 So good morning everybody. This is a joint committee meeting with the House Agricultural Committee and the Senate Agricultural Committee. We're going to be hearing from Commissioner Michael P. Shack in regards to a dairy price regulation assessments this morning. Before we get started I'd like to have our committee introduce themselves and the Health Committee. It'll take a minute but I think it'd be good so you folks will know at least who's on the committee. I'm Bobby Starr and I chair the Senate committee. Chris. Chris Pearson, Senator from Chittman County. Anthony Felina, Senator Washington County. Ryan Collamore from Rufflin County. Corey Parrot from Franklin County and Representative Alberg as well. Carolyn. Representative Carolyn Partridge, I chair the House Agriculture and Forestry Committee. I represent the towns of Athens, Brookline, Grafton, part of Northwest Minster, all of Rockingham and my hometown of Wyndham and I'll let Rodney introduce himself. Rodney Graham, I represent Williamstown, Washington, Orange, Grant, Bereshire and Chelsea. Thanks Rodney and we'll go to Tom who is ranking member. Thank you. I'm Representative Tom Bach, I represent the towns of Chester and over Baltimore and North Springfield. We'll go to Terry Norris who's our clerk. Terry Norris, I represent the Addison Rutland District, Towns of Benson, Orwell, Shoreham and Whiting. Thanks Terry and now Vicki Strong. Good morning, I'm Representative Vicki Strong from Albany and I represent Orleans, Caledonia 1. Thanks Vicki and now we'll go to John O'Brien. Thank you, Carolyn. I'm Representative John O'Brien. I represent Royalton and my hometown of Tundridge. Thank you John. Now we're gonna have our two new members. We're so delighted to have them. The first one is a face I'm sure you'll recognize and that is Henry Pearl. Henry go ahead. Hi there, Henry Pearl. I represent Danville, Peachham and Cabot. Thank you, Henry and another new member who is also a farmer, Heather Supernaut when you want to go ahead. Hi all, Heather Supernaut. I represent Barnard, Pomfret, Quiche and West Hartford. Thank you. That is us. Yeah, well thank you, Carolyn and again welcome to everyone. I'd just like to start out by saying that what got us here today was last session we spent quite a lot of time dealing with milk pricing and we were at that point in time and throughout the year course we lost quite a few farms but we did get a report from Roger Albee and Dan Smith who had been working on putting together milk study report for probably two or three years and we found from that that there is some problems with the way our milk is priced and but we as a committee really needed to learn more in regards to you know what is the problem, how could we do our milk pricing differently so that we could maybe have a Vermont state milk order and we sort of came to the conclusion that we needed somebody with the expertise and pricing of other commodities with a fresh group of people with a different looking at this from a different perspective and looking at the financial regulations department thinking that they cover insurance companies and banks and a host of regulated industries here in Vermont and the pricing. We called upon Commissioner Peshack to see if he would be willing and interested in proceeding with our request and we were thrilled that that he agreed to do this for us and we kind of gave him a few directions but said hey you're on you're on your own see what you can figure out from a regulatory point of view and and you know come back with a with your findings and a report and I must say from my perspective they they did a very thorough and in-depth review and it turned out to be like a 44-page document so with that I'd like to introduce the Commissioner of our Department of Financial Regulations Michael Peshack. Welcome Michael. Oh thank you very much Chair Starr it's my pleasure to be here with you and thank you very much for that kind introduction as well. I want to introduce before we begin Jill Rickard who's our director of policy and Jill will help me this morning as she was the lead author on the study and I'll just concur Chair Starr with your assessment that you know Jill did Jill and her team and and all of those outside stakeholders and experts that we called on and and asked for their perspective and expertise all did an excellent job and did so in a somewhat condensed time frame and did so during a period of time when there were a lot of a lot of different you know fires to be put out if you will and our department was handling a number of those so I really want to thank Jill and her team and her work for the study I think you know Jill had to become expert in this area and there's a challenging area as you all know to get your hands around and to understand the the background and and the technicalities and whatnot and you know think that she did an excellent job with that so you know the report asked us you know I'll share my screen here in a minute and let Jill run through a slide deck that we have that sort of goes through in detail the report and talks about some of our findings and talks about some of the benefits some of the advantages some of the some of the downsides some of the negatives about some of the different approaches that I think are available to Vermont and you know at the end of the day what I'll say broadly is that there wasn't a clear there wasn't a clear easy definitive option that was easy for us to point to and say you know this is the right answer this is the approach that will solve the challenges the industry is facing and you know and I think I think everyone on the committees can certainly appreciate that because you've been dealing with these issues for some time and and they don't you know they're difficult and I'm sure you all would have you know found that easy answer if that easy answer existed but what we thought was would be the most helpful for us in relation to this report was to identify those different policy options talk about whether or not they're possible whether they're legally possible whether they're feasible what the pros and the cons are to those approaches as well and then hopefully that advances your policy discussion and your policy decisions that you have to make about different choices and different options so the the first charge under the study was an evaluation of the long-term sustainability of dairy farming in Vermont and I'll just say you know we were pleased to do this study in part because we know how important and cherished the dairy industry has been for generations in Vermont and will continue to be for generations in Vermont and it was part of what attracted me to have our team look into this because we know just how critical this issue is and when we look at the sustainability of the industry you know you certainly see that small Vermont farms you know the numbers are decreasing there are fewer and fewer small Vermont farms they're consolidating into larger farms for Vermont you know on Vermont scale large and that certainly speaks to the fact that the smaller farmers in Vermont are having some challenges when it comes to being able to remain independent being able to remain you know on their own and being able to do that for a price that makes it worth them doing that so certainly their challenges from that segment of the industry but then at the other end of the spectrum for the larger farmers you know what we found is that there are still pricing issues when it comes to what they're able to get for their product and of course it doesn't take you know an MBA to determine that if you're creating a product and you're not getting a price that covers that product that over time that's going to become a really challenging issue and it can be an issue even in the short term as well depending on circumstances so you know we also acknowledge that it's not something unique to Vermont you know it's something that's happening across the dairy industry in the country this consolidation and it's not something unique to the dairy industry either consolidation is happening in so many different industries and segments we see it in financial services where you're seeing fewer and fewer small banks and credit unions in Vermont and across the country smaller you know less and less community banks and more and more mega banks and and they're doing that for the same reasons that you see dairy farms becoming larger and larger it's for the economies of scale for their ability to leverage you know their size to get better technology better pricing operations so it's not unique to the industry but certainly we talk about those challenges that are that are facing the industry and then as I said in terms of the recommendation in terms of the you know recommendation for revising the dairy pricing and other market regulations in the state what we provided in the study were a number of different options that could be pursued with the with the ideas about what are the benefits of taking that option one of the detriments of taking that option and again leaving that sort of policy decision up to the committee but I think this is probably the appropriate time to share the PowerPoint and let Joe Rickard walk through more of the detail of the study and of course we're happy to take any questions that that the committee has at any point or at the end as well well we'll try to keep those at the end if we can commissioner to not interrupt you and and Jill's presentation that sounds great and if I can get my technology correct here is that showing up for everyone yes so as I mentioned this was the legislative charge that I just ran through and I'll advance ahead here and turn it over to director Jill Rickard thank you Mike hello committees it's nice to be with you today my name is Jill Rickard I'm the director of policy for DFR I am pleased to provide an overview of our study that did become 44 pages as I actually found myself really enjoying the challenge of learning about and speaking about this industry it took quite a while to become fluent enough to be able to do so for this report but once that happened it just become it became a really interesting field of study so thank you for the opportunity our study starts with just a sort of overview of the current regulatory and market conditions facing Vermont dairy not only the producers the farmers but also the processors we talked about dairy cooperatives a little bit about retail and wholesale pricing as commissioner P check said you know dairy is the is a very important industry in Vermont as you all know it's the largest agricultural industry in Vermont contributing approximately 2.2 billion dollars in economic sorry one second activity per year to the state and it is facing significant challenges mostly because the costs of production tend to exceed the available the available price to producers under the federal milk market order in addition to that there is a significant amount of volatility in the price available which makes it difficult to plan in the long term this has caused a decrease in the number of farms the Vermont dairy farms there are 610 today they've decreased 69 percent since 1997 and 37 percent in the last 10 years there is also as Mike mentioned been a significant amount of consolidation of farms and line with under industries there's also been a significant amount of consolidation processors this is also true in terms of the dairy co-ops they have consolidated to become more regional in nature more national in nature there are two main ones obviously as you know in Vermont agro mark and DFR and those are very large regional and national co-ops whereas perhaps 50 years ago co-ops would have been more local in nature one thing other thing I should mention is that there is a decreased demand for fluid milk across the board and in Vermont but an increased demand for dairy overall finally COVID-19 is really thrown a wrench into things it's it's a little bit difficult to take 2020 as a sort of the natural progression of things post 2019 because it's been such a strange year but it's definitely made things very difficult um this year and also to predict what's to come post pandemic so the next slide you know can I just mention one thing on COVID-19 you know what we've seen across the board in our industry financial industries and higher education and hospital systems you know industries that were doing really well prior to the pandemic that were in really strong financial position and had good operations you know they have been able to weather the pandemic pretty well and in some cases they've come out better actually and all of those industries that I just mentioned that were struggling prior to the pandemic you know the pandemic really exacerbated their challenges and to some degree you know I think you could put dairy the dairy industry into that bucket as well so the first thing I'll sort of talk about is the federal milk market order I'm sure everyone on this call is familiar with it but the but to sort of level set we looked at the pros and cons of the federal milk market order in terms of being a neutral regulator and calculator it does serve that function well it provides for orderly market conditions and it is helping to ensure an adequate fluid milk supply which is one of its missions it provides a transparent publicized minimum price and it serves a very important audit function to ensure that transactions are fair and being conducted in the way that they should some of the cons are it's you know one of its other missions is to improve the income situation of dairy farmers and it that is a mission that it it maybe is struggling to serve and that's evidenced by the fact that Vermont small farms have increasingly consolidated or not been able to stay profitable in the recent past there are also issues and this is something that's a bit above our you know level of expertise here but with the price calculation methodology for the federal milk market order and this is something we talked to some of the co-ops about and some of the other industry experts with how the price is calculated and how it's dependent on the class one price and the report sets forth for the couple of options that people have suggested to sort of get behind for some changes at the federal level so our report sets forth not only alternatives to the current system of regulation but also just some ways we think that the legislature could think about supplementing it and and improving it just at the local level we talk about of course changes to the FMMO pricing formulas that I just mentioned we talk about risk management which is an important part of ensuring that farmers can make a good return but it's not a way of changing the system there are options available in terms of private hedging using the derivatives market forward contracting through dairy co-ops and also options at the federal government level to manage risk we talk about state milk marketing orders and provide a legal analysis of whether doing that would be possible in Vermont and we also look at the systems in place in both Maine and Pennsylvania in depth and I'll talk about the main system in a future slide we talk about the regional compact that did exist a couple of years ago and whether that would be possible or advisable on a going forward basis obviously that depends on the cooperation of other member states and action at the federal level that's a little bit out of our hands we talk about various systems of supply management at the state level at the national level again it does involve congressional action if we were to do something like that but we do run through the different systems that have been proposed or are in place in different areas we talk about whether it makes sense to increase focus on organic and then finally we spend a lot of time talking about the possibilities for providing support for education farm management technical assistance innovative solutions increasing brand awareness of Vermont products and those are like I said supplements to the current system that would hopefully help out individual farms and to help out things at the local level but they are not fixes to the system of dairy pricing regulation so I'll start with just providing an overview of the main state order system interior program and we had a couple of conversations with Julie Marie bickford who is the head of the main I believe dairy producers organization and she was very helpful in explaining the system and the pros and the cons and how it works and what makes it successful or not in main so the main milk commission sets minimum prices for producers wholesalers and retailers the producer price is the federal milk market order price plus a reflective regional premium that is adjusted periodically by the commission however the minimum prices apply to only a small subset subset of producers because most processors sell more than 25% of their finished products outside of main into federal milk market order states and so the majority of producers actually are receiving pricing under the federal milk marketing order there are some additional programs that mean offers that supplement the minimum price scheme that appear to be providing some successful or you know semi successful safety nets for Vermont or sorry for main producers one is that they offer a quality seal for processors who utilize 100% main milk and this is a way for the state to encourage processors not to source milk from out of state one of the very large processors does utilize the quality seal and they don't actually source any milk from neighboring states there are some geographical challenges that make main a very unique states that's not easily comparable to Vermont and it's you know being bordered by Canada and the ocean and not several other states like Vermont is make it a little bit different from our state in the way that we can source and also market our milk and dairy products main also has a 30 day rule that requires a processor to give 30 days notice to a producer before it turns off the sourcing of that milk or terminates the agreement to source and this ensures that a producer can find a home for its milk if the processor is planning to terminate the agreement the processor has to give that notice to the secretary of agriculture of Maine and in connection with the state order pricing they also have what's known as a tier program it's the sustainability dairy sustainability program which makes payments to farmers from the state's general fund when the federal price is lower than the costs of production the payment depends on a farmer's current level of production per year which starts at zero at the beginning of the calendar year and then each farm goes through the tiers throughout the the the year and gets higher prices for the first amount of milk and then the level the level means a lower program payment as they as their production grows the even though these payments are made out of the general fund there is a milk handling fee that's assessed on the first main entity to touch milk so whether that's the processor or a wholesaler if they're sourcing products from outside of Maine or even a retailer and those handling fees are deposited into the general fund and they're sort of providing partial payments for that tier program but they don't fund the entire thing there is a really significant amount of general fund payment that the main government makes every year to the tier program to support the farmers and even in the face of all of these actions farms in Maine are still consolidating similarly to the way that they are in Vermont it does seem to be obviously supporting a better price for producers in that state but it is not preventing small farms from closing and something else obviously to think about is that the price of milk in Maine for consumers is obviously higher next slide so another thing we looked at are the various supply management programs in place and that have been proposed i'm sure you're familiar with the Vermont supply management working groups proposal which supported a two tier growth management system and then the dairy together group which is part of the wisconsin farmers union has proposed a market access fee program which would set annual production growth limits but allow a farm to pay a fee to expand production beyond those limits the fees would then be distributed among farms that choose to limit their production there was an empirical study that was done that showed some positive impacts to this program if it had been implemented in the 2014 farm bill and those are detailed in the report clearly a supply management program is not something that would be successful at the state level Montana system is detailed also in the report they're the only state that has a state level supply management system there are some issues with that if supply management were to be implemented it would have to be a national action which obviously requires congressional approval and is somewhat out of Vermont's hands we would suggest if the legislature is interested in looking at this further to um do some cost benefit analyses uh comparing you know the the benefits to producers processors retailers consumers and also the potential drawbacks to such a program next slide bank and the last section of our report um examines some areas where we would suggest that the legislature could consider supporting innovation and farm management educational financial support for on-farm technologies as well as lower cost lower input production methods a few things we look at are increased support for grazing by farmers and not just organic farmers but farmers across the board could benefit from grazing it could increase price and also lower the cost of input such as feed um farm hygiene and milk quality management are ways to boost price by increasing component quality um and other quality aspects of milk um there are programs for technical and financial planning as well as on-farm quality management programming at UVM extension as well as the Vermont Housing and Conservation Board another way to help farmers with costs would be to reduce transportation costs which are very high a way to do that would be to help farmers obtain additional bulk storage and more efficient plate cooling systems some programs are available through Efficiency Vermont but those are pretty expensive innovations um that a lot of farms wouldn't be able to make on their own um the innovation council of which um excuse me a second I forgot the name of that Laura Ginsburg heads it up um has looked into um increasing the market appeal for Vermont products by um perhaps helping them use packaging that's recyclable so now most uh paper store paper milk packaging is not recyclable because it's lined with plastic and cheese packaging of course is is plastic as well so they're looking into whether it's possible to switch or source recyclable packaging there which would obviously give Vermont brands a boost um for consumers that are interested in buying things in recyclable packaging and they're also have suggested a brand ambassador to promote um Vermont brands not not the Vermont brand in general but specific Vermont brands and we think that is a good idea as well so those are a bunch of the things that we have looked at I I didn't go into a whole lot of detail about it because the the report is as you said 44 pages and it it does contain a lot of information and analysis um our conclusion is that there are no easy fixes to the problem unfortunately um we are happy to work further with the committee but of course the dairy stakeholders are the ones who really know this industry the the farmers themselves the industry groups the co-ops the agency of agriculture um should all weigh in on whatever steps that the legislature looks at um we suggest a number of cost benefit analysis as I mentioned and um we would suggest that action at the federal level um could be supported through these various trade organizations and co-ops which I think now the co-ops are leading an effort to um suggest changes to the the pricing methodology in the federal milk market order and of course um we suggest um consideration of support for on farm management and innovations yeah uh thank you Jill um so we're back to the full screen Michael did you have anything to add to Jill's uh report no I think just again wanted to thank Jill and thank her for that summary I think she hit on all the high points there's a lot more detail in the report both on the points that Jill hit on and then additionally some other um you know areas of discussion as well but wanted to really highlight the things that we thought were the most relevant to the committee and the things that committee would have the most interest in and potentially have the most questions about yeah um so I guess we'll we'll take any questions from committee members um I'm wondering um Michael or Jill um if you if somewhere's in your report I think I figured out I read 62% of our our milk basically is utilized here in Vermont which is like night and day from what it used to be 20 and 30 years ago and I'm wondering if if you if you looked at that because what we did in the legislature and throughout the industry is um we promoted value added and you know that's the way to go and you're going we're going to make a lot of money from the products and then we'll divide the money up and well we did go ahead and create a lot of products cabbage cheese Ben and Jerry's the the factory down in in Brattleboro I'll value added and utilizing a lot of our milk but it never seems to trickle down and so I'm wondering did you look at that at all about the the volume and where it goes and whether or not uh somehow we should be able to tap into uh the value added products or the milk that goes into value added products we did look at where the milk goes um and you're right the there's not a lot of fluid processing in the state it's um going to cheese and to the yogurt plant and um some other things as well um but mostly those two tapping into the value add in terms of I guess I'm just not following how to well what I was thinking is or one the question is is there a way that we could put up some kind of a surcharge or some kind of a pricing mechanism on these value added products which would generate money and that money could revert back to the the farmer because the way as you know the way the federal milk marketing order works class one is the highest and highest price milk and then you work your way down to where this other milk is not worth very much or not as much and at the same point in time there's a big demand for the cheeses and the yogurts and the Ben and Jerry's ice creams and and all that but yet that's where our milk's going but yet we aren't reaping any of the the Benny's you know it's it's amazing to me that a pint of Ben and Jerry's ice cream cost as much as a gallon of milk and or you get a little pint of ice cream and you pay four dollars and something for it and you go to the stores on certain days and you buy a gallon of milk for you know three ninety nine and it there seems to be a lot of slippage there on on the value yeah I agreed and one of the things we talk about is you know that is something that a number of stakeholders are pushing for to change in the federal milk market order pricing methodology yeah that is that is something that a number of people mentioned that they're working toward if in terms of doing that at the state level I mean main control is not only producer prices but also you know the minimum wholesale and retail prices and so obviously if you're talking about increasing retail prices for certain of those products then that could flow back to the producer but they in terms of the system we have now I think those changes would be have to be done at the federal level yeah um hey Jill Senator if I just and Jill could correct me if I'm wrong but I think this gets into the you know into into the fact that geography helps main and that you know maybe there's not a lot of alternatives to milk coming from main for those that are doing the processing in their state where we wouldn't necessarily have that geographic benefit and and if we if there were too many restrict you know if the price was was you know you just have to be mindful with the prices and what the restrictions are and and would individuals would companies then source their milk from other places other than Vermont and how he would control for that not that it couldn't be done but I think that's the consideration a consideration Jill and something unique unfortunately to Vermont that main doesn't have to contend with as much yeah the uh so you know we've been doing the the problem that we I think we're facing is that we've been doing the same old same old and you know the same old work pretty good until the federal order was revamped uh back uh uh 10 15 years ago and and uh you know it's kind of gone south on us uh keeping up with the cost of everything um and uh you know we we've got a long ways to go and and we keep bumping into you know roadblocks as we move forward um and we always well you can't do this because that's in the federal order or you can't do this because it's in you know you've got to go to Washington and um you know I think uh Jill mentioned uh dairy compact well you know it took us nine years I think it was to get get that thing put together and and past and some of us in the room haven't got nine more years to work on a project to get past including myself um so you know it uh it it behooves me that that we've got this issue and and we can't seem to find a solution uh I know you've got some good recommends uh supply management supply control uh well we're under that system now but I don't see where it's benefiting our our dairy producers uh you know if they were cut uh 15 percent so on the 85 percent they were getting an extra buck a hundred or something you'd say well by golly we finally got it figured out but um that isn't the way the system not that we put it together it was put together by of course a milk handler and um so it benefits uh you know the processing and the handlers not the dairy farmers that we're concerned about um are there questions from any of the committee members uh you know if you raise your hand I think uh either I or Linda will see you um senator star sorry can I mention one more thing yes so the one thing I wanted to mention about the premium on the on the dairy products or sorry the processed products is we are a little more similar to pennsylvania in terms of their state market order in terms of our geography the two things I would mention there are one is that their milk is some of the highest in priced in the country so there's this balance between what consumers are can or are willing to pay and how that impacts for monitors um if you were to do the federal market order and then the other thing that I found interesting is that Doug Eberly who's the head of the pennsylvania milk commission mentioned that they don't set premiums for cheese and other process products because there is a more national market for those um and so mandating a premium for pennsylvania for for non fluid milk um would make their products less competitive in the national market so that's not something else to think about yeah we bump up against that you know all the time um the um so um you know what what did you find uh where we could you know advance some type of uh updated uh state pricing system uh did you uh come across to anything that that we possibly could do to do that well I think we our conclusion is that I don't if if structured correctly we don't believe there are any legal impediments to doing so it's a matter of what the practical issues are and whether the cost benefit analysis ultimately tells us that it's a good idea for Vermont and and in that way I think we're not very similar to Maine we're more similar to pennsylvania in terms of our geography not necessarily in our farm size and volume but um in a number of other ways so it's interesting to look at pennsylvania in that way um so a lot of the other states that have state market orders are very different from Vermont as well so it's hard to compare yeah yeah geographically we you know across the bridge into New York there's plenty of milk that that already seems to find its way into Vermont and dilutes our you know our poundage uh you know because if you look at if you look at what is bottled and what goes into ice cream and cheese and yogurt and powder it adds up to way more than our production so yeah we are we are for some reason importing milk into into Vermont from some winners um and I don't know if we've ever looked into that um so um so any other questions uh from folks if Carolyn did you have any House members that had a question Bobby I'm not seeing any little blue hands um if anybody has a question this is your opportunity Don O'Brien has a question okay John go ahead thank you um Joe I just wondered if there was any analysis of of just the number of of farms versus the the pricing of milk so if we have 600 dairy farms approximately in Vermont um and we'd rather keep 600 dairy farms in Vermont than have the same number of cows with 10 dairy farms in Vermont so if there's a community value to farms um did you look at at somehow state pricing or perhaps even federal pricing of a dairy dairy farms at at scale so for example if Vermont said uh the first hundred cows you milk you're gonna get five dollars a hundred more um and have maybe a graduated pricing like that and and also how did you look at at places like France and Switzerland where there there's certain regions where that sort of scale farming works and and how much it costs to to keep those farms going I didn't know if we could come up with a price it may be prohibitive but sort of work backwards from that like how much if Vermont subsidized a certain amount of milk how much would that cost um thank you representative that that is not a level of analysis a detail of analysis we actually were able to do and I did not expand our analysis to European countries they have a you know a vastly different system of regulation as you know so I I sort of tried to stay out of that realm for this particular report but that's something that if you're interested in us doing we could probably engage with a firm that could help us do some sort of study on potential pricing. Kerry Norris has a question. I've just uh probably a lot of it's just rumor maybe but maybe you can answer some of those questions that are that are rumors but when I was on the milk commission we talked about supply management and and agro mark and and DFA both implemented some restrictions and if I'm not I could be incorrect but I think agro mark has lifted those and DFA is still have the same restrictions and I'm just wondering if you think that DFA being a more national co-op is that it going is that a problem considering they could bring their milk from the Midwest here cheaper than they could pay the farmers in Vermont to produce it just curious. I I wasn't I sorry I wasn't aware that agro mark had lifted there is at the time that we submitted the report I think that was still in place and I'm not sure how to answer that question unfortunately. Yeah I think agro mark is still on to some degree and I know the the 15% that DFA did impose the reduction I believe I do I know that's still in play but you know it's strange it makes me wonder we got a 15% reduction from DFA but it's only part way across the country and if we're importing milk from out of state to keep our our utilization going in in the cheese business and ice cream business and yogurt business why you know why don't why doesn't DFA find a home for that milk out there and and keep our milk for our own industries and not not penalize us with a 15% reduction in production on our farms but anyways those are all issues that I guess are going to need more more review and and study if if there are no other questions for committee members if any of the guests that are on would like to have something to say if you'd raise your hand Linda will make sure that you get unmuted and we'll let you on. Senator Starr this is Jackie Folsom from the Vermont Farm Bureau I have no internet today so I'm on the phone with you all can you hear me yes okay thank you very much for asking the Department of Financial Regulation to work on this report and as those of us have been around the dairy industry for a while no it is not an easy thing to do Vermont Farm Bureau is policy driven and so I just like to tell you that in regards to their recommendations we support a national all-in supply management program and we have been working with Bobby Wilson at the Wisconsin Farmers Union as a result of the dairy summit that was held a couple years ago we were on track to be engaging with all sorts of legislators across the country prior to COVID in trying to work up a supply management program into the next farm bill as I recall Secretary Perdue at the time from USDA said he would not support that but that didn't stop us what did stop us was COVID and we don't know I haven't heard what incoming Secretary Vilsack has to say about supply management and we'll probably be working backwards on that we do support modernization of the federal milk marketing system and the need to support regional production for food security and we also have a long-standing line of support for a state national and industry supported long-term counter cyclical program aka the compact we would hope as a farm organization that represents all types and kinds and sizes of farming we would not focus on organic or grazing as a way to solve the situation because we believe that every farmer has the needs the ability to figure out what works best on their farm but we would support more and continue technical support to farmers I think what you've heard in both the House and Senate Ag Committee testimony from the folks BHCB and a UVM extension who have discovered while helping farmers complete their forms for the CARES money that a lot of our folks need help in not only broadband access but in the ability to do record keeping and that sort of thing and it is a need and finally I'll just notice that someone mentioned efficiency Vermont farmers are paying an inordinate amount of money to efficiency Vermont as the charge on their electric bill and many of them have already taken advantage of all the programs that they have offered and we would just really like to see efficiency Vermont step up and look at more programs that can benefit farmers directly in regards to energy efficiency and we'd be glad to work with any number of farmers to help them figure that out I'm sure we could have a robust conversation on what their needs are and what the next steps could be with efficiency Vermont and I'd love to have that conversation so thank you very much and that's where the Farm Bureau is today yeah and Jackie moving forward if you know if you have some recommends where we can bring in efficiency Vermont and recommend certain updates and policies and practices we'd be glad to work on that with with you and the rest of the you know anybody that wants to help out is great thank you very much there are any other questions from any other folks yes Rob Linda could you unmute Rob Wheeler can you hear me yes thank you Mr. Chairman and so I would just like to ask the question of the department if they looked into it at all and maybe it wasn't part of your charge or if you studied it all providing help financial assistance for those companies with Vermont dairy brands to expand markets that is a I can tell you from serving on the agro market board of directors that is a huge sum of money to break into a new market and and it's not just a one and done sort of thing you have to back it up you have to go back year after year and keep supporting that brand in order to provide that kind of growth that meaningful growth that we need to continue converting commodity pounds to value added pounds we've done a really nice job of that and I know Chairman Star mentioned earlier you know why is that difficult for that money to trickle back down to the farmers and while I don't have the exact figure in front of me I can share with you that our cooperative routinely in the last several years pays pays well above what I would say was well above per hundred weight the Boston blend price to its members not just the Vermont members but all the members of the co-op received that and and that is directly attributed to our conversion of commodity pounds to value added branded cabinet products but it costs a lot of money to support that brand and and and to advance that into other areas of the country we're pretty well known here in our backyard we do a really nice job but the further away you get the more the more competition there is and then just the more more money it takes to support that brand and have any meaningful growth and I'm wondering if you folks at all looked into helping those branded companies with market access and supporting market thanks uh Rob thanks a lot for letting us know that you you folks at agramar to paying above the federal milk market order price I I hadn't heard that from any of my farmers in the near in the yaw that used to be they'd get a 25th checker or something and so that that's good news and as far as helping to helping to produce and and promote and update on Vermont products um and didn't didn't Cabot cheese take Vermont off the label or something uh off the cheese label or something is am I wrong on that Rob or not there there are areas and there are products because they're not made in Vermont like we have a plant in uh in Chattanooga New York obviously that uh we cannot put those products no may not be able to have a Vermont branded uh they may not say Vermont on them and and we found as we do try to enter new markets believe it or not as well as much as we love that Vermont brand it doesn't always resonate in other parts of the country like it does here in our backyard I'll be daring that yeah so you learn something every day so is there other questions concerns uh issues a Marie well why don't we get Jill back on if she's got a comment and then we'll go to Marie thank you senator um and thank you for the question we we the extent that we looked at helping brands like Cabot enter new markets um and other you know smaller Vermont brands and large Vermont brands we looked at the 2020 Vermont dairy marketing assessment actually proposed a state government position for a brand ambassador and not a sort of overall Vermont brand ambassador but somebody that would have the specific role of helping Vermont brands market themselves effectively in other states um and that's something we thought was was really interesting obviously it requires the funding to do that um but but that proposal was made in the Vermont dairy marketing assessment this past year yeah thanks Jill Marie hi everybody can you hear me this is a new system in the barn here yeah okay so something really hit me Jill when you were talking um you know about the reasons that we've lost farms so many farms and then you also compared it to main who pays better um there's this assumption that we have that the number of farms is dwindling because of price only and I'm wondering if we really looked at that if that's why farms are going out because I know I live on 22a and 30 years ago it was a farm after farm after farm between Fairhaven and Virginia and you know our family stayed farming and we've we've acquired several of those like maybe nine I don't know more and every single one of them they were just retiring they aged out yeah so no one said oh I'm sick of the price of milk I'm you know and they're young and they're clitting they had had a full life and their farm was their retirement so that just hit me that's just the thought but really um as dairy farmers today I think that our value here in the northeast we're realizing is going way beyond just the milk that goes leaves the driveway I mean we're looking at a world where places we're depending on for food are going dry or they're not going to be able to provide what we have and here in Vermont we have opportunities to feed ourselves and really we're only feeding this region we only make a 50% of our own dairy for this region you know if we look at this region of the whole Vermont's pretty small so I think you know a lot of um what we're doing is in the innovation it's in the other things that we provide to society and it's like you know cleaning the water making sure you know we adopt all the conservation practices that will actually improve our environment and you know you folks senator star are on this you know with the payment for ecosystem benefits or whatever it is all of these days understanding that value that we have and you know like on our farm we're starting to look at different kinds of products like phosphorus instead of importing phosphorus we're taking it out of the manure and recycling it and we'd like to package it and further sell it I mean there's so many opportunities beyond just the milk so that those are too and we're working on carbon credits that are produced on farms to help that way I mean we've got a lot going towards um but have you ever figured out Marie why people pay four dollars and I've been in Jerry's pint of ice cream but they won't pay six dollars for a gallon of milk I mean I mean that makes you wonder doesn't it well all our growth has been not in fluid milk so you know I'm a cheese farmer I'm a cabinet farmer and I know that people love the cheese because and during lockdown we increased our retail sales by 20 percent so that's you know we're in those other and then we just added some new products that are really really popular so I think it's about you know building trust in your community so that people can see you can see us you know anyone buy a cabinet product and get online and see those all farmers in Vermont I really understand this today that you know this connection this this is what's going to make us stand above others in the country I mean Vermont farmers are way above understanding our societal role yes that's for sure yeah um representative girl has a question yes representative go ahead hi there yeah I just wanted to build on what Marie said I was having some similar thoughts and it's kind of a newbie question because I don't know how you guys have done a lot of work over the years on this but um I just wondered if if we took a step back and thought about the the real question here of what we're trying to accomplish and if that's to increase pay price or if it's to increase the number of farms or save the farms that we have here because those are all very very different questions and and to add on to that I mean the thought of how much you would have to increase the pay price to make it so it's actually a viable business for people to restart and re-enter the market is probably prohibitive and I mean I just I just wonder what the what the true if we've really addressed the main question which is what do we want what does Vermont want and um and I I just was had some concerns on that and if anybody could elaborate that off well uh Henry is it Henry yes yeah um 20 I bet it was 20 years ago I forgot the date but we we the compact was mentioned in Jill's report and brought up and 20 years ago or more that we put that together Bob Gray is on on with us today that worked a lot on that in Washington but way back way back then we had a pay price to dairy farmers of 16 dollars in 74 cents the the price was regulated it was set by a board of people that dealt with this and you know my phone stopped ringing I was like that Maytag repair man ad that you used to see on tv sitting there scratching his head because he didn't have anything to do the processors were happy the farmers were happy consumers were happy and everything worked good um and the both agramar and St. Albans co-ops were big supporters of getting that going and helping getting it going and um you know it worked well but for some reason in Washington we we uh couldn't get it ratified the second time uh to be uh renewed but so that was it was 16 dollars in something 20 odd years ago for the price of milk well we all know that how prices have gone for tractors and seed and fertilizers and buildings and everything and you know the price should be up around 20 21 dollars a hundred weight uh and everybody should be able to afford that and uh but anyways um that's a little history lesson on on what we can afford but it would be nice if our if our farmers could feel like they're making money and uh being able to buy and and utilize the equipment that they need and and do the practices now that we're requiring done on farms uh for clean water and phosphorus removal and and all those things but anyways um let's get on is there someone else with um with a question or Don Roberts has a question yeah welcome John hi senator star and everybody else um just very quickly on the executive director these days of a farmer advocacy group based in Middlebury we have nearly 100 farmer members from some of the very biggest farms in the state down to a beekeeper um just some quick comments I can uh Jill's comment about looking into the european pricing system I have a little knowledge about that um mainly english knowledge uh co-ops as we have them are illegal over there they they do have some co-ops but they're quite different um the milk pricing is very very strongly linked to supermarkets and and they sort of dictate what the base milk price is but their milk price also has a stronger link to the cost of production than ours does and um so that so that's something that might be worth looking at another comment is I really want to commend this report um I am full of admiration as to how um uh commissioner Peechak and his his staff um wrote a very even-handed um very balanced report um and basically emphasized how complicated the whole business is um the other comment is you know for a time many of you know I worked for the agency of ag and while I did that I had an opportunity to visit many many farms in this state from the northern border all the way down um to the south um and it was always interesting to see the vastly different management styles and capabilities that were on farms and I would really think that we need to spend much more money time effort in helping our farmers understand the business of being a farmer um I think I sadly there are probably many many farmers who if you walked onto their farm and said what does it cost you to make a hundred pounds of milk they actually couldn't tell you um accurately and I think that is something that should be encouraged um I've you know I was a dairy farmer for 40 years um and I've worried about this system for all of that time and one of my main worries was how do we if we if we do something different to everybody else how do we protect the borders of Vermont so we don't get swamped with cheaper milk which we saw when you know the compact uh didn't or failed eventually was because of pressure legal political and commercial from outside the state um how we do that and I don't think succession is a reality um so um those are just you know my comments I look forward to working with you both the house and senate ag um oh one last comment is for at least the next two years we have two of the most powerful senators uh come from Vermont and you know they control the money the money um committees in the senate I hope that we can utilize that power if we want to change the milk marketing order um which clearly um is maybe needs a total rethink we saw with the producer price differential going haywire this last summer and reacting negatively for farmers uh that that is something that we really need to look at thank you very much yeah uh thank you john um man to say pieris next Amanda thank you senator and thank you everybody um on both committees and the study is very interesting um I had a couple points piggybacking on some of the other comments so this might not be in the order I've been taking notes but um I do want to um talk a little bit about the aging population and lack of farm transition opportunities and I do think that's something that the state could absolutely help um in and I think some of it begins in reinvesting in our vocational programs and re-energizing some of that work um COVID has been a very challenging time across education and certainly in our state colleges and I know that's that's really something that needs to be addressed and I think um retraining people to work in uh with their hands and outside and on the land and um that progression needs to happen to keep our 600 dairy farms um there and I think some of the transitions we are seeing is due to that um I also think um that there could be resources the state and through federal monies to help uh Vermont farmers to implement the practices which mean so much to Vermonters and I think I agree with Marie that they have to be science-based and they have to have a proven effect on the environment I think it can't just be a social policy-driven it really has to be science-driven um and there is a lot of science out there and there are a lot of practices that farmers would be excited to implement in technology but they just don't have the resources so I think that would be something the state could help and by doing that we can lead in some of these new markets that we'll be developing um you know we're we're involved on our farm we're um enrolled in a California market for our digester which is you know when they first proposed it it's not something that dairy farmers really think about but you know we're we're learning all of this and the technology and advancements um I think we just need some assistance in getting more farms involved with those practices I think also the state um can look at and I'm interested in Jill's perspective on cost to production and how it varied from the states you looked at and was there a deep dive in there could there be a deep dive how does the cost to production vary from state to state understanding geography would have a part but what else plays into that the cost of implementing policies um the cost of labor the cost of insurances state to state there's a lot in that and so most farms today we're dealing with the margins you know we're dealing with the margins and we are ensuring our milk and that's adding to our cost to production but that's not to make money but that's to minimize our loss and especially during COVID a lot of farms got introduced to that and will be heavily investing in the next couple years as we try to pull out and see what's going to happen to our exports so I guess A did you did you do a deep dive and B is that possible to do a deep dive and I think the last part I would like to say is I was really excited about the brand ambassador idea um I think that's great and I think if you tied that with some supports for a Vermont dairy innovation center where you know small farmers can go in with some ideas on how to market something specific to their dairy and we have a couple people on the call who do their own sales from their farm you know they could add to their product line and it seems to be working for them and I would like to see if that's something more perhaps the state could invest in and and the next steps and would be excited to continue that conversation on another date I'd like to thank you for your time this morning yeah thank you Amanda Jill did you have any comments and and with uh they should like to give sure thank you um a couple of things first of all that they're the northeast dairy innovation center is um you know it's not Vermont specific but it's regional specific and that is being headed up by someone at our agency of agriculture Laura Ginsburg or she's part of the leadership on that um they're doing some really great research um in terms of you know how to increase value for Vermont farms such as you know is it possible to help for farms get into more of the recyclable packaging and would that put us at an advantage in terms of our marketing as compared to other states um they're also looking to a number of on-farm technologies and how to help support um farms financially in that aspect and they've gotten some federal grant money which is great so I just wanted to plug that um second um we absolutely took into account and mentioned our report the generational challenges of just not having the next generation of dairy farmers to step up and take over and that is driving a lot of the consolidation I also on the other hand in the report mentioned that young people who want to get into farming who don't necessarily have the family um history in farming are challenged by the cost of land and the capital cost to get started in the industry and that is something else that's I think probably prohibiting a lot of young people who would want to get started in you know the the the new sort of trendy cheese artisanal cheese and artisanal butter that's sort of taking over there are a lot of people that um just can't get there because the capital costs are too high and then finally um the cost of production state-to-state is not something we did a deep dive into it's a little bit hard to get that level of data to be able to compare um but in the future that is something that we could give in a longer time frame potentially look into yeah thank you Jill uh Bob Greg uh did you have your hand up yes thank you very much Mr. Chairman and thank you uh members of the committee both committees I very much appreciate the opportunity to I wanted to wait a little bit uh uh Bobby before I made any comments because I wanted to hear what the rest of you were saying I'd like to extend my thanks to the commissioner and to Jill for your report it was very very well done and very comprehensive good presentation Jill and would you kindly send me a copy of it I'll get my email to you I'd like to see it absolutely I want to be a little bit uh sort of go back a little bit history I don't want to take too much time but I work out of DC uh and I've worked out of here for a number of years I used to represent seven dairy co-ops back in uh early 90s now it's down to three dairy farmers of America uh agro mark and upstate Niagara over in western New York they're down in Pennsylvania now but I used to have seven you can see what's happened within the in the uh dairy cooperatives in terms of consolidation over the years I live in northern Virginia I'm 20 minutes from the Capitol but I do legislative work and regulatory work for the dairy co-ops uh but what I what I want to talk about is is three or four things and I'll try to go through this pretty quickly and if you have any questions you can try to answer them first of all uh in terms of the federal milk marketing orders uh there's always been an effort to uh to really criticize them and it's sort of an easy thing to do but the federal milk marketing orders are just part of our whole pricing process there is an effort underway right now to look at the class one price mover after we've seen the uh producer price differential problems that occurred with that that were changed in the 2018 farm bill when the class one price mover was changed from the higher of class three or class four the differential was changed and they went to an average uh and at it tacked on 74 cents on the class one differential they're re-looking at that and they're re-looking at the class one price mover what I would say about the federal milk marketing order price there has been sort of reviews of that over the years it is complicated I don't consider myself an expert on federal milk marketing orders because I don't work on that per se I work on immigration reform I'm working on climate change I work on uh the dairy margin coverage uh program and other things as well the federal milk marketing orders are very special issue uh now we've had a number of of of times when they have been looked at I'll talk about just a few years ago when there was some interest in trying to look at a competitive price uh milk pricing under the federal orders where you would select certain counties in the country where there was a very competitive price for milk and uh there was a lot of interest at that time of saying that might be an answer to improving the price for uh milk and as they looked at that and examined that they found statistically that wasn't going to work and geographically it didn't uh it didn't uh really do the job so what I'm saying about federal orders if you're going to change the federal orders you've got to really examine how how it's going to work out what's going to come out at at the other end of the pipe or you may get something that's going to make things worth now I agree that class one uh our class one uh utilization has gone south in the northeast it used to be 45 percent it's now down to 29 percent uh and uh there is uh taking uh national milk and others are taking a look at the class one price mover some people say well we ought to have a class one differential for all four prices class two which are uh uh soft products cottage cheese ice cream and so forth class three the hard cheeses class four uh butter and powder but if you're going to change the federal milk marketing orders number one you better do a very good analysis and that better be done by people who know what they're doing and the joke always used to be there were only three people in the united states that knew anything about federal orders and they were ordered never to get on the same plane at the same time but uh what I'm saying is you need to have the industry pretty much behind this you're going to make suggestions to the USDA's marketing service you need to have the industry behind this and there is work being done on that right now and there will continue to be work now let me just say just a couple other things I don't want to dominate this uh section because it's very good and I've learned a lot by by listening in 2014 we had a milk price of $25 a hundred what we saw after that was a three percent to four percent overproduction across the country starting in 2015 2016 2017 farm milk prices went south in a hurry some of the cooperatives including agri mark of course and dfa and others started to institute supply management procedures not all of them did there's about 35 to 40 cooperatives they produce about 70 of the milk in the country there is 30 of the milk is produced by independent producers keep that in mind many of these are huge they have 15 20 000 cows now they would love to see the 35 co-ops have a strict supply management program so they could put out another 5000 cows and keep overproducing okay now I'm not saying we shouldn't do more supply management with our cooperatives but you've got to keep in mind a lot of the 210 billion dollars billion pounds of milk produced in the United States is not necessarily produced by cooperatives and if you if you're looking at somebody mentioned this I think Jill mentioned this and she made a very good point that the transportation cost of milk is very expensive dfa sends a lot of its milk into the southern states because they are milk milk deficient I have friends of mine in florida say my god bob we pay seven dollars a gallon for a gallon of milk bobby was mentioning three dollars uh 295 three dollars for a gallon the reason is that milk is is brought all the way along from texas and other states all the way into florida and georgia and states that are producing very milk very milk deficient so that's what our what that's the environment out there the other thing I would say is this uh it's working down here and working on all the kinds of legislation we're going to see more legislation here on climate change which we are looking for renewable energy I'm very high on trying to get uh greenhouse gas emissions and more anaerobic digesters and efforts by our dairy farms to use methane gas and have it converted to electricity and uh there was an ers study by the economic research service a few years ago that showed as much as eight to nine percent of our electricity in the united states could be used to to generate electricity in our country bill ral who's on I think has enough electricity on his operation to provide 500 homes now that's what we should be doing and so the other thing is this we've got a number of environmental groups and I don't criticize them because I work with them all the time but we are we are facing a number of groups down here activists groups who think that the agriculture the livestock industry should be reducing our dairy herds our our hog operations and so forth because we make a larger contribution to greenhouse gas emissions that's not necessarily true but we need to work on technology and so forth so that we can reduce greenhouse gas emissions even more uh uh the the cost of anaerobic digesters are very expensive and they don't cash flow for a number of years so those are just some of the things I wanted to add to our discussion and lastly I want to say something about dan smith I appreciate uh bobby star's comments about the compact but dan smith had an awful lot to do more than I did about the compact and it worked very well but I would just say this there are a number of things that deal with farm milk prices when we get over when we get a high price we get over production we tried to get in 2014 a supply management provision into the 2014 farm bill along with the dairy margin coverage program I know Jackie Folsom uh worked with us on that the farmers union and other groups we got killed on the house floor by a loss of over 100 votes and pulling that piece of supply management out of our uh out of our bill and it's very tough I'm not trying to apologize but it's very tough to get a supply management provision done federally we can try but I tell you it's not easy to do so those are sort of the things that we're working on I want to work with everybody and we want to keep our small farms and business and and also keep in mind that every piece of legislation we have passed including the mlc program that senator lehi put together in 2002 the dairy margin coverage program that was passed as part of the 2014 farm bill uh is a risk management insurance program every one of those has a component in it that's directed to smaller farms it has a has a cap in it that is directed to help smaller farms the problem is it isn't enough and now many people are saying we should have always had a program and I've said this for a number of years we always should have had programs at the federal at the federal level that were more directed to help our smaller and mid-sized farms now we're trying to do more of that and I think there'll be more efforts in the 2023 farm bill to do that so thank you for giving me an opportunity to make some comments so chairman star next up is kerry thompson atherton followed by jane clipper larry gervais and leon berthiam kerry your chair you're muted um i just wanted to add to the with the subsidy part on for the vermont it was way back in the beginning eventually that's going to fall right back on the back of the farmer so i don't know if subsidizing is really the the route to go um it's going to fall back on i see their tax paying or services or um supplies is just going to fall back on our backs as far as the farmer is concerned yep um any question jane clipper just next thank you um first of all i want to thank both um the committees for for all the work but especially dfr for their um very in-depth study in a very short period of time with all the other work you're doing with the covid 19 so um thank you for that because um i'm i'm sure it's not easy um first of all i want to go back to henry pearl's question um about what what are we trying to do here are we trying to look at a price of milk or are we trying to save farms i i think that that is a key to moving forward and recognizing what is it that we want um if we look at the information that diane bothfeld sent us all this morning um we see that there has been significant attrition in in farms but if you look at milk production and cow numbers um we've become much more efficient and yes we've consolidated but as commissioner peach act mentioned earlier also what industry has not consolidated um i think we have to be realistic in moving forward with dairy farming and looking at it's a business and we need to know the cost of production i don't want 26 27 28 dollar milk because as bob bray indicated that just brings over production and then we have the downturn and again if you look at diane's numbers in 2014 yes we had 23 24 dollar milk back down to 2015 it was 16 dollars on our farm i can i can get away with 1750 milk i don't want to do it for very long i can do it for a year or two but i can get away with it because my cost of production is in line with that every farm has a different cost of production so to create a milk price that helps everybody in my mind it's it's going to be very challenging i think the other piece that we have to to realize is and i think jackie fulson mentioned in the beginning it's all farms are our farms that we need pushing organic pushing grazing our farm has been in production continuous dairy production since the early 1800s we are sustainable we've weathered the ups and downs and we will continue to do that so i think we have to be careful when we look at farming we want our farms to be sustainable business going forward and i want to kind of reiterate what bob gray indicated is you have to be careful for what you wish because it might come true yes milk marketing order is complicated and it's not perfect but it provides a program that is transparent and is audited and everyone knows when we start moving away from that what do we get i i'm very proud of being a dfa member and i think sometimes we get conflicted with because it's big it's it but it's also created in regions and we talked about moving milk as bob indicated moving milk is very expensive we don't move milk into vermont we have a northeast region of milk and the milk is utilized in in vermont to move milk from ohio michigan into vermont that cost is is prohibitive we have plenty of milk here in this region we're not moving milk i think the other piece that i just want to kind of bring us back to is dairy is a business and if you're looking at moving forward as it's been indicated by many people helping farmers become better business people and really understanding the cost of production will be key in moving forward again i want to thank everybody for all the work that has been done over the years on this um and i just have to say i like it on the other side not being a lobbyist but being a producer yeah very sorry very dear base good morning larry good morning can you hear me yes sorry i might have to go to another meeting shortly so i'm not going to be able to hear that all this i apologize i thank you for having us here today um and i wanted to put guys like bob gray and leon bertha on up front to talk a little bit more about you know what is going on nationwide with the supply with the supply management theory because we see with you know agramar actually started doing this before the covid and then we were forced to dfa chris i used to be saying that was co-op was not around anymore but the last um i don't have the figures in front of me but the last uh milk uh report came out and you know vermont did end up reducing i think five percent or whatever but the check wasn't put across the whole nation and you get to state like texas i went up 10 so it kind of hurts us over here because we don't know this program that's in front of us is it's not voluntarily it's put on us and now we don't know what next month's uh mail brock's price is going to be on that last for us is 13 percent it used to be 15 percent uh and you can't run a business like that i mean you look at september october you're like oh it looks like it's going good you're not getting deducted too much it was i don't know maybe three four dollars and then you get to december one it was ten dollars well i guess my question to to bob would be on a the federal i mean we know this has to be something done in federal to and it has to be an all-in buy-in to to make this work is is there a way that is being presented that it's more uh uh voluntary if you had a percentage and a year that we got an oversupply here's the price of milk that's we're gonna pay you if you drop your production to here i'm higher value added you can still produce your whole base in that last five percent ten percent whatever it is maybe at a lower value but then anybody that produces over their base there has to be something checked in there where you know you know now you have an impact fee or something like that uh is there something like that because if it's voluntary it's a lot easier to do for different firms and it may work for some may not work for others but if it's uh you know set the bar out of 15 percent you get a five percent hey that might be enough to offset maybe it's just a two percent uh overproduction in the country and that corrects the the melt price and and we know um you know we are now at a disadvantage here in northeast that used to be an advantage to have a class one fluid milk uh you know over 50 percent and that's the way we were modeled uh and we can chuck our milk to all these markets and we never built that infrastructure over here but they did out west for different avenues to condense it down and all the the dairies are right there at those plants it makes it a lot cheaper for transportation wise and you know melt fluid doesn't actually probably come to east but other products do so if there's you know the northeast combat was great you know it was a region and and it kind of put a check and balance and things but it has to be a total buy-in so i'm just wondering if you could answer a little bit of that question i'm kind of getting a little long winded and i know a lot of other people want to talk and i do have to leave it i apologize but that's just basically what i have to say yeah thank thank you larry i think leon's isn't leon not pretty soon east next yeah so welcome leon and uh leon burkeham from dfa you're muted leon again good morning and thank you for the invitation to participate uh this morning but first of all thank you to all the committee members for your continued advocacy for vermont agriculture i certainly want to commend the commissioner and jill and the department for a well researched comprehensive report as well i certainly appreciate the objectivity and the insights that were provided in in this report i think there's been a lot of great comments that have been made throughout this morning and so some might be a little repetitive but again i think as the commissioner started off our dairy industry along with many other industries have evolved when you think about our farmers we need to get farmers credit for how they have adapted and adopted to so many changes um in their operations over their history if you will with increased technology today and precision farming has also changed again how they operate at the same time our industry became more from a regional to a national and today a real global industry and so we need to recognize that as we talk about our solutions and as been noted you know jill has mentioned that you know vermont is a little bit different in terms of where it sits the size of vermont and our population also probably limits us in terms of what we can do to really generate you know some additional revenues to have really a significant impact in adding to you know our farm farmers income you know dairy pricing has been a topic over my 37 years you know with the cooperatives and supply and demand continues to be the primary market forces really for impacting overall farm prices and that's really where we need to get to the heart of if we're really going to have any significant impact is that but at the same time right now even under these circumstances as a country and as larry just mentioned you know we're still seeing year over year increases in overall milk production you know recently you know on average the 24 states are over 3 percent again and today we have the highest or the largest herd on record since 1998 and then we continue to see milk per cow continue to grow so those are all things that again continue to challenge us when we're looking at what's and how that's impacting our overall milk price again it was noted you know again in terms of a loss of farms and it's already been alluded to there's other reasons than economics that farm cell herds there isn't it sometimes again no next generation workforce challenges has been an issue in hearing from our farmers in terms of creating challenges for farms as well as the increasing demands that we are asking on our farmers there's more require reporting requirements more documentation that's required on our farms a lot more administration and adherence to new practices that also have you know impacted as to whether or not again that farm wants to continue to move in that direction as well as the farm we got to talk about the processing side and consolidation and changes in ownership of processing plants and manufacturing plants certainly has had its impact as well especially when we look at New England where the majority of Vermont's milk you know flows and we really haven't seen a lot of new investments from you know processors manufacturers other than what dairy farmers have owned and invested in their own facilities when you think about recent years that's where the majority of investments have been is with the cooperatives and the dairy farmers at their own facilities we need to work with all of our processors regardless of the size but as importantly we need to really work with our larger processors to support and grow their operations here in Vermont so that they can continue to again utilize more of our own milk and so we got to make sure whether it's our commissioners our agencies have really close relationships with these larger processors in this state and we need them again and I think they are challenged because many of them are owned by global companies have plants across this country and so our local plants have to compete for investment dollars and so we've got to make sure our business environment is conducive for continued investments here in their facilities to utilize more milk again our as I think Jane most recently just talked a little bit about you know our dairy farmers need to become more familiar with their financials their cost of production also again as brought up by Jill this morning the risk management programs we really don't have a again enough utilization of the risk management programs that are offered either by the government or the cooperatives and so we need to continue to focus on increased education and support on increased education and support for these particular programs again investment whether it's in UVM extension or other resources we really need the expertise in cutting edge professionals to support our farm operations here just again a couple of more brief comments in terms of technology and innovation I think this is an area that we need to continue to focus our energy and resources as we need to continue to look at new product lines new ways of again utilizing a dairy base excess program supply management again I'm not sure that I would use those as again synomously you know base excess programs really provide an economic signal to the again the dairy farmers in terms of what's going on in the marketplace but dairy farmers at the end of the day can determine to what extent they wish to produce milk the program just allow allocates the costs more equitably in marketing the additional milk over the base so again I think the other thing is we got to work with our congressional delegation and this new administration to see where their priorities we already know that again one of the key focuses is going to be the climate change agenda and I think we need to understand how that's going to impact our industry here in Vermont and what are we going to need to do to support our dairy farmers to meet what those new expectations might be so I know as again a member of the DFA team you know and others that are with me today you know we're certainly interested in taking part any actions you know as we move forward from today's hearing so thank you for the opportunity yeah thank you Leon uh there are others uh yes mary white yeah morning mary good morning so I just want to thank um everyone for being here and the people that worked on this report I think it does a really good job at actually identifying some of the price issues that we're seeing and we keep talking about operating farms as a business and having people understand that concept which is huge but it's so difficult to do in satchel of volatile market when it comes to your gross farm income because again milk is our number one product on these dairy farms and even with risk management programs it's really hard with the volatility we've been seeing over the last five years as to know you know am I going to be able to make these investments I want to make next month next year so there are definitely issues um with pricing and I think Larry mentioned that being the volatility's point as well with the base excess programs um definitely on the co-op level I don't think we're seeing that return in our milk check so it has to be a national program when we talk about supply and management we were able through farm bureau to actually present the Vermont milk commission report on a national level and it received a lot of positive impact so everyone that worked on that again COVID kind of put the brakes on that but we were talking to producers and organizations from California and all states in between that were very supportive of the work that we did here in Vermont for putting that on a national scale so on the same point is that Jane mentioned this is if we see an increase in price and we trigger that overproduction again that's not going to help the industry at all so I think a lot of these things go hand in hand when we talk about the FF MMOs with the pricing and doing supply management at the same time how do we get these systems to work together to be able to support all producers that really want to have a good price in a standard market for our milk so I will say that we use risk management programs in abundance here on our farm or a small farm definitely under the cap so we've got DMC, DRP and due to feed prices you know this year our DMC did not pay out like we predicted so there's other markets that impact these risk management programs other than just the milk price DRP is a great tool but again we're not seeing that return in our milk check prices when we lose some of those due to other market volatility that we cannot control so this is a price issue and I think that we really need to do some more research on why farmers are going out of business and I think advancing technology and getting people to understand their business is huge but we need to understand the pricing market going forward and how to adapt with consumers yeah thank you Mary a quick question Mary um are you the one that lives on the right side of the hill or the left wrong side the hill I'm on the wrong side no you're on the wrong side the hill hey uh getting back to milk pricing and all that if if we hadn't have had COVID money that we helped with this year uh on the in the farmers how how would that have turned out financially for farmers that you work with that they've been zero dollars instead of what got paid out to our dairy farmers shoot through the state program yes so it was um it was a mixed batch you know because people had some people applied for the federal money and some people hadn't um I think overall it was it was huge you know our lowest mailbox milk check price was down to 13 dollars during COVID which is very much below our cost of production and I know some DFA farmers that we work with were receiving 10 dollars so on top of that with cuts um in production it was definitely well received and needed I don't think anyone got ahead from it by any means but it was definitely helpful um just to have some state input so we do thank you for that yeah thank you Mary um representative partridge would like to speak yeah carolin carolin are you with us she's working on it sorry bobby the uh space bar is not working to unmute uh I I want to um I'm going to have to jump off this meeting to go to the agricultural fairs capital grants uh committee meeting uh but I just wanted to take a very brief moment to thank everybody for coming today and I especially want to thank the uh commissioner and Jill record for doing this report I think it's it's really helpful um and and and and thank you especially to the farmers because um I think you guys do the hardest work of almost anybody in the state and sometimes you're not paid in fact a lot of the time you're not paid uh what you should be so um thank you all and um I'm sorry I have to leave but I want to make sure the fairs get their money so take good care and thanks bobby yeah thank you carolin yeah um speed k heart has been waiting he's got his hand yeah let's see Steve are you there yeah I see you're on milk Steve uh good morning and I guess close to good afternoon now uh can you get closer to your mic is that better uh yeah some can you hear me now okay yeah okay I want thank you for the invitation to participate in this and and be a listener um you know I the commissioner and Jill I think it's a wonderful report you did um and shed some really good information uh I'm a dairy farmer second generation here on our farm I've been here for um pushing 30 years at this point um I guess my comments that I would have uh after listening to this uh you know everything always the focus is on price and I think back to uh a couple comments have been made about 2014 and 2014 I had probably the most fun farming that I've had in my life everything was super super easy and you couldn't figure out where to invest the money that you had and my dad told me at the time that it was probably going to be a really bad thing for our industry and I would say the following four or five years that followed that proved that to be very very true um you know because of the prolonged price slumps that we've we've been sitting in uh not saying that the price you know what I personally like to see $20 in my own checkbook to to pay the bills I would but I'm fearful on the larger scale of what that does to incentivize uh overproduction which we've seen time and time again um we were I'm an agar mark member and of course we were affected by the base uh cutbacks this year and I've become a student of milk pricing and risk management because I've had to to help make our business uh be able to compete with our competitors and other states in the midwest far west um you know I think some of the things that the state can do is really work to help educate the farm community about the different tools that are there. I was on a webinar yesterday and I believe they said that only seven percent of the production in Vermont is covered by DRP contracts for this year at this point and you know that's one of the tools that farmers can use uh to really kind of protect themselves to the swings of the market um but there needs to be the you know the education there so that people understand it and understand how it works um I guess a couple other real quick comments uh you know farms that have kind of gone out of the business one of my biggest fears is that we're seeing kind of a changing of the landscape in Vermont uh we've had two of our neighbors within the last month that went out of business one that was a farm of about 250 cows and the other that was a farm of about a hundred those farms went out of business because their base was produced or excuse me base was purchased by other farms that wanted to have the ability to market and sell more milk and it was an avenue for them to get out of the business and to receive a good price for their cows the sad part to me is is there will probably never be cows on those two parcels of land again and I'm a little fearful with what that's going to do to you know kind of the landscape in Vermont you know I I would challenge the legislature that I hope that's where a lot of the efforts are and what sort of things can we do uh to to support the farm not necessarily in trying to raise the price but trying to help keep their cost of production uh lower um and uh you know I think that goes a long ways other things that are kind of key in my and I think I heard one person kind of speak on it a little bit uh is workforce challenges um we've seen state in New York uh now with the minimum wage it's increasing and overtime legislation and and rules and you know that's caused their labor costs to go up tremendously and we can feel that's already coming you know that's coming down the the road in Vermont as well and gonna be another challenge that we need to deal with um I guess that's really I just that the big thing for me is uh you know trying to to manage or manipulate the price of milk uh I think is going to be a really hard thing to do um because we're dealing with a nationwide thing uh you know and the the independent producers that are not affected by these programs uh you know kind of have free reign so thank you for the opportunity to speak yeah thank you steven sale already a dad way I will senator we have two people left on the list Catherine Derrand and Rob Wheeler yeah Catherine you're you're up all right great thank you so much yeah good afternoon to everyone appreciate the opportunity to be able to speak with all of you I'm the best vice president of economics and legislative affairs at agro mark so as you all know our 160 farmers in Vermont uh two plants 680 of my colleagues uh we love talking about dairy sustainability this is really important and I'm just so thankful that we had the opportunity to to work with the commissioner and Jill as they were drafting their report which I've got to say I was really impressed with um it's a difficult issue to tackle and I was just impressed by the thoroughness of that report and I think what I appreciated most was the acknowledgement that long-term sustainability of dairy farming is equally weighted on milk price and on the cost situation and we tend to think about the milk price and I apologize I came in a little bit late to this meeting so I'm probably reiterating what has already been communicated here today but you know milk price is the number one fix we all seem to gravitate towards for obvious reasons but the challenge is that it is the national system and from that standpoint that's where you know we feel we need to be targeting our approaches and and spending much of our time and I just want to you know just update the group and let everyone know that we are integrally involved in conversations surrounding milk pricing you know it's it's clear to all of us especially the farmers in the room that there are some significant issues with our current system and even more that have unfolded in this last year with the pandemic situation have really showed us where there are some holes and what holes need to be filled and I'm just honored and thankful that agrimark as well as our other co-op partners have a seat at those tables where those conversations are taking place in the economic policy committee arena and really looking at making making changes that we all I think agree to we are you know right in the midst of all of those as we speak and so hopefully we'll be coming out with some great recommendations in the the not too far future and really just appreciate the support of everyone in Vermont to you know come to some agreements together and support us in those efforts I also just want folks to know that it's not just looking at what are these immediate issues in front of us but also taking you know that 50 000 foot level and so I appreciate you know the state dfr looking at it from that way in a national arena we're also doing that and I think that's really important you know a couple other things I would say on the revenue side you know some of these state programs that were referenced in the dfr dfr report you know our great models that are worth exploring you know they can be extremely beneficial if they are structured appropriately and if the state is willing to support support those efforts I would caution that we need to be careful that we are adopting a program that does not put Vermont farmers at a competitive disadvantage and also make sure that that flow of milk continues in an appropriate way I'll piggyback on a comment that Steve just made and that you know there always will be risk in dairy markets no matter you know if we get every change we're looking for and then some there's always going to be risk and that importance of risk management is going to be continuously and more so you know just critical to the success of our dairy farms and I think there's some ways that we can you know look to other states and what they've done to support their farmers and in getting into risk management whether that's educational resources or perhaps a little financial incentive you know paying for a premium to get into some of these programs things along those lines I think there's some great opportunities there and lastly on revenue I would just say that you know Vermont has been so supportive in acknowledging and supporting farmers on those you know non federal order pricing revenue streams you know supportive of value added off farm profits on farm processing all these different things I think you've done a great job and should continue to do where I kind of take a step back and what I mentioned I appreciate about this DFR report is is the focus they had on cost and I think that looking at the cost side of the equation for profitability is where there are some huge opportunities for the state to really be a leader and do some great things and help out not only our farms but our communities and our environment and you know we as a dairy industry and dairy farms we talk about cost of production as you know kind of a ever-increasing burden on our farms right and it is we talk about labor all these things that we ask farms to do because we know that they can do that for us but I think we should be kind of shifting our narrative a little bit and thinking you know what are cost of productions for our local economies you know those costs come right out of our farmers milk check and flow into our local communities so you know I think we need to start thinking about cost as really this ever-increasing economic contribution to our local communities and you know I get a little excited that if we can shift that focus we can do some really great things together and again support our farms but also our local communities and you know continue to foster that economic growth you know I think we encourage embrace and support the adoption of efficiency measures technology on farms you know we have the new administration now with a focus on climate change farmers have a huge opportunity to help in that fight and I think Vermont is showing that we can be a leader in that and if we can pull our farmers into that conversation and into that solution I think we can do some really great things together and I will end I apologize that was a little long winded there but what ended my favorite part of of the report that came out was the mention from Julie Murray Beckford who's with the Main Dairy Industry Association and you know I'm not supporting or against the main program but more so what she quote what was quoted she said about their state program and she referred to their program as a true economic investment in their rural economy and that really spoke to me and I think that's where we're at in Vermont and we need to be you know making the decision are we are we willing and ready to make that investment not just in our farmers but our entire you know local communities and economies that our dairy farms are so integral in so we're at a really exciting time and I think we can all do a lot of great things together so again thank you to DFR for doing such a great job on that that thorough report and for all of you for all of your feedback and and support in in helping out all of our farmers and our state so thank you yeah Catherine a quick question if I may why don't you tell us what a fair price uh should be for cost of production and you know should it be should it cost you $15 should it be $16 should it be $20 because we have nothing to judge that by because every farm is different but what what do you as a company executive feel is a fair and reasonable cost of production and if we had that number I'm sure we could work up or we could work down as as a group to to more than meet that well I I think that's a bit of a loaded question and I guess I would come back and say it would depend on what are those goals of economic contributions that you're you're looking to achieve right you know one of the interesting things we see about cost of production data is that it's it's very correlated with milk price right and so we see that cost of productions will will follow our milk price and if our farmers have more money coming in if their margins are better they're going to spend more they're going to do better practice is better farm management make it better and better so we could go as high as you want we could do some really great things um if you're asking what sort of a general cost of production is I think you know it varies greatly amongst farmers um but some of you know whether you're looking at USDA or some other cost of production resources you know average we would say in the region is about 18 dollars yeah and we aren't even anywhere near that and you know that's why when Steve Cahart testified he had such a smile on his face back there when the price was good because he could go down street and buy what he wanted to buy not just what he could afford to buy but anyways we'll we'll get to that eventually so we have one more witness uh linda yes rob wheeler sorry folks i'm i'm i know in the interest of time you want to move along and and i'm a retread i'm on now for the second time but uh i forgive me for not noticing this but i'd like to ask the commissioner and uh jill did you look at massachusetts state program i know you mentioned mains and i know that jill was intimately involved not jill excuse me katherine was intimately involved when she worked for the state of massachusetts uh on their program um i have a just a little bit of anecdotal knowledge because i am so close to the massachusetts border where i farm here in vermont um and it's interesting to me that i've watched my massachusetts neighbors uh be able to plow money that the state of massachusetts has given them back into their operations they're buying robots they're modernizing um small farms like myself they're able to plow that money back into their farms and um and that's all based off uh mr chairman that's all based off a cost of production study that i believe happens every year and uh of those massachusetts dairy farmers they're actually asked to participate in a cost of production study and from that study they determine uh what that cost of production is and then if the milk price is below that for any given month then they qualify those farms all those farms qualify for that massachusetts payment that's given to them um on a per hundred weight uh basis and i'm just wondering if the if the department looked into that program at all uh jill our our commissioner are you still with us i'm here senator yeah unfortunately we did not look into the massachusetts program i if given a longer time frame i would have loved to look into every state program and to the european system and to what new zealand's doing into all of these things i could have written a hundred more pages but unfortunately we had a limited time so i had to sort of pick and choose well you did very well with the time that you had um well it is afternoon and uh well we have bill ral you have a question bill our statement yes hi thanks everyone uh good discussion haven't heard anything about the export market and surplus milk as a result of losing export so if you have a management tool in play and you have pressure from let's say the upper midwest let's call it that we are making 216 17 billion pounds of milk a year and we have a 17 export market if you lose a percent or two of that that's going to create a surplus of milk and if the management tool is imposed on a certain region but not another there's nothing to keep that milk from flooding in on top of you and when there's enough milk on the market it will move if the price is right and it's surprising how far it will move that's something that i'd like to bring to your attention and and something that you should keep in mind because some years back the state of wisconsin spent a lot of money and quite a few years building infrastructure to process their dairy products we don't have the infrastructure to process all of our milk and if somebody can flood milk in on top of our effort for less of an expense than we can produce it here it will show up i say that because i know that it does just would like to bring that to everyone's attention well i think that that is one area that i don't know uh jill if you're michael but i think that's one area we didn't get into uh too much um and but as we move forward uh hopefully we'll we'll form a task force that um that can move forward uh that's part of the the bill and uh we'll have you know people on there and review review that bill along with other suggestions that that people today put forth as well as what's in our report from from the commissioner with that i think is if that we've covered everybody i think and it's been very good everybody has been quite timely because we're just 14 minutes over um or 15 so in closing again i i'd like to thank all of you for your time that you spent with us and a special thanks to commissioner peshak and and jill for the work that they did so diligently and and i'd say complete and for spending especially the commissioner for spending most of the morning with us with so much on his plate these days and y'all commissioner thanks a lot for all you've done in regards to the cobit issue statewide for all of us you and your team have uh with the governor have done an excellent job and um i uh when i can i watch you guys on on tv and and the way you guys present yourselves so calm and collective is is really good um so thanks a lot for all that and i'm sure we'll we'll have more to do to work together in the future and appreciate all you've done so thank you and thank you everyone else