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Senator Leahy
Members of the Senate Committee on
the Judiciary
Testimony of Willard Rowell
I operate a farm with my brother
Brian and his family in Franklin County, Vermont. Green Mountain Dairy was
Vermont's 2008 Dairy Farm of the Year and operates as a large farm under
rules administered by the Vermont Agency of Agriculture.
We produce 23,000,000 lbs of milk
annually, our herd numbers 900 lactating Holsteins, 150 dry cows, and 650
replacement heifers. Our waste stream is processed through an anaerobic
digester, which offers the farm multiple benefits. Cropland for the dairy consists of
1000 acres of corn, and nearly 500 acres of hay land. We utilize best
management practices and operate the farm in an efficient manner.
Today we find ourselves in yet
another dairy crisis and recognize that dairy farmers nation wide are
producing milk well below their cost of production. Here in the Northeast
the cost of production is approximately $ 18cwt, the pay price for raw milk
was $10.25cwt and is presently $11.25cwt, which leaves our farm over $2.5
million dollars short of last year’s income. In fact, these rates will find
us $1.6 million dollars short of breaking even for the year.
Our national annual milk production
in the US amounts to 190 billion lbs and depends on export markets to
achieve a balance between supply and demand to ensure fair pricing for our
product. The world economy is in recession, consumer demand is down at home
and abroad, last year's export markets of 11% have dwindled to 5 ½ % this
year and the market has been over supplied with milk by about 4%. The Market oversupply or surplus
determines the pay price for 100% of milk produced which has created an
untenable situation for the dairy farmer.
During the first six months of this
year dairymen have converted $4 ½ billion worth of equity to loans and
continue doing so at a rate of $800 million per month. Upcoming months will
prove disastrous for many as equity is depleted and survival of the fittest
plays its role. Presently, there is no dairy farm in the US supplying raw
milk to the market at a profit to the farm.
The need to balance supply with
demand seems obvious since the over supply determines pricing on all milk.
During the past several years this country has struggled with the concept of
supply management versus producing for an open market, our inability to
recognize the role played by surplus milk today has us working for less than
half of last year's price in other words we are producing 50% of our product
for nothing by not recognizing the surplus.
Regarding the matter of balancing
supply with demand, producers from across the nation are expressing interest
in a plan developed by Holstein USA and The Milk Producers Council. The
Dairy Price Stabilization Program (DPSP) provides for the establishment of a
national 15 member Producer Board. The US Secretary of Agriculture shall
appoint members to the Producer Board after considering nominations by any
interested party. In addition, the Secretary shall appoint one dairy
economist to advise the Board. The Board shall then advise the secretary on
administration of the program. The program calls for producers to establish
a Production base. The Board will meet annually to determine a production
forecast, which will be revised through quarterly meetings. The Board will
determine a market access fee to be levied against producers who exceed
their production base and distribute the proceeds among those who did not
exceed their production base.
The Dairy Price Stabilization Program
is a budget neutral supply management tool by which the supply of milk can
be balanced with demand through a National Producer Board representative of
the dairy industry to stabilize milk prices. The program is currently being
drafted as a Bill and will soon be introduced to the Senate.
As a member of the St. Albans Dairy
Cooperative, I am very encouraged with a recent board decision, which
endorses the concept of a National Supply Management Program to stabilize
dairy pricing.
The matter of antitrust being pursued
by Senator Leahy and Senator Sanders offices through the efforts of
Assistant Attorney General for Antitrust, Christine Varney and Dr. Joseph
Glauber, Chief Economist, US Department of Agriculture, is of vital
importance, ensuring the dairy industry the opportunity to function on a
level playing field in a competitive environment, which will prove to be of
great benefit to the industry and the consumer.
Finally, to ensure stability in the
Dairy Industry, there should be a comprehensive evaluation of Federal Milk
Marketing Orders (FMMO); to determine if they function as intended, to
determine the effectiveness of their design and to determine if they are
representative of today’s needs.
Senators, it is rather humbling to
look at all the decent hard working people associated with agriculture and
then have to recognize the state of our dairy industry. Today’s world
consists of 6.4 billion people, 9 billion will have arrived by the end of
the century and we represent the people who will feed them.
We extend our gratitude to Senator
Leahy and the Federal Delegation for conducting these hearings and providing
responsible leadership.
Respectfully submitted,
Willard "Bill" Rowell |