Milk prices rebound slightly
Higher prices mean no state subsidies for September
Copyright © 2003 Blethen Maine Newspapers Inc.
AUGUSTA — The price farmers get for their milk is up this month, which means the state is not required to subsidize dairy farmers.
But the head of the dairy industry association says it is too soon to celebrate.
"The rumor mill is getting a little disturbing," said Julie-Marie Bickford, executive director of the Maine Dairy Industry Association. "We've heard of substantial farms who are talking about putting farms up (for sale)."
Bickford and dairy farmers around the state are keeping a close watch on a task force formed by Gov. John E. Baldacci that will study the industry and come up with recommendations. The group, which met this week, is scheduled to release its report by Nov. 15.
The September price for milk is $16.96 per hundredweight, 2 cents above the threshold that allows state subsidies to kick in. When the price is below $16.94, the state pays farmers the difference between the current price and $16.94.
Most farmers in Maine get what is known as the blended price, which is milk used for cheese and butter. That price in August was $16.01 per hundredweight, Bickford said.
From May through the beginning of this month, farmers received payments from the state regardless of the price of milk, said Richard Davies, a senior policy advisor who works for the governor.
But from this point forward, their payments will be based on the price of milk, Davies said.
"It's a promising sign that milk prices have rebounded," he said.
The state has spent about $4 million on subsidies for dairy farmers this year and has $2.4 million available, said Agriculture Commissioner Robert Spear.
Monmouth dairy farmers Ivan and Nancy Smith said strong animals and well-timed rain have made this a good summer on their farm, Snafu Acres. But Smith, a Democratic state representative, said she is banking on the task force to come up with long-term solutions that will provide farmers with stability.
"Even if the prices are up now and we're breaking even this summer, we've got two years we've got to make up for," she said. "It's going to take Ivan and I years to catch up with all the vendors we owe."
Rep. John Piotti, D-Unity, serves on the committee because of the work he does when he is not in the State House. Piotti is director of The Maine Farms Project, which helps farmers with business plans, financing and marketing.
He said the dairy industry is on the brink of having too few farmers to make it economical for existing farms to continue to operate. If many more go out of business, the state is in danger of losing a processing plant and the cost to truck the milk to processors could go up, he said.
The number of dairy farmers in the state continues to drop, from 650 in 1996 to 396 today, according to the industry association.
"I can't think of what central Maine would be like if the dairy industry disappears," he said.
He said task force members agree there is a problem and that state action is needed. It is not yet clear what kind of state action will be recommended.
"There's emerging consensus that there needs to be something to stabilize the price," he said.
The task force broke into subcommittees that are taking a close look at options such as a milk handling fee, something rejected by Baldacci earlier this year.
Others are studying the affects of taxes on farmers, such as how property taxes and sales taxes add up as part of the cost of doing business, Piotti said.
They are also looking into how farms can best be managed and whether a more diversified approach would be better for some farms.
When the group meets again Oct. 1, they will present ideas from each of the subcommittees, Piotti said.
Bickford said for the first time in a long time, the amount of milk produced in Maine is starting to drop. As farmers sell their cows, other Maine farmers have not been buying them up.
Economists predict that milk prices will go up again in October, down in November and down again in December, said Stanley Millay, head of the Maine Milk Commission.
Piotti said farmers have adopted a "wait and see" attitude.
"Many of the farmers are hanging in there," he said. "I think they're waiting to see what's coming out of Augusta in the next few months."
Susan M. Cover — 623-1056
scover@centralmaine.com