Milk co-op advances $2 million in payments to farms
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By Bruce Edwards STAFF WRITER - Published: October 27, 2009
Agri-Mark made $2 million in payments last week to its dairy farm members who continue to struggle with the lowest milk prices in 30 years.
The 1,300 members of the dairy cooperative each received a check that averaged $1,500, or $1 per hundredweight, based on one month's milk production.
It's the second round of checks sent out by Agri-Mark this year. In the spring, farmers received checks averaging $600, or 30 cents per hundredweight, bringing total advance payments for the year to $2.6 million.
The payments represent an advance on the cooperative's year-end profit sharing distributed to its members in New York and New England. Of Agri-Mark's 1,300 farmer members, 300 are in Vermont.
Agri-Mark spokesman Doug DiMento said Monday the advance payments are a first for the co-op and indicates that the board of directors recognizes the dire financial straits in which farmers find themselves.
"We're glad we're able to make these payments but we recognize these payments they're not going to solve the problem," he said. "They're just going to help farmers pay some bills."
DiMento said while the average check was $1,500, they varied with milk production.
He said the solution is "long-term decisions and changes in the dairy industry to make sure this type of price crash does not happen again." Milk prices paid to farmers have plummeted from a high of more than $20 a hundredweight last year to a low of $11 this year.
Kelly Loftus, a spokeswoman with the Vermont Department of Agriculture, said prices paid to farmers are up slightly this month to $12.08 per hundredweight but "still not even close to the cost of production which is hovering between $17 and $18 a hundredweight."
Loftus called the current situation for farmers "dire." She said so far this year 43 dairy farms have gone out of business, including eight since last month, leaving the state with 1,035 farms.
"We have an antiquated federal dairy pricing system that does not serve the market currently," she said. "It was instituted back in the early 1930s and it's just no longer suitable for the market needs."
DiMento said Agri-Mark has lost 30 farms throughout New York and New England in the last couple of months alone. He said the co-op has replaced those farms with new members.
Milk prices have plummeted along with the global recession that has curtailed U.S. exports of dairy products. That in turn has put more dairy products on the U.S. market where demand has also fallen.
Despite low milk prices dictated by the federal price support system, DiMento said Agri-Mark is having a profitable year because of the continued popularity of its Cabot brand of Vermont cheddar cheese and butter and the McCadam brand of New York cheeses.
In addition, DiMento said sales of whey protein (a byproduct of cheese making) at its Middlebury plant are helping to boost profits. Whey is used as a protein supplement in baby formula and in geriatric, muscle building and energy drinks.
Cabot and McCadam sales represent 30 percent to 35 percent of the co-op's business.
Milk not used in cheese making is sold wholesale, primarily to HP Hood.
Based in Methuen, Mass., Agri-Mark posted a profit of $11.8 million last year on sales of $881 million.
bruce.edwards@rutlandherald.com
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