March 12, 2010

Organic dairy farmers optimistic amid the economic storms

MATTHEW STONE

— By

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Staff photo by Andy Molloy MILK MAN: Spencer Aitel is an organic dairy farmer in China.

Kennebec Journal

CHINA — Spencer Aitel's Two Loons Farm in China has been organic since 1998. In fact, it was among the first dozen dairy farms in Maine to make the transition.

This winter, as dairy prices fall and lawmakers consider cutting from a state subsidy program, Maine organic dairy farmers like Aitel appear better positioned to overcome the unfavorable conditions.

''Our crunch points for pricing don't necessarily coincide with the conventional market's,'' Aitel said.

But if lower prices and subsidies endanger Maine's conventional dairy farms, Aitel and others say, the organic farms would not be immune from the effects.

Aitel's farm belongs to an organic-farm cooperative that offers a set price for milk. The cooperative sells much of its milk to Londonderry, N.H.-based Stonyfield Farm.

Other organic dairy farms have fixed-price contracts with distributors, such as Boulder, Colo.-based Horizon Organic.

''The reward is that prices remain stable instead of fluctuating with the commodity market,'' Aitel said. ''Without stable pricing, the business person can't plan ahead effectively.''

Conventional dairy farms can benefit while dairy prices are high. When prices fall, however, the farms have to absorb it.

A glut of supply in the U.S. dairy industry, partially the result of falling exports, is driving milk prices down this winter. According to some industry predictions, prices could fall to $11.54 per 100 pounds of milk in March. That's down from the June 2008 price of $19.56 per hundredweight.

The average cost for producing milk in Maine is $22 per hundredweight, according to Julie-Marie Bickford, executive director of the Maine Dairy Industry Association.

Farmers rely on a network of government subsidies to close the gap between sale prices and production costs.

When a federal subsidy system does not make up the difference, Maine farmers must rely on a $12 million state dairy stabilization program.

As Maine lawmakers look to close an $838 million budget shortfall this session, Agriculture Committee members have discussed a $4.8 million cut to the state's dairy support program.

''There's a lot of serious implications to these decisions and nobody's going to be happy,'' Aitel said.

Subsidy cuts could complicate dairy farmers' lives, said Joseph Roseberry of Roseberry Farm in Richmond. But at a time of budget cutting, he said, it's only fair that dairy farmers share in the pain.

''We get some of that subsidy,'' said Roseberry, whose 65-cow farm was also among Maine's earliest organic dairy farms. ''I think everybody should share in the good times and the bad ones on that.''

But a cut in the state price-support program could prove a fatal blow to many of Maine's 330 dairy farms, said Bickford, of the Maine Dairy Industry Association. The effect would also stretch beyond the state's network of farms.

''Because these farms are businesses out in the rural parts of our state, it's the underpinning of the rural economy,'' she said.

''If we were to remove or reduce the price support system in Maine beyond the point where we can sustain the farms, it will produce a ripple effect beyond the farms.''

EFFECTS RIPPLE OUTWARD

Whether conventional or organic, each of Maine's 330 dairy farms contributes to an infrastructure that supports the industry.

''If the industry as a whole crashes, that puts pressure on the entire dairy infrastructure, such as trucking, veterinary services and supplies,'' said Russell Libby, executive director of the Maine Organic Farmers and Gardeners Association. ''So it's important to maintain a base of dairy farming wherever we can in the state.''

With that infrastructure at risk, organic and conventional dairy farmers are allied in efforts to save Maine's dairy price support program.

''I think most organic farmers value their conventional neighbors,'' Aitel said.

Dairy farmers of all types help to maintain a ''critical mass,'' Bickford said.

''Critical mass is one of those numbers you really don't know what it is until you've lost it,'' she said. ''Once you've lost it, you see the other businesses that support dairy farms go out.''

For Aitel, that's a scary thought. ''You want to maintain enough people using milking machines so there's a milking machine repair man,'' he said. ''What happens if the nearest repair man is in Vermont?''

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