“Empty, empty. Empty, empty.”
Longtime dairy farmer Clark Hinsdale murmurs these words to himself as he surveys the vacant main barn at Nordic Farms from a catwalk high above hay-strewn floor. Sparrows flit among the steel girders of the expansive structure, the only other sound breaking the silence where once hundreds of dairy cows milled about, mooing and snorting.
Thousands of schoolchildren, college students and dairy farmers traversed this catwalk since the barn was built in 2004 by Hinsdale and his father as a showcase of modern dairy farming. Robotic milkers were part of the draw. Busloads of farmers came from as far as Kentucky to witness the wonders of Nordic Farms, Hinsdale said.
The barn was alive with nearly 300 cows then, roaming freely rather than constrained to stalls as they lined themselves up to be milked by the laser-guided robots. Hinsdale often played country music over loudspeakers in the barn to add to the sense of contentment.
“We thought we built in 2004 the most state-of-the-art dairy facility in the state of Vermont,” Hinsdale said. “We were the first to have robotics. We did a digester, computerized calf feeder, steel frame barn, basically trying to be the dairy of the future.”
The future lasted until March 21 of this year, when Hinsdale auctioned off Nordic’s cows, robots, tractors and other machinery following the bankruptcy of the owner of the dairy operation, Michael LaClair, in September. LaClair had bought the cows and machinery from Hinsdale while Hinsdale retained ownership of the land. Hinsdale lost $500,000 as a result of LaClair’s bankruptcy.
The demise of Nordic Farms is only the latest, and perhaps highest profile, failure in a developing crisis for dairy farming in Vermont that has seen the number of farms drop from 1,015 in 2010 to 739 today, down 27 percent.
Nationally, the number of dairy farms in states excluding Vermont is down 25 percent over the same time period, from about 52,000 in 2010 to about 39,000 in 2017.
“We’re watching our neighbors disappear and it’s a disappointment,” said Bill Rowell of Green Mountain Dairy in Sheldon. “Rural America is falling apart and we’re losing farms.”
Rep. Peter Welch, D-Vermont, agrees, saying Congress is “turning its back” on rural America. He cited the recent farm bill that cut funding for the USDA Rural Development agency, and reneged on a promise to build up broadband in farm country.
“On one thing after another, the focus is away from maintaining the strength of rural America,” Welch said.
What’s at stake for Vermont is not only a business that has helped to define the state for generations, but also one that generates $2.2 billion in economic activity, according to the Vermont Agency of Agriculture. The very appearance of Vermont — the verdant fields and rolling pastures that make Vermont unique in the Northeast and attract visitors to the state — is also threatened by the crisis in dairy.
“When one of us falls, what’s going to happen to that open ground?” asked Heidi Dolloff, a dairy farmer in Springfield. “Once you build a house out in the field you’re not going to take the house down. Your farms are one of the most important things to keeping open land.”
LaClair, 63, now lives in Addison County and says he has no desire to return to farming — something he’s done all his life. He’s working for Burlington-based GSR Solutions, which is extracting nutrients out of farm waste to make fertilizer.
“It’s something new and I’m interested in it,” LaClair said. “With the experience I have in farming I can help them out.”
LaClair says he took on too much debt from “Day 1” at Nordic Farms, financing 100 percent of his assets. Milk had to be priced at $19 per hundredweight for him to break even. When it dropped to $15 per hundredweight, he had a problem.
“When you finance 100 percent of your assets, it doesn’t leave wiggle room,” LaClair said. “The capability of borrowing wasn’t there.”
Hinsdale said he tried for a year to sell the farm and found no buyers, even though it was priced less than the $2.5 million the barn alone cost to build. He estimates up to 800 people attended the auction, but only 300 were bidding. The others were there to catch a glimpse of what they hoped would not be their futures.
“A lot of people were farmers, wanting to see what dairy assets are worth,” Hinsdale said.
The answer: Not much.
Too much milk means too little profit
Clark Hinsdale said the auctioneer had offered him $1,800 a head for his herd in 2014, when dairy was booming. At the auction, his cows sold for $960 a head, which means $860 a head after commission, less than half the 2014 price.
“The whole auction is an out-of-body experience,” Hinsdale said. “You feel like you’re watching somebody else in a movie.”
What happened? Why did Vermont’s farm of the future last only 14 years? Hinsdale blames it on the demise of the three-year cycle.
“The rule of thumb in dairy was over a three-year period you had a great year, you had a bad year and you had a middling year,” Hinsdale said. “That’s the way it was. You had to make enough money in the good year to offset the bad year, and try not to lose any money in the middling year.”
The last good year, says Hinsdale — and it was a very good year — was 2014. The price plummeted in 2015 to about $16.50 per hundredweight from nearly $26 per hundredweight in 2014. Farmers like Hinsdale lost money on every gallon of milk they produced, measured in 100-pound increments. Today milk is selling for just over $15 per hundredweight, remaining depressed for the fourth year in a row.
Nordic Farms produced about 7 million pounds of milk per year, which means for every dollar the price of milk dropped, the farm lost $70,000. A $5 drop in price translated to $350,000.
“We’re talking about $350,000 that you’re supposed to somehow cut out of your budget, your cost of doing business, to keep going,” Hinsdale said. “And you can’t.”
Vermont Agriculture Secretary Anson Tebbetts confirms the dairy industry is in the fourth year of a “very stagnant downturn.”
“Every single farmer is facing challenges now, regardless of size,” Tebbetts said. “We’re in a global economy with dairy just like many other industries.”
Recognizing the crisis facing the state’s dairy farmers, the administration of Gov. Phil Scott is offering $700,000 in aid to help with loans to farmers and to help pay premiums for a federal insurance program designed to protect their profit margins.
The farmers interviewed by the Burlington Free Press for this story, however, dismissed the insurance program as ineffectual. Rep. Peter Welch went further, saying it’s “not right” to have farmers depend on a government rescue program to survive.
“We have to have a market mechanism that works for them,” Welch said. “If they go into business and are efficient, farmers need to get a reasonable price. Failure to do that creates a dynamic where mega-farms are going to be the only survivors.”
The Canadians have an answer to the price problem, Hinsdale said. He sees the results when he drives across the border.
“Why do farms look prosperous when you cross the border, everything neat and organized?” Hinsdale asked. “It’s because they have a quota system. The farmers only make the amount of milk the market wants.”
Chris Galen, spokesman for the National Milk Producers Federation in Arlington, Virginia, explained that Canadian dairy farmers buy their quotas, much like New York cab drivers buy a medallion in order to do business. In addition, the Canadian government has put high tariffs in place to keep out imported milk, ensuring Canadian dairy farmers won’t be undercut on price.
“The bottom line is we’ve never had a system like Canada because there’s not the political consensus to make it happen,” Galen said. “It’s the same reason we don’t have single payer health insurance like Canada does.”
Everyone is feeling the pain
Bill Rowell and his brother, Brian, run the Green Mountain Dairy in Sheldon, which milks about 900 cows. The land around their farm is reminiscent of the Midwest, stretching unbroken to the horizon.
Rowell is well aware his dairy business is in a global market, as Anson Tebbetts says, affected by dairies in Europe, as well as Australia and New Zealand.
“I would say the U.S. farmer relies too heavily on export markets,” Rowell said. “If we’re geared for 17 percent exports and lose a couple percent of that market, we start to get in trouble.”
Chris Galen said the export market for U.S. dairy farmers has been rebounding recently but not as strongly as farmers hoped it would.
“A lot of the conditions that are affecting the dairy farms in Vermont and the Northeast are very similar in the Midwest and the South,” Galen said.
Galen said the federation keeps track of farm auctions, and “there have been a lot of them all across the eastern half of the country.”
In the West and California, there are fewer dairy farms, and the farms are much bigger, Galen said, meaning there have been fewer failures.
Galen said the United States is still suffering from a surplus supply of milk that can be traced back to the boom year of 2014. Hinsdale agrees.
“Maybe because 2014 was so good and generated so much expansion and loss of export markets, maybe that’s why we didn’t recover in three years,” Hinsdale said. “Maybe that’s why we’re in year four with no recovery in sight.”
Go big or go home?
After the auction at Nordic Farms, Clark Hinsdale told anyone who would listen — including many media outlets — that the dairy business in Vermont is finished for farms smaller than 500 cows, including his. He was giving up the dairy business for good.
“If I have to put it in one or two sentences, I would say the state of Vermont needs to embrace their large dairy farms, because they’re the only ones that have a future,” Hinsdale told the Free Press.
Hinsdale added that in his opinion in Vermont, “large farm is a dirty word,” among the “non-farm public.”
Hinsdale was president of the Vermont Farm Bureau for many years, and spent many hours in the Vermont Legislature, lobbying on behalf of Vermont dairy farmers. So when he spoke, people listened. Word of his obituary for small farms in Vermont made its way south to Springfield and the 80-cow small dairy farm owned by Mike and Heidi Dolloff.
The Dolloff farm sits at the edge of town on 102 acres of rolling fields, pastures and woods. The Dolloffs lease hundreds of more acres in the area to grow their crops for feed. Heidi Dolloff likes the proximity to town.
“It’s like you can farm but your amenities are really close,” she said.
The Dolloffs came to Springfield 20 years ago from Putney with 30 cows and nothing else, Mike Dolloff said.
“Just the two of us,” he said.
The couple built a life for themselves and their two children. They hire no labor. They do everything themselves, from digging out new drainage for the barn built in 1968 to artificially inseminating their cattle and taking care of them when they’re sick. Their honeymoon was an overnight in Addison County.
“My reward is looking at the animals,” Heidi Dolloff said. “People breed dogs, people breed horses and win the Kentucky Derby. We like to breed cows, and milk beautiful cows.”
The barn the Dolloffs are standing in is filled with those beautiful cows. The cows closest to the couple stretch their noses toward them as far as they can from their stalls, not quite able to touch them. All along the rows of stalls, metal gates softly clack as the cows dip their heads through the ends of the stalls to feed.
The Dolloffs were upset when they heard what Hinsdale said about small farms. They don’t dispute that dairy is in a crisis, but they insist they will survive — as long as prices do again rise above the cost of production.
Mike LaClair believes the Dolloffs are big enough to make it
“My rule of thumb for a single family to make a living off farming in more normal times is between 60 and 80 cows,” LaClair said. “I think they could still do it. They might have to use up equity to bridge the gap back to higher prices. Most farmers have to decide how much equity they want to eat up, or throw in the towel.”
The problem in dairy has always been about supply and demand, and no one has been willing to clamp down on supply, Mike Dolloff said.
“When your gas tank is full, do you stand there running it on the ground, or do you pull the nozzle out?” he asked.
The Dolloffs believe someone better figure out how to pull the nozzle out, because the state of Vermont and its rural economy needs dairy farms to survive.
“I feel that small farms mean a lot to the community,” Heidi Dolloff said. “If you look at any barn, each cow has economic value to the local economy. If you’re milking 70 like us or 1,000 like larger farms in the state, each cow makes the economy stronger in Vermont.”
Both Bill Rowell and the Dolloff’s say they’re doing OK for now, even as the price of milk continues to languish.
“We’re borrowing money,” Rowell said. “Everything’s good except the getting paid part.”
If the problem of oversupply isn’t fixed, says Rep. Peter Welch, a dark cloud hangs over the future of dairy in Vermont and across the nation. Welch doesn’t see this Congress coming up with a fix any time soon, or even what that fix would be.
Currently, the only response dairy farmers have to compensate for low prices is to increase production to try to make up their shortfalls — driving prices even lower.
“All of us who represent rural America are seeing the impossible burden we’re putting on dairy farmers,” Welch said. “They can be the most efficient, hardest working, most innovative farmers anywhere, but if the price is less than the cost of production, they’re not going to be able to milk the cows.”
Source: Burlington Free Press