlling some of the supply. It also would allow farmers to buy insurance that pays out when the gap between the wholesale price of milk and their expenses gets too narrow.
MILC included a slight adjustment for feed prices.
Rep. Peter Welch, D-Vt., said it was “pretty outrageous” that a bill wasn't passed in time to help dairy farmers. He voted for the House version in committee and was among a group of 79 House members who sent a bipartisan letter to House leaders in July, urging them to bring it up for a vote.
“This farm bill, one of the very good provisions in it, is that we passed the dairy stabilization that was authored by Vermont farmers. And that would provide them with more price stability and cost tax payers less money — a pretty good thing,” he said.
Rep. Reid Ribble, R-Wis., who serves on the House Agriculture Committee with Welch, said he supports the new insurance program because it includes affordable premiums for small and medium-sized farmers.
He said the Republican leadership felt there wasn't enough time to pass a bill of this complexity before the recess.
He said he's not hearing from farmers in his district in northern Wisconsin because they anticipate some fix to occur during the lame duck session, he said.
“Either the farm bill will get passed or current farm policy at current funding levels will get extended. One of those two scenarios will happen. I'm very confident of that,” Ribble said.
Meanwhile, Gorder said farmers are waiting for some kind of break.
“My only hope is there's a drought that we only have to deal with one year, and this time next year, we'll have a farm bill and we'll have some certainty and we'll have rain,” he said. “And not necessarily in that order. I'll take the rain.”