Dairy farms and the economy
Local dairy farmers are having a really tough time right now. The price of milk is below the production cost. Federal price support payments make up only 45 percent of the difference, and they take months to arrive. For New Hampshire’s small dairy farms, that means a struggle for survival.
Throughout New England, dairy farmers are turning to legislators. In Connecticut, the state makes retailers pay a fee to sell milk. The $30 annual fee goes to support the state’s roughly 160 dairy farms. Legislators are considering hiking that fee to between $500 and $3,000 a year. It’s one of several proposals to preserve small dairy farms.
Maine dairy farmers are fighting to keep the state’s dairy subsidy.
Some Vermont legislators want to create a state program, essentially a series of stores, that would support farmers by selling local food.
Now, I understand the tourism value of dairy farms in Vermont and, to a lesser extent, New Hampshire. But there a few serious philosophical and economic problems with state subsidies for dairy farmers.
For starters, where does the state draw the line? Lots of other businesses are important — much more important — to the state economy. If we subsidize dairy farmers on the basis that tourists come here to see dairy farms, shouldn’t we also subsidize ski resorts, sugar shacks, hotels, bed and breakfasts, etc., when they fall on hard times?
Another justification for subsidizing dairy farms is to support small farms. That makes no economic sense. Farming benefits from economies of scale, as many other industries do. Why should the state take money from profitable businesses and give it to unprofitable ones for the primary reason that the unprofitable ones refuse to make their businesses large enough to become profitable? I l would love to run a small movie theater like the IOKA. That would be close to a dream job for me. But it is impossible in most markets to make money running a cinema that size. Should the state tax big theaters and other business owners to subsidize my little theater just because it’s cute and old-fashioned? Of course not.
Milk prices are so low because the supply of milk exceeds demand. But farmers are paid to keep producing, so supply isn’t dropping enough to boost prices again. Which means that some farms probably will go out of business. Which is probably what should happen.
People say they value small cinemas and local hardware stores and corner markets. But they don’t value them enough to actually spend money there. Which means they don’t really value them. If people really value small dairy farms, they would go there and pay $8 a gallon for milk. But people value $3-a-gallon milk much more than they value a scenic farm. Which means, we are going to continue losing the scenic farms — unless they can find a way to produce $3-a-gallon milk.
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I would pay extra for raw milk and cream (you just try making clotted cream with ultra-pasturized, I dare you). RSA 184:30-a says I can buy raw milk directly from the producer, store or milk pasteurization plant. Well, I admit, I only called a few local farms, but I couldn’t find anyone who would sell me raw milk that didn’t have demand already exceeding supply. It seems to me that if these dairies put their mind to it, they have a product they could sell at a price premium, while at the same time reducing the supply of pasturized milk, even if just a little bit.
Comment by Jon — March 13, 2009 @ 5:34 am
hey drew!
just want to say this information was very useful to me, im currently doing an assignment on subsidising dairy farms :0)
cheers
Comment by sherrealle beaumont — April 8, 2009 @ 6:00 pm