Last-minute budget cut to Maine dairy subsidy riles farmers

Annie Watson pets one of her Holsteins at Sheepscot Valley Farm last month. Derek Davis/Staff Photographer

Dairy farmers and their supporters are protesting a last-minute, 50% reduction in Maine’s wholesale milk price subsidy program that they say threatens the state’s already struggling dairy farms.

In a late-night budget session over the weekend, the Legislature’s appropriations committee cut proposed funding to the Dairy Stabilization Program from $8.9 million to about $4.5 million for the fiscal year starting July 1, according to dairy industry sources.

The larger amount had been negotiated by legislators on the agriculture committee and dairy industry representatives, and it had won approval in both chambers and support from Gov. Janet Mills, a Democrat.

“It’s very upsetting,” said Annie Watson, a dairy farmer who is president of the Maine Dairy Industry Association. “A lot of time, effort and cooperation went into the negotiations. The rug was pulled out from underneath us.”

The dairy subsidy reduction is one of several controversial budget changes made by the Democrat-led appropriations committee that are being attacked by Republicans and questioned by some Democrats, including the governor.

“This is deeply concerning to many members of our caucus,” Christine Kirby, spokesperson for Senate President Troy Jackson, D-Allagash, said in a statement.

“It’s an abomination,” said Sen. Rick Bennett, R-Oxford, an appropriations committee member. “It’s tremendously harmful to the farmers and it undid the tremendous bipartisan work of the agriculture committee.”

Bennett said there is no reason for the reduction when funding is available for such a necessary program.

The supplemental budget changes were made late Friday night and early Saturday morning. The vote on the dairy subsidy reduction fell along party lines, with eight Democrats in favor and five Republicans opposed, Bennett said. Further details about the dairy subsidy reduction were unavailable Tuesday, including what the exact fiscal impact would be.

Dating back two decades, the Dairy Stabilization Program provides subsidies that make up the difference between the regional wholesale milk price set by the U.S. Department of Agriculture and the actual cost of production for Maine dairy farmers. Unique to Maine, advocates say the subsidy program is one reason the state’s dairy industry is as healthy as it is.

Still, Maine has lost one-third of its commercial dairy farms since 2020, dwindling from 195 to 145 conventional and organic dairy farmers that struggle to operate amid rising costs, shifting market forces and climate change. The number of dairy farms in the state has fallen 78% over the last three decades, from 674 operations in 1990, according to the Maine Milk Commission.

The decline mirrors what is happening nationally, with 1,600 dairy farms shutting down across the United States last year, according to the U.S. Department of Agriculture. Hardest hit were Michigan, Wisconsin and Pennsylvania.

To help stem the losses in Maine, Gov. Janet Mills signed emergency legislation last month to set up a task force that will study the challenges facing the state’s commercial dairy farmers and recommend ways to support the long-term sustainability of the industry by the start of next year.

An initial proposal for the dairy subsidy program would have funded it at $35 million in fiscal year 2025, based on a cost-of-production study that compared 2022 market prices and production costs.

After negotiations, however, the agriculture committee requested only $8.9 million for fiscal 2025, or 25% of the price gap, “realizing it wasn’t going to be possible to do it all,” said Rep. Sawin Millett, R-Waterford.

“It was a huge concession,” said Heather Spaulding, deputy director of the Maine Organic Farmers and Gardeners Association. “Even at that amount, we’re still going to lose farms. It seems some people still don’t understand that.”

The appropriations committee further reduced the subsidy funding to 10% of the price gap, Bennett said.

The committee’s House chair, Rep. Melanie Sachs, D-Freeport, said in a statement that the dairy subsidy reduction was part of an effort to make sure the state meets its obligations and manages its financial resources responsibly.

“We were able to make significant investments in affordable housing, mental health services, public education, child care, nursing home and veterans’ home support, child protection services, and health care, while also looking ahead and making sure we are prepared to navigate any future economic uncertainty,” Sachs said. “To do so, we needed to consider the entire scope of the budget and adjust accordingly. We await the full funding status report from the Office of Fiscal and Program Review.”

Sachs noted that Maine’s 145 dairy farmers are in line to share a $7 million one-time payment to help cover production cost increases in recent years.

Sen. Peggy Rotundo, D-Lewiston, Senate chair of the appropriations committee, didn’t respond Tuesday to a request for comment.