New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
The New England Milkshed Assessment is sponsored by American Farmland Trust, with the
collaboration of Tufts University’s Agriculture, Food & Environment Program (AFE) at the
Friedman School of Nutrition in Boston. This summary marketing report is part of that study,
and was led by Hugh Joseph at the Friedman School. It includes input from the project’s other
team members - Tim Griffin (AFE), and Cris Coffin and Julia Freedgood at American Farmland
Trust - as well as significant contributions from 11 Friedman School graduate students,
including several background research reports with content incorporated in this document.
Input was also derived from interviews by researchers with more than 40 key informants from
across the dairy sector, including academics, dairy farmers, marketers, institutional food service
personnel, government officials, and others.
While the emphasis of the overall assessment is on New England’s dairy producers, the
geographic focus for much of the marketing analysis was Boston and Massachusetts as the
largest consumer base in the region. Not all markets were addressed; the emphasis was on
those where promotional and marketing strategies were not well understood and/or showed the
most potential for expansion in ways that can benefit the region’s dairy farmers.
Contexts for this report: New England’s dairy farming has been in a long-term decline. For
example, the New England dairy herd (or number of cows in the region) has decreased by 25%
from 1992 to 2007, a decline totaling over 75 thousand cows (although increased per cow
yields have maintained overall milk output). In particular, small and midsized farms, defined as
owning less than 200 dairy cows, decreased by 50% during this time period (although farms
with over 200 dairy cows have increased by 35%). Land owned or rented that is used for dairy
farm production in the region has also decreased from 982,000 acres in 1992 to 611,879 acres
in 2007. In 1920, there were 25,356 dairy farms in Vermont, and the long decline has seen the
number of its dairies drop just in the past 20 years from 2,272 to 977 this year. Indeed, the
long-term viability of these farms remains uncertain, as many New England dairy farmers have
still been operating at a loss in many years.
The region now has about 2,100 dairy farms that play a valuable role economically,
particularly in Vermont and Maine, generating more than $13,000 per cow annually in direct
economic activity. They generate over $700 million annually in fluid milk sales, the largest
percent of any New England agricultural commodity, and contribute more than $3 billion to the
region’s economy. Vermont remains the largest milk producing state in New England. Dairy
products are valued at $584 million a year, or 83 percent of all agricultural sales in the state.
Dairy farms also have important health and environmental /open space benefits.
Sustainability of dairy producers: Given this scenario, stabilization and potential growth
opportunities for dairy producers in New England is driven by multiple factors, including on-farm
costs; milk yield efficiencies; external supply forces; downstream industry integration and
consolidation; and policy and regulatory factors at the regional, state and national levels,
including the Federal Milk Market Order. Overall demand for, and sales of, dairy products are
shaped (or constrained) by these influences. To the most part, the survival and stability of
dairy producers going forward will also rest on non-marketing strategies that include farmbased cost efficiencies; diversification of activities to generate more on-farm income; and other
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New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
economic and policy determinants. Still, the marketplace is an important element of the overall
equation for producer sustainability. Within the marketplace, underlying factors include prices
driven by regional, national, and global supply and policies and increasing price fluctuations and
price instabilities driven varying production / supply.
From a sales perspective, New England is a diverse marketplace. In particular, the
different scales of local markets, and their distances from dairy producers, implies that a variety
of approaches is warranted. Most dairy is produced in Vermont and Maine where the
population (a. k. a. marketplace) is smaller, and thus alternatives such as direct marketing are
more limited. The inverse is true for Southern New England.
Dairy products similarly need differentiating. In particular, fluid milk is a very different
market than products such as cheese, yogurt, and ice cream. Furthermore, the production
source of New England dairy products, particularly fluid milk, is not always differentiated; it can
be comingled with product from New York State in particular, and that has a particular impact
on identity and branding strategies.
1. Demand for dairy products, particularly milk: Overall milk consumption continues a
gradual decline extending over several decades. For example, among children ages 2-11 years,
overall consumption was about 1/2 cup (3-1/2 fluid ounces) less in 2005-2006 than in 19771978. Most is within the whole milk category, due to, among other things, increased consumer
awareness about fat consumption, substitution to other fat-containing foods, and public health
campaigns about low-fat milk consumption, but milk consumption overall has fallen:
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
1968
total fluid milk
total cheese
total frozen dairy
dry, evap. & cond. milk
1978
1988
1998
2008
Figure 1: Servings/person/day (availability) of Different Dairy Products, 1970-2008
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New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
Thus New England consumers overall are not getting the recommended servings of (low-fat)
dairy in their diets. The recommended number of servings for children aged 2-9 is two servings
(cups) per day, and for children, adolescents, teenagers and adults aged 10 and above, it is 3
servings (cups) per day. The breakdown among the different groups is given in the table
below, relative to overall supply.
Dairy product:
Total dairy
Whole milk
2% milk
1% milk
Skim milk
Total fluid milk
Yoghurt
Cheese
Ice cream
Dry, evap.,
cond.
Dairy
product:
Total dairy
Current availability per person per
day
1.680
0.180
0.230
0.080
0.100
0.634
0.046
0.702
0.056
0.052
Hypothetical availability per person
per day
2-3
Total servings per day:
Boston
1,029,984.5
110,355.5
141,009.8
49,046.9
61,308.6
388,696.5
28,202.0
430,386.4
34,332.8
31,696.5
Total servings per day:
Boston
1,774,404.00
Therefore, the increase in dairy product demand relative to currently recommended
consumption would equal 41.95 percent. Ideally, these increases would occur in the low-fat
dairy categories: 1 percent milk, skim milk, low-fat yoghurt, and low-fat cheese, for example;
and come from New England producers. While these are averages, milk and dairy product
consumption, especially low-fat dairy product consumption, is even lower in low-income groups.
Besides cost and nutrition factors, demand is influenced by cost factors and competition
from cheaper beverage options. Household consumption is further shaped by increasing trends
towards eating away from home. Government and institutional policies also influence demand;
these include a reduction in the dairy proportion of the WIC benefit; lower than desirable
participation in school lunch and in breakfast programs; new rules for a la carte sales in public
schools in Massachusetts, and strict food budgets at schools and hospitals.
Recommendations:
• Strive to maintain overall product demand and reverse current trends. In particular,
support broad-based efforts to address pressures on dairy consumption among children
and youth categories.
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New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
•
•
Focus on trends such as low fat content, premium products, and on specific sectors and
demographics, such as educational institutions and children, where pressures on
consumption exist and policy-related influences are common and can be effective.
Build demand for New England dairy products: Support strategies that can expand the
production and sales of dairy products with New England content. These will benefit
most as part of producer-driven niche marketing.
2. Niche marketing: As with most of the food supply chain, producers are the segment that is
losing money or are the least successful. The overall food sector is economically quite healthy.
In dairy, farmers need alternatives to being the price takers with over-reliance on wholesaling
as their main outlet. The overall direction of farming in New England is away from direct
competition within an increasingly global marketplace, and toward niche marketing strategies.
This is most salient in the produce sector; however, it is spreading across all commodities and
products, but still weak in dairy.
Niche marketing combines multiple strategies to veer away from reliance on the mainstream
marketplace. These include:
• Alternative processing - on-farm processing of milk, cheese, ice cream, and butter;
• Diversified dairy animals – goats and sheep, as well as cows;
• Non-dairy diversification and value added – producing other farm animals for meat;
adding other farm activities besides straight dairy production;
• Moving to organic production and products;
• Product differentiation from the mainstream or conventional competition via branding
and related promotion;
• Direct marketing to restaurants, small stores, and via farmers’ markets, CSA, and
farmstands.
To the extent that producers can continue to move in these directions will shape much of the
future of dairy. Niche marketing can bring increased sales and better prices for producers who
have a direct involvement or investment in developing unique or special products and markets
that stand out from the conventional dairy sourcing options available to consumers. Other
farms that are already producing a value-added product may look to expand or collaborate as
partners with other farms.
Recommendation:
• Support “niche marketing” diversification as an essential strategy to the sustainability of
many, if not most dairy producers. Better understand what models are working best,
and share this information among producers.
3. Farm-sourced products: While the price of raw milk is a key barrier to the sustainability
of dairy producers, there is of milk, cheese, ice cream, and butter, where demand is growing in
the marketplace for products that have local identities and perceived high or better quality.
Farmers that can profit directly from the production and sales of cheese, yogurt, ice cream,
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New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
butter and other items can add considerable revenue through such value-added activities. An
example here is cheese:
There are essentially two markets for cheese – one for the more generic types that are
used for making popular items such as pizzas, and are sought at the lowest prices by
restaurants, schools, and other large users. The other is specialty or artisanal cheeses, for
which there are hundreds and brands and varieties. New England cheese producers, such as
Cabot, make such cheeses that are ‘world-class’. In Vermont, demand has led to new dairyrelated processing plants including Swan Valley Cheese, Commonwealth Dairy, Kingdom
Creamery of Vermont, Vermont Farmstead Cheese and cheese production at the Vermont Food
Venture Center. Cheese production is expanding among dairy producers and small processors
across the entire region. Massachusetts now has an estimated 25+ small and artisanal cheese
producers, including those made from includes sheep and goat milk. However, the marketing
potential is not keeping up, particularly through direct sales.
Recommendations:
• Support local cheese promotional efforts, such as the emerging yogurt and cheese
makers’ Massachusetts Cheese Guild.
• Encourage and assist non-farm cheese making business to buy direct from New England
producers or processors and coops that represent them.
• Encourage more local / regional cheese distribution and marketing at farmstands,
farmers’ markets, and CSAs.
• Promote use of more local / regional cheese at restaurants and by food service
purveyors.
4. Organic dairy: In 2010, Maine had 72 organic farms (out of 330 total) and Vermont had
200 (out of 1010 total). In 2008, the National Agricultural Statistics Service (NASS) began
tracking organic farms as part of the Census of Agriculture.
State
InventoryInventory-Peak Cows
Farms
ME
64
MA
8
NH
14
VT
182
Number of Organic Dairy
milking cows in 2008.
3969
395
489
13,100
Farms and Certified Organic
The benefit of organic production for producers is the need for higher prices for raw milk.
Organic Valley pays New England producers $30 per CWT +/-; and MOO pays its members $33
per CWT – compared to the price paid for conventional raw milk hovering between $15-$18 per
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New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
CWT during 2012. Vermont, which had only 2 certified organic dairies in 1993, had 179 organic
dairies producing a combined total of over 156 million pounds of milk in 2008. Nearly 100
farms in Vermont switched to organic just in the 2006-2007 year. Organic now about 15% of
Maine’s milk output, about 10% of New Hampshire’s. Maine had 25 organic dairies in 1997,
and 61 in 2008 with a total production of over 47 million pounds.
But more recently the trend in most states has slowed because the economics are not as
compelling. Many factors influencing conversion are on-farm related or are connected to
contracts, both of which are beyond this report to address. But marketing also plays a role.
When HP Hood stopped buying organic milk from many Maine farmers in 2009, many would
have gone out of business had they not formed their own collaborative – Maine’s Own Organic
Milk Company (MOO). Further pressure on prices comes large buyers such as Stonyfield Yogurt
that struggle to stay competitive with the conventional yogurt marketplace. And there is similar
retail consumer resistance to significantly higher organic premiums since the economic
downturn in 2008. However, some of this is attributable to the perception of milk as a fungible
commodity. Organic marketing should emphasize quality differences and other distinguishing
characteristics that can build preferential demand, particularly where the market is affluent
enough to pay a premium for this.
Recommendations:
• Support a more stable organic marketplace to reduce risks for producers who convert to
organic production. To decrease variable demand and price volatility for organic milk,
longer-term sustainable contracts by key customers, such as yogurt and ice cream
producers, other businesses using organic dairy products, and institutions, are
warranted to support the producers.
• Promote more niche organic products that can sustain demand for organic producers
and often bring higher revenues. These include yogurts, cheeses, and manufactured
products containing organic dairy content.
• Improve promotional messages to emphasize premium qualities of organics that justify
higher prices. This includes environmental and ‘buy local’ messaging.
• Have milk marketing fees applied specifically to promote organic dairy, at least
proportional to sales volumes.
5. Promoting and branding of New England dairy producers: Promotion is a major
aspect of marketing any product. Because there is a public interest element to dairy farming
and dairy consumption, promotional campaigns fall into the realms of businesses, government,
and non-profits, often working together. However, promoting New England products has
complexities that provide advantages and disadvantages to scale. In particular, “buy local”
messaging seems inherently on target for dairy, since most dairy consumed in New England
(with some notable exceptions such as commodity cheeses and foods containing dairy content)
comes from the region, or close by (e.g., New York state).
Further complicating the messaging is the use of local by large processors. Garelick, for
example, displays “From Local Farms to Local Families” across its milk tanker tracks that
crisscross the region. This makes it challenging for smaller operations to make distinguishing
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New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
claims. Finally, the concept of ‘local’ varies to business and consumers depending on the
product, their knowledge of its provenance, and how it is promoted. Local can be a backyard or
a region. This can cause confusion where individual dairies or coops, states, processors, states
and regional messages overlap with their ‘local’ terminologies. Finally, while this is an effort to
support New England dairy producers, and New England has a clear regional identity,
consumers generally do not care if the source of their dairy is from neighboring New York state,
and still consider that within the realm of ‘local’ and ‘regional’. They also comingle the New
England and the Northeast as regional identities. Large vendors, including Cabot and organic
dairy companies like Stonyfield, have had to stop or limit use of New England on their
packaging because some of their product is sourced from outside New England itself (typically
New York).
5.a: Regional promotion and branding: New England may be a great region to have a
regional brand for dairy since the geographic area is relatively small, dense, and a regional
identity already exists. While desirable, multi-state efforts, like the Dairy Compact, are unlikely
to be revived anytime soon. Nonetheless, there are valuable regional options that include
efforts by academic institutions and by NGOs to collect and share relevant data, to develop a
regional framework for dairy stabilization / support that incorporates important marketing
elements; and by smaller dairy producers and businesses to share models and support each
other across state lines. The Keep Local Farms (KLF) campaign provides a supportable example
of regional dairy promotion. KLF is a partnership between the Vermont Dairy Promotion Council,
the New England Family Dairy Farm Cooperative with Cooperative Development Institute, and
the New England Dairy Promotion Board. Launched in 2009, KLF aims to bring more money
directly to dairy farmers while creating stronger connections between farmers and their
customers. The KLF campaign provides a supportable example of regional dairy promotion.
Keep Local Farms has three core goals:
• Drive dairy sales – particularly sales of “local” milk;
• Educate consumers about dairy farmers as “stewards of the land” and the economic
troubles they face today;
• Provide contributions to the Keep Local Farms fund.
They also strive for farmer sustainability, including: “help New England dairy farmers stay in
business by helping them help themselves’; treat farmers fairly by helping to provide consistent
and reliable income; use the “fair trade” model to offer the producer additional funding”. AN
example of successes with this is Harvard University, which has contributed $0.10 to KLF with
the purchase of every serving of milk sold in their retail outlets. They hang KLF banners and
signs at purchasing points, and have plans to promote KLF in their student dining halls. The
University of New Hampshire, the University of Vermont, and Boston Medical Center are all now
working with Keep Local Farms as well. Hannaford Supermarkets promoted Keep Local Farms
through their “Close to Home” campaign in January through March 2010. All four major dairy
processors in New England (Garelick, Oakhurst, Guida’s, and Hood) have agreed to support
Keep Local Farms.
Recommendations:
• Strive for greater clarity for consumers as to the meaning of ‘local’ and ‘regional’.
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New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
•
•
•
Support and expand use of programs like Keep Local Farms to help it continue to meet
its stated objectives.
In tandem, such efforts build public awareness regionally and thus more political
support for sustaining a viable dairy farming sector. Most Massachusetts residents, for
example, cannot name a dairy producer in the state.
Support use of dairy check off funds to promote state and regional dairy producers. A
broadened message that explains the benefits of dairy production – economic,
environmental, food security, and so on – can build consumer awareness and support
for preferential purchasing. The campaign by the Massachusetts Dairy Promotion Board
now is taking that approach and serves as a model for promotional awareness
messaging.
5.b: Statewide promotion and branding: Since most states have farm promotion activities,
dairy typically is easier to promote from a statewide geographic context. Examples come from
most New England states:
• Rhody Fresh is a branded strategy to label all milk produced by its member-farms. As of
2010, the cooperative was earning $3 million in gross revenues and selling in 120 retail
supermarkets and convenience stores in Rhode Island and Massachusetts. Rhode Island
has not lost any dairy farms in the last five years.
• Maine’s Own Organic Milk Company (MOO Milk) is a L3C company (a low-profit, limited
liability corporation) that markets and distributes organic milk that completely comes
from Maine dairy farms, and similarly takes advantage of the state identity.
• Vermont cheese has a worldwide recognition; largely promoted by Cabot. But Vermont
Butter & Cheese Creamery makes artisanal dairy products, mainly cheese, and takes
advantage of the state’s reputation for quality dairy products.
• The Massachusetts Seal of Commonwealth Quality represents an emerging state-based
effort to forge a Massachusetts identity for dairy producers.
Recommendations:
• Support statewide geographic identities as part of product branding for all dairy
products.
• Support use of dairy check off payments to promote the benefits of local dairy farming,
and not just the nutritional value of consuming dairy products.
5.c: Local promotion: Individual dairy operations, or small combined dairy producers and /
or processors, are relying heavily on the notion of ‘local’ as marketing plus. They have no
trouble being considered local, and can address more fundamental aspects of the idea, such as
freshness, and supporting local dairies in one’s community. Local food campaigns are effective
when they convey information about a product including freshness and quality, environmental,
benefits to local communities (socially and economically) and the environment. Consumers
increasingly care about the safety of their food, so accountability is important as well. All of
these considerations can be effectively communicated to consumers through a well-managed
local branding effort.
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New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
Recommendations:
• Include or emphasize really local dairy producers and marketers in statewide and
regional promotional efforts. Work together, not separately.
• Take advantage of the momentum being generated by the USDA ‘Know Your Farmer,
Know Your Food’ campaign.
• Adapt the FoodRoutes “Buy Fresh Buy Local’ campaign to increase consumer awareness
and support of local dairy producers.
6. Processing: Dairy processing is one of the most concentrated areas of regional
agriculture. Dean Foods controls over 70% of all dairy processing in the New England region.
While this might not in itself explain the pricing structures for raw milk sent to processors, it
constrains their options to capture any of the price premiums in the downstream marketplace.
Small dairy processing operations have been on the decline for decades, but there has been a
resurgence of interest in the past several years.
In 2005, there are 38 on-farm processors of dairy products in Vermont. Now this has
further expanded – see chart below. The product mix has expanded and now the following
dairy products are produced by on-farm processors: blue cheese, Gouda cheese, Colby, cheddar
cheese, Italian style hard cheeses (Parmesan and Romano), organic fluid milk, organic ice
cream and yogurt. (Similarly, there was an approximate doubling of small dairy plants in New
York over the last two years, to around 80 statewide. Thirty-four plant permits have been
issued this year).
Having control of processing makes many types of marketing much more feasible and
potentially more profitable. However, these operations can be expensive to build new, and
require adequate volume to make them viable. Because of the historical economics of dairy
businesses, lenders are reluctant to support them; even USDA and state agencies.
Recommendation:
• State and federal agricultural financing programs should be more supportive of new
efforts to develop small processing operations. More detailed assessments of the
current resurgence of local dairy marketing should be carried out to help justify and
make more loans and grants to new operators.
SPECIFIC MARKETS
7. Institutions and food service: Institutions – schools, hospitals, and such – purchase
large amounts of dairy products and as such are desirable targets for local or regional sales.
However, they also pose formidable barriers to the purchases of specialized products and use of
alternative distributors. This includes:
• Mandated use by public schools of the lowest bidders is typically required by
municipalities. To put this in perspective of the district budget, a 1-cent increase per carton
of milk could cost the districts tens of thousands of dollars per year. This is a large challenge,
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New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
especially in public school districts with less flexibility in spending.
• Institutions rely on large purveyors that supply other products besides dairy and can
deliver on a regular and predictable schedule. Vendors or purveyors must be approved in
advance, and they are not always friendly to working with numbers of independent local
farmers. For example, Somerville Public Schools in Massachusetts tried working with
Oakhurst Dairy in Maine. They were interested in Oakhurst because of their business model,
support of local farms, and a manageable price point. Unfortunately, Oakhurst was not able
to meet the delivery needs of the school district in reliability and frequency, and another
option had to be found.
• Schools get free- or low-cost cheese through the federal commodity programs. These
amounts to millions of pounds a year, but the prices paid to producers for the product are
too low for small-scale operations in New England to compete as producers for the
government cheese pool.
• Institutions often have different serving and packaging requirements that smaller dairies
can’t supply. For example, specified bulk packaging or different sizes of individual milk
cartons is not standardized across different school districts and private institutions.
Farm-to-school sales of produce have grown rapidly in recent years, and the opportunity to
include milk or other dairy products is attractive. But few dairies have their own processing
facilities. Nonetheless, for those that can supply milk or products, such as yogurt, cheese and
ice cream, the prices offered and logistics remain barriers. Even hospitals that pay top dollar
for their facilities and professional staffs are reluctant to increase budgets for better quality
foods. This is beginning to change, but on a case-by-case basis.
Nonetheless, some institutions can and do try to buy organic and other products that
support dairy famers. However, the price premiums allowable are typically narrow. Many now
do buy Stonyfield yogurt, but that has come as a result of years of work by Stonyfield to get the
serving sizes, packaging and pricing suitable to the marketplace.
Private schools provide an interesting market for a New England regional brands of milk
and dairy products, although they typically purchase less milk than do public school districts.
Private schools and universities may be the best avenue for increasing regional milk
consumption in New England, as they have slightly greater flexibility in their budgets and
purchasing. They are capable of purchasing milk at a higher price point and purchasing by their
‘values’ instead of being governed solely by the bottom line. An important point to recognize
with schools is that their milk demand is predictable and steady, but seasonal. Schools are only
purchasing milk when students are in session, usually September through May, with a two to
four week vacation in December. This could play as a positive or a challenge in the marketing of
a New England regional milk product.
High Lawn Dairy in the Berkshires has been selling to private institutions. Currently, 10
percent of High Lawn’s milk production supplies four schools – Williams College, Wellesley,
Phillips Academy and Buxton School. On average, High Lawn submits 10-20 bids per year to
schools. However, it received no new contracts in the past three years. High Lawn also lost 2
contracts - Smith College and Springfield College - to larger dairies due to competition in price.
Recommendations:
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New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
•
•
•
•
Despite the success of “Farm to School,” in the region, there are no similar support
mechanisms for local dairies to follow the suit. The premise of “Dairy Farm to School” is
still quite new, and there is no existing research that assesses the opportunities for local
dairies to sell directly to schools. More research of existing models is needed to
determine what options exist or need to develop in order to expand opportunities for
small and independent dairy producers and processors to sell to institutions.
Schools and state education departments should better address constraints to dairy
consumption in schools, such as new nutritional guidelines for competitive foods and
beverages that are likely to reduce dairy sales. This policy focus can be at the state
agency level.
Some institutions, notably private schools or public schools in well-off communities, have
an interest in local foods and sustainability, and are incorporating local or regional
independent dairy, including organic dairy, into their purchases. This could be more
widely promoted to other districts and universities. More documentation of procedures
and sharing results from those who have tried it would be helpful to other schools and
universities. Hospitals are in a similar situation. State-funded colleges and universities
have also been cutting back dairy alternatives due to budget cuts, but it make take
efforts targeting state governments or legislatures to overcome such impediments.
Schools could try to increase participation in the School Breakfast and School Lunch
programs, where a lot of milk in particular is consumed.
8. Retail food stores: We did not focus on larger supermarket, package stores, and other
retail locations where most milk is sold to retail shoppers. Specialty stores and coops do
preferentially stock local and regional independent dairy products, and organic products. For
example, Harvest Co-op in Boston currently sells milk from a large variety of companies such as
Stonyfield, Organic Valley, and MOO, and they ran many campaigns to encourage the purchase
of this product. Whole foods also stocks High Lawn Farms Crescent Ridge Dairy, Shaw Farm,
New England Organic Creamery, and MOO Milk, depending on the store. Products from these
individual farms are delivered directly to the store either by the farm or through a local
distributor.
Recommendation:
• Coops and Whole Foods exemplify the options available in retail grocery stores.
Opportunities for smaller grocery stores and package stores to carry such products are
not well studied except via the experiences of individual dairies to market their products
in such locations. More shared information on their experiences would be helpful to
other, particularly newer, independent dairy distributors.
9. Restaurants: Chefs and restaurant food buyers have significant expertise in purchasing
local food, and many are willing to purchasing products directly from the farmer. While
restaurants have many reasons for buying locally produced foods, there is less focus on dairy.
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New England Milkshed Assessment
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The obstacles that restaurants face when buying local foods include inconsistent availability and
quality, difficulty identifying reliable local producers, difficulty in making purchases due to lack
of procedures with many farmers, and dealing with multiple suppliers ordering and delivery
schedules. Small local producers sometimes can overcome these limitations by pooling
resources and aggregating their product. Additionally, producers can use an intermediary
aggregator to distribute or ship local products to consumers through restaurant markets. Such
intermediaries could allow growers to spend more time managing the farm and less time
marketing their goods.
However, there are successful models such as Henrietta’s Table in Cambridge, MA. Fluid milk
products are delivered directly from Oakhurst Dairy in Maine. A local distributor delivers butter,
yogurt, and other milk products multiple times a week. Henrietta’s Table consumes 300 pints of
butter each week, and purchases Stonyfield brand yogurt and purchases specialty butters from
Vermont Butter and Cheese Company, which are procured through the local distributor. Many
higher-end restaurants use similar volumes of dairy products, and are very focused on quality
and sourcing, but have focused more on produce than on dairy.
Recommendations:
• There is an untapped market for local farm branded milk in the Boston restaurant scene.
The importance of a farm name to the consumer is high when buying local produce or
dairy products. Local distributors may be key in getting local milk into restaurants by
keeping distribution costs low for farms, and allowing restaurants time savings with onestop shopping.
• Many more higher-end restaurants could be purchasing greater amounts of products,
particularly cheese, but also ice creams, butter, and cream for New England
independent distribute from farmers directly. This may be a potentially strong growth
area for producers or independent dairy processors with specialty products.
Direct marketing: A large majority of dairy farmers, particularly in Vermont and Maine, are
only set up to wholesale their milk. It would take a substantial amount of capital and labor to
restructure their businesses to retailing milk. Currently, there are only a few dairy farms in the
area that are set up to directly sell their milk, an most of these are filled to capacity. Direct-toconsumer sales by dairy producers are well established at farmstands they operate, and at
other farmstands where regular deliveries are possible. Two other direct markets do not have a
lot of dairy marketing, however:
10. Consumer Supported Agriculture (CSA): CSA dairy is scarce; Massachusetts has
one dairy-focused operation based in Framingham that includes a raw milk option as a niche
product. Almost no CSAs include dairy, in part because they mainly produce fresh vegetables
and have not thought about dairy, except cheeses in a few instances. There are a handful of
dairy-only CSAs in the Northeast, but opportunities seems somewhat limited; home delivery is
often a preferred option for farms that could offer a CSA model.
12
New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
Recommendations:
• As CSAs increasingly diversity by adding products from other local farms, the
opportunity to add cheese shares is ripe for expansion.
• Diversifying CSAs should also investigate other dairy products from local producers to
incorporate into a CSA share.
11. Farmers’ Markets: Fluid milk sales at farmers’ markets appear impractical for many
reasons, even where there is a niche product with a price premium. High Lawn Farm in the
Berkshires sold milk at farmers markets, but experienced great resistance from wholesale
accounts, which said they would stop selling High Lawn Farm milk if they continued selling at
farmers’ markets.
Local cheeses are still a small component of total farmers’ market sales (e.g., about 10
vendors in Massachusetts), limited in part by the number of on-farm producers with the
capacity to sell at these venues. However, there is expansion potential if markets are more
flexible to allow other farmers to market the cheese. Farmers markets have some opportunities
to offer other products, such as yogurt and ice cream, but face practical challenges (although
ice cream is sold, particular for immediate consumption, at some markets).
Recommendation:
• Diary expansion at farmers’ markets has greater potential than with CSAs. But as with
most direct marketing, there is limited data on current vendors and research on
potential for expansion. More assessment is recommended given the size of this
marketplace.
12. Incentive voucher programs: As with fruits and vegetables, dairy consumption is
lower in lower-income communities. These incentive programs, such as the Farmers’ Market
Promotion Program, and Wholesome Wave’s double vouchers, are primarily targeting fresh
produce at farmers’ markets. Some programs can include CSAs, deliveries to senior community
centers, and other locations. The use of incentives to promote dairy consumption has not been
investigated in any depth. While there is skepticism, more information and one or two pilot
efforts seem worthwhile to determine the feasibility of a dairy promotional program, especially
for products (cheese, yogurt, etc.) from local producers.
Recommendation:
• There has been little if any research on expanded opportunities for using incentive
programs; more is warranted given the need and potential for this to apply to dairy.
Pilot programs could determine their viability.
13. Dairy Home Delivery: Home delivery of dairy products is an iconic image of earlier
decades in our country’s history, and is often thought of as an outdated practice. However,
13
New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
there has been a recent resurgence in the dairy home delivery model as consumers seek out
new ways of connecting with their food and the people who produce it. Massachusetts is home
to multiple home dairy delivery companies, with three operating in the greater Boston area.
These home delivery ‘dairies’ were once producers of milk on their own farms, but have moved
out of production and remain solely with the distribution of milk purchased from local farms.
Dairy home delivery is a niche market targeting a consumer who is in search of a high quality
milk or dairy product, convenience, appreciates the source of their food, and is willing to pay a
higher price for the product. Although a smaller market, this outlet can still have great impact
on the New England dairy industry.
Recommendation:
• As with other direct marketing, more information is needed on the practicalities; more
background best practices, challenges, and overall potential for home delivery is worth
gathering and sharing.
Summary conclusions: New England’s dairy producers need to continue to adapt to more
creative marketing as part of overall diversification if they are to be sustainable over the long
term. Marketing is a diverse component of dairy industry. Creative marketing-related
strategies will be needed by more producers, in combination with other programs and policies
by dairy producers and by all those who support their continued existence in New England.
More research and information sharing has been emphasized. The critical need to promote
such transitions on a timely basis requires that producers, customers, policy advocates, and
policymakers better understand the specifics of what works, how it works, and the challenges
that have to be dealt with. Interested parties could do more to fund and carry out marketingoriented case studies of promising strategies. Initiatives like Rhody Fresh (RI) and The
Farmers’ Cow (CT) are still emerging models, but already offer best practices and lessons
learned to benefit others considering multi-producer models. Similarly, marketing case studies
are warranted for unique individual businesses to discern success factors and challenges they
overcame.
14
New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
Tufts papers cited:
Appelman, J., Bardot Lewis, C., Simons, J., & Tung, A. Boston Milkshed Assessment: Setting the
Framework for a Comprehensive Analysis of the Dairy Supply Chain to New England's Largest
Urban Center". Tufts University, Friedman School of Nutrition Science and Policy, Agriculture,
Food and Environment Program. May 2010.
Eliza Bemis, Vanessa Herald, Rachael Kirk. Greater Boston Area Milkshed Marketing
Assessment: An Explanation of Existing Opportunities to Increase Economic Viability of New
England Dairy Farms. Friedman School of Nutrition, Tufts University. May 7, 2011.
Amelia B. Fischer. The New England Dairy System and Consumer Demand. Tufts University,
Friedman School of Nutrition Science and Policy, Agriculture, Food and Environment Program.
December, 2010.
15
New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
APPENDIX TABLES
Consumption Trend Graphs
Total fluid milk availability:
servings/capita/day
1.00
0.80
0.60
0.40
0.20
0.00
1968
1978
1988
1998
2008
Figure 2: Total Fluid Milk Availability: Servings per person per day
0.140
0.120
0.100
0.080
ice cream
other frozen dairy
0.060
total frozen dairy
0.040
0.020
0.000
1960
1970
1980
1990
2000
2010
Figure 3: Frozen Dairy Product Consumption, servings per person per day
16
New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
0.050
0.045
0.040
0.035
0.030
0.025
yoghurt
0.020
cottage cheese
0.015
0.010
0.005
0.000
1968
1978
1988
1998
2008
Figure 4: Yoghurt and Cottage Cheese consumption, servings per person per day
0.35
0.30
0.25
0.20
American cheese
Italian cheese
0.15
miscellaneous cheese
0.10
0.05
0.00
1960
1970
1980
1990
2000
2010
Figure 5: Cheese consumption, servings per person per day
17
New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
Figure 1. Number of on-farm dairy processors in state of Maine between 1995-Feb 2012 (low
is eleven, high is eighty-three). Eleven more on-farm processors are in the process of getting
18
New England Milkshed Assessment
Sum m ary of Policy Dim ensions and R ecom m endations Related to M arketing
set up, but are not included in this data. Also, the 2012 number does not include frozen
desserts processors or any interstate milk shippers.
Figure 2. Number of on-farm dairy processors in state of Vermont between 1995-2012 (low is
nine, high is forty-eight).
19
New England States’ Dairy Policies
NEW ENGLAND MILKSHED ASSESSMENT:
STATE-LEVEL PROGRAMS AND POLICIES HELPING TO SUSTAIN THE REGION’S DAIRY FARMS
AND STATE AND FEDERAL POLICY RECOMMENDATIONS
THE CONTEXT




Dairy farms manage most of the cropland in five of the six New England states and
represent the largest market value of any agricultural commodity in the region.
o The region’s 17,000 licensed dairy herds generate more than $700 million annually1
in fluid milk sales.
The average mature milk cow has an annual economic impact of about $14,000,2 and the
region’s dairy herd contributes more than $3 billion to the New England economy.3
The average dairy farmer in New England owns or manages over 300 acres of cropland,
pasture and woodland; this land is more vulnerable to development if it is not being actively
used for agriculture.4
Severe prices swings and rising costs of production continue to impact the region’s dairy
sector
o At $11.79 per hundredweight (cwt.), the June 2009 all-milk price was 10 cents less
than what farmers received for milk in 1979 (real dollars).5 Many producers suffered
financial losses of $350 to more than $700 per cow in 2009.6
o Though profitability has since improved, with average milk prices in the Northeast of
$21.53 per cwt. in 2011 covering average net costs of production of $18.10,7 prices
are already beginning to drop again in 2012, following the cyclical pattern below.8
1
United States Department of Agriculture, New England Agricultural Statistics 2010. June 2011.
Statement of Vermont Dairy Industry Representatives to Secretary Vilsack, Burlington, VT February 13, 2010.
http://www.vermontagriculture.com/news/2010/Dairy_Principles_Agreement_Vilsack_Visit.pdf; see also American
Farmland Trust in collaboration with Community Involved in Sustaining Agriculture, Increasing Local Milk
Processing Capacity: Benefits to Pioneer Valley Consumers and Communities, January 2011.
3
In 2010, there were 213,100 milk cows in New England. New England Agricultural Statistics Service, Annual
Bulletin 2011, page 80.
4
2007 Census of Agriculture
5
Parsons, Bob. “Vermont’s Dairy Sector: Is there a Sustainable Future for the 800 Lb. Gorilla?” Food System
Research Collaborative at the University of Vermont Center for Rural Studies Opportunities for Agriculture
Working Paper Series, Volume 1, Number 4.
6
Ibid. Quoting 2010 Northeast Dairy Farm Summary, produced by Farm Credit East, Farm Credit of Maine, and
Yankee Farm Credit.
7
Lidback, Joanna and Laughton, Chris. 2011 Northeast Dairy Farm Summary, May 2012. Farm Credit East, Farm
Credit of Maine, and Yankee Farm Credit.
8
Farm Credit East, Knowledge Exchange Partner, Volume 6, Issue 2, February, 2012.
2
1
New England States’ Dairy Policies
U.S. All-Milk Price, 1979-2009
Source: U.S. Department of Agriculture 2010b
Rising production costs show no sign of slowing.
 Feed, the largest single yearly expense for most dairies, rose more than $300
per cow in 2011, to $1,578.9
 Gas, fuel and oil costs rose by 35%, and crop inputs were up by 15%.10
 Drought conditions and continued high demand for U.S. feed stocks are likely
to push feed prices higher
 Milk production costs in the first six months of 2012 are already up by
an estimated $1.40 per cwt.11
Given these trends, it is not surprising that the region is losing dairy farms at an alarming
rate: In just the last 10 years, nearly 1/3 of the region’s licensed dairy herds have gone out
of business.12
o

9
Lidback, Laughton, 2011 Northeast Dairy Farm Summary, May 2012
Ibid.
11
Farm Credit East, Knowledge Exchange Report. July, 2012.
12
New England Agricultural Statistics, 2011.
10
2
New England States’ Dairy Policies
Policy Conditions



Current federal dairy policy is widely regarded as insufficient in providing price stability and
income support to New England milk producers.
Relevant federal dairy income and price support mechanisms include:
o Dairy Product Price Support Program: This program indirectly supports the farm
price of milk through government purchases of surplus dairy products from dairy
processors. It sets a national milk price floor of about $9.90 per hundredweight—
which is the equivalent of half the current cost of milk production in the region.13
o Milk Income Contract Loss Program (MILC): This program pays dairy farmers when
milk prices fall below an established target price. It is similar to crop subsidy
programs which pay farmers only when farm prices drop below certain levels.
Eligible farmers receive a payment equal to 45% of the difference between the
target price and the lower market price. In 2009, the program was amended to
include a feed adjuster, which increases the target price when feed costs are high.
 The MILC program is extremely important to New England dairy farmers. In
2009, during the last price trough, MILC payments to the region were over
$31 million. [In contrast, MILC payments were under $2 million in 2010,
reflecting rising milk prices.]14 However, MILC alone is an insufficient income
safety net during severe price troughs, especially since there is a payment
cap affecting dairy herds of over 160 cows.
Congress is currently debating reauthorization of the federal Farm Bill. In both the Senatepassed and House Agriculture Committee versions of the bill, the Dairy Product Price
Support Program and MILC are replaced with a dairy margin protection program. This new
program would provide subsidized insurance coverage for dairy farmers when margins15 are
low or negative. It would also provide a market stabilization, or supply management,
program to scale down production when the market is oversupplied. While too soon to
know if these changes will be implemented and how they will affect the region, these policy
reforms have been embraced by a number of dairy organizations and Members of Congress
from New England.16
NEW ENGLAND STATE POLICIES AND PROGRAMS
Recognizing the importance of dairy to its agricultural sector, economy and land base, every
state in New England has taken steps to help retain and sustain its dairy farms. These steps
range from programs that provide direct support to dairy farms when federal milk prices do not
cover the costs of milk production—in essence, supplementing the federal Milk Income Loss
Contract program—to those aimed at dairy herd health and dairy product promotion.
Additionally, most of the New England states have programs that, while serving a broader
farming constituency, have been extremely important to dairy farm viability. This latter
13
See 2011 Northeast Dairy Farm Summary.
See Farm Credit East Knowledge Exchange Partner, Volume 5, Issue 9, September 2011.
15
Margins equal the all-milk price minus feed costs
16
See Northeast State Departments of Agriculture (NEASDA) Farm Bill Funding Priorities Summary, March 2012.
14
3
New England States’ Dairy Policies
category includes programs aimed at increasing farm profitability through business planning,
on-farm processing and value-added product development; on-farm energy programs focused
on both efficiency and renewable energy production; conservation cost-share programs helping
offset the costs of environmental compliance; and farmland protection programs which provide
farms with the capital for reinvestment, expansion and/or farm transition while protecting land
in perpetuity. Others include programs that provide some degree of tax relief to farm
businesses, some at the option of municipalities, and those that provide a state procurement
preference for foods grown within the state.
Below is a summary of the type of state-level programs and policies that are helping to support
and sustain dairy farming in New England, and recommendations for additional policy actions.
A more detailed inventory of each state’s relevant programs follows.
State-level Dairy Stabilization Programs:
Three of the six New England states have ongoing programs that provide direct assistance to
dairy farmers when federal milk prices do not cover the cost of production. These programs
use two different approaches. In Maine and Connecticut, the state makes direct payments to
milk producers; in Massachusetts, the state offers a refundable income tax credit.
Each state has a different mechanism for funding its program. In Connecticut, the funding
mechanism is a deed recording fee that is collected for a variety of purposes, including the dairy
program. In Massachusetts and Maine, funding is through the General Fund, though in Maine,
milk handling fees are collected and deposited into the General Fund, in part for this purpose.
In both states, the Legislature has capped, either through the yearly budget process (Maine) or
as part of the authorizing legislation (Massachusetts), total spending on the program.
Two other states have made one-time-only emergency payments to dairy farmers in the past
decade. In 2007, addressing the cumulative impact of poor weather, low prices and high
production costs and concerned about dairy farm attrition, the Vermont Legislature made $3
million available for interim dairy assistance. New Hampshire did likewise in 2008, providing
$2.1 million to dairy farmers through an Emergency Dairy Assistance Program. At the time,
New Hampshire also created a permanent dairy Emergency Relief Fund; however, no state
resources have been dedicated to the Fund since its creation.
Little analysis has been done of the impact of these programs or one-time emergency payments
on farm viability. However, some evidence suggests that these programs are helping to slow
the rate of dairy farm attrition. According to Tim Drake, Executive Director of the Maine Milk
Commission, since implementation of Maine’s Dairy Relief Program, dairy farm attrition rates are
significantly less than comparable rates in Vermont and New Hampshire.17
Dairy Herd Health:
State and federal herd health testing and vaccination programs are vital to milk safety and
quality, in addition to protecting the economic sustainability of the dairy industry. To differing
17
Drake, Tim. “Maine’s Dairy Relief Program,” Maine Policy Review. Winter/Spring 2012, pages 77-78
4
New England States’ Dairy Policies
degrees, state Departments or Agencies of Agriculture provide services in this area. New
Hampshire has some of the most comprehensive services in this regard, offering free Johne’s
testing (a service that the state continued after federal funding was cut). Additionally, the NH
Veterinary Diagnostic Laboratory operated jointly by the state Department of Agriculture,
Markets & Food and the University of New Hampshire, offers mastitis testing/culturing and
pregnancy blood-tests directly to farmers, as well as other pathological and microbiological
diagnostic services in cooperation with herd veterinarians. State and federal funding is often
augmented with milk producer fees or contributions.
Dairy Promotion:
Five New England states have created a state-level Dairy Promotion Board or Council to educate
consumers about both dairy products and dairy farms, and all New England states are
represented through the New England Dairy Promotion Board. These Boards and Councils are
funded primarily through milk producer contributions. The New England Dairy Promotion Board
is also funded through a producer “check-off,” and the New England Board has been
instrumental in the creation of the regional Keep Local Farms program (described below).
Farm Viability Programs:
As a region, New England has 14 million consumers. Direct marketing and value-added product
development are two key means of improving farm profitability for dairy, as well as for other
farm types. Five of the states have established programs to help farmers with business
planning and market and product development. A Rhode Island Farm Viability grant, for
example, provided instrumental seed funding for Rhody Fresh, a RI milk branding effort
developed by nine of the state’s dairy farms. As of 2010, the Rhody Fresh cooperative was
earning $3 million in gross revenues and selling in 120 retail supermarkets and convenience
stores in Rhode Island and Massachusetts.18 Maine, Massachusetts, Vermont and Connecticut
all have Farm Viability programs that offer business planning assistance and grants to
implement elements of the business plan. Dairy farmers have participated in these programs in
each of the states, helping them develop on-farm processing for specialty cheeses, yogurts,
puddings, or ice cream, or new marketing ventures, such as a farm store, ice cream parlor,
home delivery service, or internet sales.
Farm Energy Programs:
Dairy farms are not only significant energy consumers, but significant generators of animal
waste. Several New England states have programs that are helping farmers both reduce energy
consumption and costs, and find economic uses for their manure. The Massachusetts Farm
Energy Program, for example, has helped participants realize an average of $12,000 in annual
energy savings. In Vermont, the Agency of Agriculture, Food and Markets’ Renewable Energy
for Agriculture grant program offers funding for planning, feasibility analysis, and business plan
development, while the Vermont Clean Energy Development Fund supports the purchase and
installation of methane digesters with low-interest loans and competitive grants.
18
RI Rural Development Council and Farm Fresh Rhode Island 2010 Report to Senators Reed and Whitehouse,
retrieved March 5, 2012.
5
New England States’ Dairy Policies
Farmland Protection Programs:
With intense real estate development pressure and high land values, New England states were
early adopters of “Purchase of Agricultural Conservation Easement” (PACE) programs.19 PACE
programs (often known as purchase of development rights programs) compensate property
owners for restricting development and other future use of their land so that it remains
available for agriculture.
Massachusetts boasts the nation’s first state-level PACE program. Called the Agricultural
Preservation Restriction program, it began as an act of the Legislature in 1979. Since then the
other five New England states have established programs. Together they have saved more than
260,000 acres, or 6% of the region’s total land in farms.20 Vermont’s Housing and Conservation
Board alone has protected 139,000 acres on 567 farms and has offered on-farm business
planning, financial and technical assistance services to 336 farmers, many of whom are dairy
farmers.
By allowing farmers to cash in a percentage of the equity in their land, PACE programs create a
financially competitive alternative to selling land for development. PACE programs provide
capital for farmers to invest in and expand their farm businesses, retire debt, purchase land,
finance retirement, settle estates and help transition the farm to a new generation. The benefits
of PACE are especially important to the region’s dairies because they are highly capitalized.
Tax Policies:
All six New England states have a form of agricultural use assessment, allowing eligible
farmland to be taxed at its agricultural value. Additionally, a number of states provide
additional property tax relief to farmers. Some, such as Connecticut, Maine, Rhode Island and
Vermont, exempt certain farm animals, buildings or equipment outright from local property
taxes. Massachusetts allows towns the option of exempting farm animals and equipment, while
Connecticut allows towns to exempt a portion of the value of agricultural buildings. Maine has
a program that links property tax relief and farmland protection; its Voluntary Municipal Farm
Support Program creates a mechanism by which towns can effectively waive local property
taxes for farmland owners in exchange for a limited 30-year easement protecting the farmland
from development. These state-level tax policies are especially important to dairy farms, given
the significant investment these farms typically have in animals, land, equipment and farm
infrastructure.
Procurement Preferences:
In recent years, several New England states have taken steps to require that state entities, such
as state universities, colleges and agencies, preferentially purchase foods produced in state.
Some states have gone further to also enable towns to preferentially purchase local foods
through a number of mechanisms, such as no-bid contracts and bids within 10% of the lowest
19
Note that these have different names in different states but are all the same kind of program. For example, in
Massachusetts, the program is called the Agricultural Preservation Restriction or APR program.
20
New England Farm and Food Security Initiative to Keep Farmland in Farming, farmland protection fact sheet
prepared by American Farmland Trust, November 2010.
6
New England States’ Dairy Policies
bid. Specific policy tools are presented in the six New England state policy memos that are part
of this report.
A Regional Approach: Keep Local Farms
Inspired by the “Fair Trade” concept, and launched in 2009, the Keep Local Farms program is
an important new regional effort to bring more money directly to dairy farmers while creating
stronger connections between farmers and their customers. KLF is a partnership between the
Vermont Dairy Promotion Council, the New England Family Dairy Farm Cooperative with
Cooperative Development Institute, and the New England Dairy Promotion Board. While
individuals can make contributions to dairy farmers directly online, the avenue with more
potential is building collaborative relationships with grocery stores.
Research completed for the program indicates that consumers are willing to pay more at retail if
they know the proceeds are being returned to the farmer. Early results are promising. In one
year, four Hannover grocery stores raised $40,000 through the program, showing the potential
for success if more retailers participate throughout the region.21 In addition to stores, KLF is
growing its institutional partners, especially the region’s colleges and universities.
21
Details about the KLF program are gleaned from their website and personal communication with Diane Bothfeld
at the VT Agency of Agriculture, March 15, 2012.
7
New England States’ Dairy Policies
POLICY RECOMMENDATIONS:
Given the unique circumstances of each state in New England and the diversity of challenges
facing the region’s milk producers, there is no one-size-fits-all approach or single policy or
program that will ensure the sustainability of the region’s dairy farms. Clearly a suite of
programs and policies are needed —both to help milk producers address the primary challenges
of price instability and rising production costs and to encourage new marketing approaches and
value-added product development to capture a higher share of the retail food dollar. These
programs and policies are needed at both the state and the federal level.22
Federal policies and programs:
At the federal level, the current Dairy Price Support Program and Milk Income Loss Contract
(MILC) Program appear likely to be replaced in the pending Farm Bill reauthorization with a
dairy margin protection program, and with a market stabilization, or supply management,
program to scale down production when the market is oversupplied. Whatever the program(s)
that Congress adopts, it is critical that any program reduce price instability and provide a means
for dairy farmers to bridge periods of low milk prices.
Federal policy also can play an important role in building demand for regional dairy products.
The following changes to federal nutrition programs could have a beneficial impact for New
England dairy farmers:
o Through the USDA Foods Program, public schools participating in the National
School Lunch Program receive “commodity” foods purchased by USDA. These foods
include fresh, frozen or processed meats, dairy and nut products, and fruits and
vegetables. According to USDA, the value of commodities purchased and
distributed through the program is somewhere in the vicinity of $1.2 billion.23
Cheese is a significant commodity that public schools in New England rely on for
their lunch programs. Indeed, in the 2011-12 academic year, public schools in New
England received more than 1.6 million pounds of cheese through the USDA
Foods Program.24 Providing schools with cash in lieu of commodities would allow
school districts that choose to do so to buy cheese and other dairy products directly
from farmers and processors in New England. Recently, a collaborative of state
Farm to Institution programs in the region, Farm to Institution in New England
(FINE), proposed such a policy change to the USDA Foods Program. The FINE
proposal would allow public school districts with an annual commodity food
entitlement of $50,000 or less to opt for cash in lieu of commodities.25 Piloting such
22
Municipalities can also play an important role in supporting local dairy farms—especially through supportive tax
and land use policies. These recommendations, however, are limited to state and federal policy.
23
Brayley, Dorothy and Winston, Amy, 2012 Farm Bill Position Paper: USDA Foods Program, Farm to Institution
New England, April 2012.
24
Based on interviews with state coordinators for USDA Food Program distribution in Maine, New Hampshire,
Vermont and Rhode Island. Cheese was provided either directly to the schools or purchased on their behalf and sent
directly to a processor for
25
Brayley and Winston, 2012 Farm Bill Position Paper: USDA Foods Program, Farm to institution New England,
April 2012.
8
New England States’ Dairy Policies
o
an approach, as has been proposed in the Farm Bill reauthorization recently reported
out by the House Agriculture Committee, would allow analysis of its potential impact
on demand for New England dairy products.
A regulatory change in the National School Lunch and Breakfast Programs
could increase demand for Greek yogurt, which in turn could fuel demand for both
milk and Greek yogurt produced in New England. Current USDA regulations for
public schools consider Greek yogurt to be the same as regular yogurt despite its
higher protein content. By creating new guidelines for Greek yogurt that recognize
its dense nutritional and high protein value, schools would find it more economical to
use Greek yogurt as a high-protein meat alternative.26
Addressing rising production costs will require continued support for federal programs that are
helping milk producers reduce energy use, comply with federal and state environmental
regulations, and maintain herd health. Some important federal programs for dairy farmers
include: .
o The Farm and Ranch Lands Protection Program (FRPP) is leveraging about $2
in state, local, philanthropic and landowner contributions for every dollar it provides
for permanent farmland protection in the region while helping dairy farmers expand
their farm operations, reduce debt, finance retirement and transition their land to a
next generation;
o The Environmental Quality Incentives Program (EQIP) is widely used by dairy
farmers for nutrient, manure and pasture management, and, increasingly, for
energy efficiency improvements and renewable energy development to reduce rising
on-farm energy costs;
o The Conservation Stewardship Program (CSP) has the potential, if properly
tailored for the region, to compensate dairy farmers for some of the important
environmental benefits they provide through their land stewardship. Changes to the
program are needed to make it more attractive to New England farmers, and less
burdensome to USDA staff to administer
State Policies and Programs:
As the above narrative describes, many of the region’s current state-level farm programs and
policies are having a positive impact on dairy farms. However, little has been done to measure
that success: farm numbers do not tell the whole story, nor do program participation numbers.
More evaluation and documentation of program impact on dairy farms will help sustain popular
and political support for these programs.
As importantly, our study found little research around the profitability of specific value-added
dairy products or direct-to-consumer marketing approaches. While an increasing number of
milk producers are gravitating to on-farm processing--bottling milk for home delivery and/or
producing value-added products such as cheese, yogurt, and ice cream--and most of those
producers are selling those products direct to consumer, there is scant information about which
products and which marketing models offer the greatest return on investment. Developing
26
Press release from Office of Senator Charles Schumer, June 18, 2012
9
New England States’ Dairy Policies
such information could help state policymakers determine what type of public investments and
policies could be most advantageous to dairy farmers.
As noted in the section above, dairy farmers rely on a wide variety of state-level programs and
policies. Continued support from lawmakers for these programs is critical. These include:
 State-level dairy stabilization programs
 Programs that are supporting dairy herd health
 Dairy promotion and state branding programs
 Programs that are helping farmers develop renewable energy and reduce farm input
costs
 Purchase of Agricultural Conservation Easement (PACE) Programs
 Procurement preference policies
 Farm business planning programs
 Supportive tax policies
Additional policy recommendations can be found in the Marketing Recommendations report,
which can also be found on the webpage.
10
New England States’ Dairy Policies
Connecticut
Connecticut Facts
•
•
•
In 1990, Connecticut had 500 dairy farms on 136,000 acres with 27,000 milking cows. In
2007, this dropped to 210 farms on 72,000 acres, and 19,000 milking cows. 1
The economic impact of the Connecticut dairy industry, including processing, is estimated
between $832 million and $1.1 billion in new output (sales). In turn, this generates an
estimated 2,465–4,242 jobs and $145–$208 million in additional personal income. Dairy
1
farming is the second most valuable component of Connecticut’s agricultural sector.
2
Connecticut dairy farms produced 366 million pounds of milk in 2010.
State-Level Policies and Program s That Directly Benefit Dairy Farm ers
The establishment of a dairy stabilization program through Connecticut’s Community
Investment Act (CIA) has had the greatest impact of recent state-level policy changes. The CIA
provides a dedicated funding stream to the CT Department of Agriculture for programs
important to dairy farmers, including a dairy safety net, agriculture viability grants for producers
and farm cooperatives, and the CT Farm Link, CT Grown and CT Farmland Preservation
programs.
The original CIA, enacted in 2005, established a $30 fee to be collected by town and city clerks
for the recording of all documents into municipal land records. Documents subject to this fee
include: deeds, mortgages, mechanics’ liens, judgment liens, notices of lease, releases of
mortgages and liens, name change certificates, notices of variances and condominium
declarations. On July 1, 2009, the Act was amended (PA 09-229), raising this fee to $40 per
deed recording and adding an Agricultural Sustainability Account, which provides grants to milk
producers determined by a formula based on the difference between the federal pay price and
82percent of the cost of production. This $10 increase was made permanent in 2011, under PA
11-249.
A new Farmland Restoration Program established through PA 11-1, while not limited to dairy
farmers, is helping milk producers reclaim land for feed production and pasture. The primary
objective of the program is to increase the state’s resource base for food and fiber production,
focusing on prime and important farmland soils. Other important state-level programs and
initiatives for dairy producers in the last decade include the establishment of a Milk Promotion
Board, changes to the Milk Regulation Board, as well as laws intended to promote Connecticut’s
local agriculture at farmers markets and other retail venues.
Innovative institutional purchasing requirements and state-level tax exemptions have also
proven beneficial to farmers. When contracting for “the purchase of dairy products, poultry,
eggs…” for state agencies, the Commissioner of Administrative Services must give preference to
Department of Economic and Community Development, Connecticut Department of Agriculture, and
University of Connecticut, Department of Agricultural and Resource Economics. The Economic and Fiscal
Impacts of Connecticut's Dairy Industry. 2009.
2 United States Department of Agriculture, National Agricultural Statistics Service, New England Agricultural
Statistics Service. New England Agricultural Statistics 2010: Annual Milk Production (p.77). June 2011.
1
New England States’ Dairy Policies
Connecticut
products produced in-state if they are “comparable” in cost to those produced out of state.
Conn. Gen. Stat. § 4a-51(b).
Buildings, animals, and produce are exempt from personal property taxation. Farm tools are
exempt up to $500, and farm machinery up to $100,000. Conn. Gen. Stat. §§ 12-81, 12-91.
Some of the more prominent Acts are noted and linked below (the first two digits of the Act
number indicate the year enacted).
Public Act 05-228: Com m unity Investm ent Act (An Act Concerning Farm land
Preservation, Land Protection, Affordable Housing and Historic Preservation)
Public Act 09-229: An Act Concerning M ilk Producers, M ilk and M ilk Products,
Agricultural Not-For-Profit Organizations and the M odernization of Connecticut
Fertilizer Law
This Act raised the land use recording fee established under the CIA from $30 to $40 and
created an account to assist milk producers through producer grants. The law imposes a
formula for making grants to milk producers based on the federally set milk price and the
amount needed to sustain dairy operations, as the U. S. Secretary of Agriculture determines.
Specifically, when that price falls below the minimum sustainable monthly cost to produce milk,
a milk producer qualifies for a grant equal to the difference between these two figures.
Public Act 11-48: An Act Im plem enting Provisions of the Budget Concerning
General Governm ent. This legislation made permanent the $10 increase in the land use
document recording fee and rearranged the distribution formula. It credits $10 of each fee to
the Agricultural Sustainability Account, which PA 09-229 established to assist milk producers.
Public Act 05-175 : An Act Concerning the Revision and M odernization of M ilk
R egulation Statutes and the Licensing of Poultry Dealers
This Act updated antiquated statutes by making changes to the Milk Regulation Board and the
regulation of milk and milk products. It requires the Commissioner to regulate raw milk
producers.
Public Act 05-130 - An Act Concerning the M ilk Regulation Board and A Study of the
Connecticut Dairy Industry
This law added two appointees to the Milk Regulation Board one of whom must be actively
engaged in milk processing, and one of whom represents retailers. The Act required the Board
to conduct a comprehensive study of Connecticut's dairy industry and submit a report to the
Environment Committee by January 1, 2006.
New England States’ Dairy Policies
Connecticut
Public Act 08–164: An Act Concerning Assistance to Dairy Farm ers
The Act established a Connecticut Milk Promotion Board within the Department of Agriculture to
develop, coordinate and implement promotional, research and other programs designed to
promote Connecticut dairy farms and milk consumption; the Board reports annually to the
Legislature.
Public Act 10-103: An Act Concerning Farm s, Food and Jobs
This Act specifies that money collected by the Connecticut Milk Promotion Board is not
considered state funds and that the Board is within the state Department of Agriculture for
administrative purposes only.
Public Act 11-249: An Act Concerning The Perform ance Of Certain Federal
R equirem ents By The Connecticut M ilk Prom otion Board
This Act required the Connecticut Milk Promotion Board to assess a fee of 10 cents per
hundredweight of milk delivered by Connecticut milk producers or a fee commensurate with the
credit allowed for producer contributions to state qualified programs under the federal law.
Additional Research Resources
Department of Economic and Community Development, Connecticut Department of Agriculture,
and University of Connecticut, Department of Agricultural and Resource Economics. The
Economic and Fiscal Impacts of Connecticut's Dairy Industry. 2009.
Additional Resources for Farm ers
The University of Connecticut College of Agriculture and Natural Resources and the Cooperative
Extension System offer the following services to farmers:
CT Veterinary Medical Diagnostic Lab - http://cvmdl.uconn.edu/.
The Diagnostic Testing Services Laboratory performs all State testing programs(Brucellosis,
Salmonella Pullorum, Mycoplasma, Mastitis, Avian Influenza, Johne's Disease) as well as many
other tests (equine infectious anemia, Salmonella, leptospirosis, Lyme disease, Rabies, etc.).
Our poultry and mammalian extension veterinarians maintain daily contact with animal and
poultry owners, veterinary practitioners, as well as State and Federal regulatory officials.
Department of Plant Science – Soil and plant tissue testing, Integrated Pest Management http://www.cag.uconn.edu/plsc/plsc/ipm.html, http://www.cag.uconn.edu/plsc/soiltest/.
New England States’ Dairy Policies
Connecticut
The Soil Nutrient Analysis Laboratory has three major objectives. First is to provide an
inexpensive means for both agricultural producers and home owners to test their soil fertility
and receive environmentally sound limestone and fertilizer recommendations. The second major
focus of the Laboratory is education. Through our analyses as well as outreach efforts, clients
and the public are being informed about wise soil management and fertility practices.
CES Land Use Resources http://www.extension.uconn.edu/documents/CT_Farmland_Connections_FINAL.pdf.
This guide is intended to help make these farmland “connections” by walking through the legal
and practical considerations involved in leasing farmland and providing information and case
studies of successful community farms that have been established aroundthe state. We hope
that this guide is a useful resource for both those seeking land to grow food and other
agricultural products and those seeking to ensure that the farmland they own is put to
productive and sustainable agricultural use.
CES Farm Risk Management - http://www.canr.uconn.edu/ces/frm/.
The mission of the Connecticut Farm Risk Management and Crop Insurance Program is to
provide farmers and agribusinesses with information to improve farm financial management and
reduce risk.
CES – Dairy Nutrition, milk quality and mastitis –
http://animalscience.uconn.edu/faculty/Sheila%20Andrew.php.
Cutting-edge dairy research at the University of Connecticut is also available to farmers to aid
in decision-making and farm planning.
Department of Agriculture and Resource Economics – http://are.uconn.edu/outreach.php.
Extensive research on Connecticut production for dairy producers and well as other related
projects.
New England States’ Dairy Policies
M aine
M aine Facts 1
•
•
•
In 2010, Maine had 304 dairy farms, ranging in size from 10 to 1,700 milking cows.
Maine’s dairy industry generates more than $570 million dollars each year for the state’s
economy, contributes more than $25 million dollars to the state and municipal government
in taxes and provides more than 4,000 jobs.
In 2012, there are close to 32,000 cows in Maine making 590 million pounds of milk per
year (69 million gallons), a decline of 1.4 percent since 2004.
State-Level Program s and Policies That Help Sustain Dairy Farm s
The centerpiece of Maine’s dairy policies is the Tiered Dairy Stabilization Program, which was
established in 2004. The program provides economic relief to Maine dairy farmers in times of
low milk prices, paying farmers directly from the state’s General Fund when the marketplace
price received for milk falls below their cost of production. The target price for a producer
depends on which of four production range “tiers” the producer is in. Originally organized into
three tiers, the program was amended in 2009 to establish a fourth tier. All producers begin in
the first tier at the beginning of the year; some move into the second, third and fourth levels of
production fairly quickly, while others never get out of the first tier. Since the program is
funded from the General Fund, it is subject to the state budget process. Milk handling fees,
collected by the Maine Revenue Service, are sent to the General Fund. Since 2007, at least $30
million has been paid to milk producers through this program. The Legislature has frequently
imposed an annual cap on program expenditures; in 2010 and 2011, the program was capped
1
annually at $13.3 million .
In 2009, a statewide Task Force on the Sustainability of the Dairy Industry developed a number
of recommendations that were signed into law. Several recommendations related to the Tiered
Program. Another required the Maine Milk Commission to improve data collection for a
statewide cost-of-production study.
According to Tim Drake, Executive Director of the Maine Milk Commission, the Tiered Program
has helped slow the loss of dairy farms in the state. In the six years between 2004 and 2010,
Maine lost only two-thirds (78) of the number of dairy farms it had lost in the previous four
years (106). Walt Whitcomb, Maine’s Commissioner of Agriculture, believes the program is
possible because the state has a functioning Milk Commission that reviews and establishes milk
prices, and policymakers along with milk processors, retailers and consumers who are willing to
support a local supply of food. Whitcomb credits the program in helping retain Maine’s three
major dairy processing plants, with their associated jobs, and a significant number of active
dairy farms that are now, many with a next generation, making long-range capital investments.
Because Maine has showed a willingness to make funds available to stabilize erratic national
milk prices, Whitcomb sees that Maine’s dairy industry has the potential to grow.
All statistics in the section are from Drake, Tim. “Maine’s Dairy Relief Program.” Maine Policy Review.
Winter/Spring 2012, pages 77-78. Accessed March 13, 2012.
1
New England States’ Dairy Policies
M aine
In Maine, farm produce and forest products are exempt from personal property taxation.
Cattle, fowl, and other farm animals are also exempt. Me. Rev. Stat. tit. 36, § 655.
The Farmland Property Tax Program supports the education of municipalities, farmers and the
general public about farmland and open space tax programs. ME. Rev. Stat. tit. 36 §1120-1121
Additionally, coordination with the Commissioner of Agriculture, Food and Natural resources
with regard to nutrient management plans may make farmers eligible for additional tax
exemptions. Me. Rev. Stat. tit. 36 § 656, tit. 7 § 6
Other Programs and Policies
2011: An Act Regarding the Milk Handling Fee This statutory change allows only one milk
handling fee to be assessed on any particular container of packaged milk and imposes a
handling fee on 20-quart containers of packaged milk, which formerly were exempt from
handling fees.
2007: An Act to Support Farms and Limit Sprawl This legislation established a Voluntary
Municipal Farm Support Program that creates a mechanism for municipalities to support local
farms and preserve farmland by making farm support payments equal to property taxes to
farmland owners in exchange for a limited 30-year easement protecting the farmland from
development.
2005: An Act To Create a Property Tax Reimbursement for Commercial Dairy Farms. This
policy allows an eligible commercial dairy farm, which must produce and sell at least 10,000
pounds of milk products in each of six months in one year, to receive a 50 percent
reimbursement for property taxes paid on real estate that was necessary to support the farm’s
production of milk products in the year for which reimbursement is sought.
New England States’ Dairy Policies
M assachusetts
M assachusetts Facts
•
•
•
•
•
•
There were nearly 5,000 dairy farms in Massachusetts in 1950 and only 180 licensed dairy
herds in 2007.
The Massachusetts dairy industry (including fluid milk processing and manufactured dairy
products like ice cream and butter) generates over $500 million for the state’s economy.
Milk receipts rank third in value of agricultural production behind cranberries and nursery
and greenhouse production.
The state’s 180 dairy herds generate nearly $50 million in sales and an estimated
$120-$150 million in economic activity through the purchase of goods and services.
Dairy farms directly maintain approximately 92,000 acres in active agricultural production,
equaling about 20 percent of land in farms in the Commonwealth.
Nearly 227 million pounds of milk (or more than 26 million gallons) were produced in 2010
by dairy farmers eligible for the state dairy tax credit. 1
State-Level Policies and Program s that Help Sustain Dairy Farm s
After a crisis in the dairy industry was declared in May 2007, Massachusetts Governor Deval
Patrick and the state Legislature established a Dairy Revitalization Task Force and Emergency
Relief Fund. These actions provided $3.6 million in emergency relief for dairy farmers in June of
that year. Total production for 2006 from eligible farms was just over 272.7 million pounds,
yielding a payment rate of about $1.32 per hundredweight of milk. The average payment to
those 180 farmers was $19,565. 2
The Task Force was charged with investigating both short- and long-term solutions to support
and preserve the dairy farm industry in the Commonwealth. The report was submitted to the
Legislature in November 2007, and the resulting Dairy Farm Preservation Act was signed into
law in 2008. Some of the Act’s provisions are directed solely to dairy farmers, while others
more broadly support agriculture in the state.
Dairy Farm Preservation Act Provisions
Specific to Dairy:
• Dairy Farm Income Tax Credit: Established to offset the cyclical downturns in milk prices
paid to dairy farmers, the refundable income tax credit is triggered every month the
Federal Milk Marketing Order’s price drops below a “trigger” price established by the
Massachusetts Department of Agricultural Resources (MDAR). This trigger price is
calculated from monthly costs-of-production figures, including hired labor and some
portion of the value of unpaid labor; the amount of credit is based upon volume of milk
production. The credit is received when farmers’ annual taxes are filed, and the pool of
available credit is capped at $4 million a year.
The 2010 statistic is from http://www.mass.gov/eea/pr-2011/111206-pr-dairy-tax-credit.html, all other
data in this paragraph is from the 2007 Dairy Revitalization Task Force Report.
2 http://www.mass.gov/agr/dairy/preservation_history.htm
1
New England States’ Dairy Policies
M assachusetts
•
Dairy Promotion Board: Established to promote the consumption of milk and milk
products with programs and policies like paid advertising, sales promotion, publicity,
research studies testing effectiveness of market development as well as nutritional
studies, the Board is funded through a 10 cents-per-hundredweight producer
assessment. Producers are able to receive credit for the 10 cents from the National
Promotion assessment if they choose.
•
Fluid Milk Couponing: Gives the MDAR the authority under certain conditions to allow
and to regulate the use of fluid milk couponing to promote consumption (prior to this
couponing was illegal). The MDAR must protect local producer dealers from predatory
pricing.
General Agricultural Provisions
• Farm Linked Loan Program: Established a low-interest farm loan program in the MDAR
that offers low-interest four-year loans of up to $500,000 to eligible farms. This
program has not been funded since its authorization.
•
Local Option to Exempt from Personal Property Tax: Under state law, farm animals,
machinery, and equipment are subject to a local excise tax. This tax is equal to $5 per
$1,000 of assessed value. The Dairy Farm Preservation Act gives towns the option to
exempt farm animals (such as dairy cows) and equipment from local excise taxes. This
exemption must be adopted by the town by a two-thirds vote.
•
Extension of Farm Viability Funds to Agricultural Preservation Restriction (APR) Farms:
The state Agricultural Preservation Restriction (APR) Program pays farmland owners the
difference between the “fair market value” and the “agricultural value” of their farmland
in exchange for a permanent deed restriction precluding any use of the property that
negatively impacts its agricultural viability. A separate Farm Viability Enhancement
Program provides business assistance and implementation grants to participating
farmers, requiring a non-development covenant in exchange for grants.
Recognizing that many APR farms have transitioned to new owners, this provision
authorized eligible owners of APR farmland to receive business planning and
implementation grants. Farmers must show that the grant improves the economic
viability of the farm, retains or creates private sector jobs and tax revenue either directly
or indirectly, improves farm productivity and competitiveness, supports renewable
energy or environmental remediation projects on farms, or expands and supports
markets and infrastructure to strengthen the farming industry. The amount of funding
is dependent on the size of the farm in both acreage and gross farm income.
•
Extended the number of miles a farm vehicle may travel on the Commonwealth’s roads
from two miles to 10 miles.
New England States’ Dairy Policies
M assachusetts
•
Established a Commission to study the legal barriers to the adoption of new farm
technology, especially energy (including energy conservation, collaborative purchasing,
purchasing and selling of energy, energy saving technology and alternative options for
sustainability and growth). The Commission, to include three dairy farmers, the
Commissioner of the Department of Agricultural Resources, the Commissioner of the
Department of Environmental Protection, the Commissioner of the Department of
Revenue, the Commissioner of the Department of Public Health, and a member of the
Massachusetts Technology Collaborative, was to make recommendations to the
legislature.
State Procurement Preference
Recognizing consumer interest in seeing more Massachusetts-grown foods in schools and state
institutions, the state Legislature has enacted legislation to facilitate the purchase of locally
grown foods, including dairy products. State law enables municipalities, by majority vote, to
establish a preference for procuring agricultural products directly from a Massachusetts farm
operation. Once established, schools and other town entities may contract directly with a
farmer for purchases of Massachusetts-grown agricultural products up to $25,000 without
putting the contract out to bid. For contracts that are put out to bid, entities may pay up to 10
percent more for agricultural products produced in Massachusetts than products produced
elsewhere. State law also requires state agencies as well as public colleges and universities to
make reasonable efforts in contracting for foods to buy Massachusetts-grown products;
purchasing agents are required to purchase the products of agriculture grown in Massachusetts
if they are within 10 percent of the cost of comparable products produced out of state.
Agriculture Innovation Center
In 2008, the Massachusetts Legislature provided funding for an Agricultural Innovations Center.
This virtual center, which has never been funded, was intended to provide grants and technical
assistance to farmers, the University of Massachusetts, and other organizations to fund land
improvement efforts and innovative pilot projects focused on marketing, environmental
stewardship and new technology.
New England States’ Dairy Policies
New Ham pshire
New Ham pshire Facts
•
•
•
New Hampshire currently has 118 licensed wholesale milk producers and another 80–100
farms with one or more milk cows.
There are about 14,000 mature milking cows on New Hampshire farms, and the industry
generates about $62 million a year in revenue from the sale of milk. These farms maintain
close to 50,000 acres for forage crop production 1.
The New Hampshire dairy industry impacts state and local economies with more than
$141 million in total output, 3,717 jobs and more than $19 million in labor income 2.
State-Level Policies and Program s That Help Sustain Dairy Farm s
While New Hampshire has a Milk Producers Emergency Relief Fund on the books, no state
resources have ever been dedicated to the Fund and it has never been used. The Fund was
created when milk prices stayed well below cost of production over a protracted period in 200607 and was intended as a long-term stabilizer for the state’s dairy industry after the Emergency
Dairy Assistance Program, which made nearly $2 million in one-time state payments to dairy
farmers. According to Lorraine Merrill, NH Commissioner of Agriculture and a dairy farmer,
these two legislative efforts reflected a strong bipartisan coalition of support for keeping dairy
farming viable in the state. However, the global financial crisis and severe recession that began
in 2008 changed the political climate as the state entered a period of budget reductions and
retrenchment.
Dairy-Related State Tax Exemptions
While not limited to dairy farms, the state’s Current Use assessment for open space lands
including farmland is of particular importance to dairy farmers, who manage a significant
portion of the state’s farmland. In order to provide sufficient feed and pasture for their herds,
many dairy farmers rely on leased farmland owned by other landowners, and the Current Use
program encourages landowners to maintain open lands. Under NH Current Use Taxation law
RSA79-A the assessed valuation per acre of open space land is based upon the incomeproducing capability of the land in its current use solely for growing forest or agricultural crops,
and not its real estate market value. A Land Use Change Tax of 10 percent of the full market
value of the property when land enrolled in the Current Use Taxation program is converted to a
use that does not qualify for Current Use assessment. N.H. Rev. Stat. Ann. §§ 79-F:4.
In 2008 the legislature created an option for municipalities to adopt a limited provision for farm
buildings to be appraised at the cost of replacement minus depreciation, and the land under
them at no more than 10 percent of full market value. RSA 79-F also provides for change of use
tax on farm structures and the land under them when the use changes from the qualifying uses
specified under RSA 79-F. In 2002 the legislature established a discretionary easement program
for historic farm structures, which municipalities may also vote to adopt if they choose. RSA 79-
United States Department of Agriculture, National Agricultural Statistics Service, New England Agricultural
Statistics, 2011, 2012
2 According to the Granite State Dairy Promotion
1
New England States’ Dairy Policies
New Ham pshire
D allows participating communities to write specific easements for qualifying structures that can
reduce assessed evaluation of the structure by a range from 25 percent to 75 percent.
2007 Emergency Dairy Assistance Program
To help stabilize the state’s dairy sector during the dairy crisis of 2006—a time of extremely low
milk prices—the New Hampshire Legislature in 2007 enacted the Emergency Dairy Assistance
Program, a one-time payment to dairy farmers with an appropriation of $2.1 million for the
2008 fiscal year. Milk producers could apply for payments based on actual production for four
months, and assistance was calculated by multiplying milk production by the difference between
the Boston blend price for those four months and a base price of $16.94 per hundredweight.
Butterfat content was also taken into account for calculations. The enacting legislation created
an Advisory Board to make decisions and hear appeals. The program was repealed in 2008 and
replaced with the Milk Producers Emergency Relief Fund (MPERF).
2008 Milk Producers Emergency Relief Fund
Intended to be a permanent emergency assistance fund for milk producers, the Relief Fund
established in 2008 has never been activated, as no resources have been appropriated for it.
As authorized, the Fund is managed by a Board, which is charged with developing eligibility
criteria, procedures for calculating payments, and setting and adjusting the target price. If
funded, eligible milk producers would receive payments equal to their month’s milk production
multiplied by the difference between the set target price and the actual Federal Order 1 blend
price at Concord, NH for the month. In 2008, the target price was initially set at the old
Northeast Dairy Compact price of $16.94 per hundredweight. The MPERF board meets each
year and has set the target price based on USDA NASS cost of production numbers for the
neighboring states of Maine and Vermont, since NASS does not calculate a New Hampshire cost
of production. The law provides for payments to be made on a quarterly basis.
Dairy Herd Health
New Hampshire, like several other New England states, has programs that help farmers
maintain healthy dairy herds. The NH Veterinary Diagnostic Laboratory is operated jointly by
the state Department of Agriculture, Markets & Food and University of New Hampshire, and
offers mastitis testing/culturing and pregnancy blood-tests directly to farmers, as well as other
pathological and microbiological diagnostic services in cooperation with herd veterinarians. In
1964 New Hampshire became the first state to be accredited free of bovine tuberculosis. The
Department continues to provide testing and vaccination programs to protect the dairy industry
from infectious diseases, including testing for Johne’s disease—a service that the state
continued after the federal government cut funding for the program.
Additional Resources:
Title XIV: Milk And Milk Products
Chapter 184-B Emergency Dairy Assistance Program
Sections 184-B:1—184-B:5 Emergency Dairy Assistance Program
New England States’ Dairy Policies
New Ham pshire
Title XIV: Milk And Milk Products
Chapter 184 Inspection And Sale Of Dairy Products
Section 184:107 Milk Producers Emergency Relief Fund Established
Section 184:108 Target Price
Section 184:109 Milk Producers Emergency Relief Fund Board Established; Membership
Section 184:110 Board Powers and Duties
New England States’ Dairy Policies
Verm ont
Verm ont Facts 1
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•
•
•
•
•
•
Vermont is the largest dairy producing state in New England, and dairy products account for
upwards of 83 percent (≈ $584 million, adjusted for inflation to 2010 dollars) of the state’s
agricultural products’ sales, and as much as 90 percent depending on market prices. 2
Dairy farms generate more than $68 million per year in state and local government tax
revenue.
Dairy products sold directly from Vermont farms generate more than $560 million of income
and 7,500 jobs.
Vermont dairy farmers purchase 98 percent of their supplies locally.
The sale of milk from Vermont dairy farms contributes about $1 million a day to the state
economy.
Gross sales of cheese, ice cream, dips, cream cheese, yogurt, fluid milk and milk powder
total about $1.2 billion per year.
The average Vermont dairy farm has 138 cows.
State-Level Policies and Program s That Help Sustain Dairy Farm s
Dairy production in Vermont is unique in the region, at least in part because the state’s supply
of fluid milk far exceeds its demand from the state population—at least half the milk produced
goes to processing or leaves the state. 3 The growth of dairy processing in Vermont has
provided markets for dairy farmers’ bulk milk as well as the explosion of on-farm processing and
direct marketing of dairy products. The Dairy Section of the Agency of Agriculture, Foods and
Markets works closely with dairy farmers considering value added production—assisting with
design, through put and first day of processing as well as regulatory support.
While a one-time direct payment to dairy farmers in 2007 was vitally important, Diane Bothfeld,
Deputy Secretary at the Vermont Agency of Agriculture, Food and Markets, believes that, in
addition to the marketing and regulatory support the Agency provides, some of the most
beneficial state-level programs and policies for dairy farmers are those relating to conservation
and business development that are implemented by the Vermont Housing and Conservation
Board (VHCB).
Farmland Conservation and Farm Viability
Since 1987, 567 farms comprising 139,000 acres of agricultural land have been conserved
through VHCB’s Farmland Preservation Program. According to VHCB, the purchase of
development rights has contributed to renewed vitality in agriculture by enabling young farmers
to purchase farms at an affordable price and by helping established farmers to reduce longterm debt, to invest in infrastructure, and to make operations more profitable and efficient. By
1 Unless otherwise noted, dairy industry statistics are taken from the Vermont Agency of Agriculture, Food
and Markets’ Dairy Industry website. Accessed March 15, 2012.
2 Vermont Sustainable Jobs Fund Press Release, “Farm to Plate Release: Revitalizing Vermont’s Dairy
Industry.” March 1, 2012.
3 Personal communication with Diane Bothfeld, Deputy Secretary of Agriculture, Vermont Agency of
Agriculture, Food and Markets. March 15, 2012.
1
New England States’ Dairy Policies
Verm ont
focusing on conserving contiguous blocks of farmland in traditional farming communities, the
program helps to ensure that farms are not isolated by residential development and
communities can continue to support a healthy range of businesses that serve and rely on
neighboring farms.
The VHCB also administers the Farm Viability Program, which was authorized by the Legislature
in 2004. Since 2004, this program has provided on-farm business planning, financial and
technical assistance services to 336 farmers and awarded 99 grants totaling $405,000,
leveraging more than $1.1 million in farm investments through loans, other grants and private
funds. 4 In 2011, 13 percent of enrolled participants in VHCB’s business programs were dairy
farmers, with many embarking on value-added processing ventures.
According to Agency of Agriculture, Food and Markets Secretary Chuck Ross, the Farm Viability
Program is making a real difference for farmers across the spectrum—from dairy to beef to
vegetable farms and for value-added producers like cheese makers. It gives farmers the
benefit of an inside look at business planning decisions that can increase profits. As a result,
Ross says farms are expanding, diversifying and hiring help, which are good indicators for the
industry and for Vermont’s economy.
Working Landscape Enterprise FundIn 2012, The Vermont Legislature established a
Working Landscape Enterprise Fund (and a Board to oversee it) to stimulate a concerted
economic development effort on behalf of Vermont’s agriculture and forest products sectors.
With an initial appropriation of $1.175 million, the Fund will focus on three key areas:
enterprise grants and loans to land-based and value-added businesses that are new or want to
grow; wrap-around services to working lands enterprise including technical assistance, business
planning, financial packaging, and other services required by companies ready to transition to
the next stage of growth; and infrastructure for creative diversification projects, value-added
manufacturing, processing, storage, distribution and collaborative ventures. The Agency of
Agriculture, Food and Markets’ Diane Bothfeld believes this fund will enhance Vermont’s
working landscape by increasing the bond between agriculture and forestry and helping
landowners and entrepreneurs add value to farm and forest products and grow markets for
these products within and outside of Vermont.
Property Tax Treatment
Unlike some other New England states that require farmers to pay property taxes on farm
animals and machinery, Vermont exempts farm animals, manure storage facilities, and
agricultural tools and equipment from personal property taxation. Vt. Stat. tit. 32, § 3802(8).
Vermont Farm Viability Program Annual Report 2011. Retrieved from http://www.vhcb.org/viability.html
on March 16, 2012.
4
2