By Keith Whitcomb Jr.
Staff Writer
After a volatile summer, Vermont dairy farmers are looking for some stability in milk prices, however, some in the industry doubt they’ll rise much higher than they were in July.
Dick Thomas, co-owner and president of Thomas Dairy in Rutland, said Thursday that Class I milk prices in January were solid at $22.26 per hundredweight. He said the ideal range is anywhere between $22 and $23 per hundredweight.
Class I milk is milk bottled for humans to drink. The price per hundredweight is set by the United States Department of Agriculture.
Thomas Dairy has been in the milk business since 1921. These days it is a milk processor which buys milk from surrounding dairy farms.
Thomas said the price had fluctuated since the pandemic hit. In May, it was down to $16.20 per hundredweight.
“We lowered our price to our customers by 32 cents per gallon,” said Thomas. “In June, we didn’t lower it, although the price went down to $14.57. And then in July when the price came back up to $19.81, we raised our price 32 cents per gallon. And then the price came up more in August, it came up to $23.03 per hundredweight. So we raised our price 16 cents per gallon, and because we didn’t lower it in June we raised it 16 cents instead of 29.”
The COVID-19 pandemic led to governments across the country setting rules and guidelines that effectively, or directly, shut down many of dairy’s biggest markets, those being restaurants and schools. Thomas said some milk had to be dumped and the company stopped buying from two farms. One, he said, found another buyer, and he’s not sure about the other supplier. Thomas Dairy itself consolidated a delivery route and has taken advantage of government programs aimed at helping the industry. Among them is the Payroll Protection Program and the Farmers to Families Food Box program.
He said the price for September is $21.69 per hundredweight, and Thomas Dairy will lower its price to its customers by 12 cents.
“We’re very fortunate that the price of fuel and the price of other goods hasn’t changed a lot, but we have had to move the price of milk,” he said.
The price Thomas Dairy and others pay to farmers fluctuates a few times a year, he said, but not usually this often. An 11.5 cent change in the price per hundredweight is the equivalent of about one cent paid to a farmer per gallon.
“When it moves over a dollar, you’re looking at four cents a gallon,” said Thomas. “We can’t go too much further without having to change our price.”
This year was hoped to have been one of recovery for milk prices, according to Leon Berthiaume, senior advisor for Vermont for Dairy Farmers of America, which merged with St. Albans Cooperative Creamery in 2019.
“So we started the year with strong milk prices and hoping to have a stronger year in 2020, which would better position our dairy farmers after having a number of challenging years from an economic standpoint,” said Berthiaume. “Then COVID came front and center and really had a significant impact in March and April to the demand for dairy and the implication to many processing plants across the country.”
He said the USDA and other programs helped rebuild milk prices over the summer, but fears they may have peaked for the year.
“And then we saw a significant rise in our prices to dairy farmers for their July milk, so that was a highlight for our members, but when we look at 2020, at this point probably the July milk prices will be the highest milk prices for 2020,” he said.
What happens to milk prices next will depend on what happens with the pandemic, schools and restaurants.
“One of the things we don’t think about is the impact our schools have on food service both with the consumption of fluid milk but also a lot of cheese is involved in school food programs,” he said.
He said prices overall likely won’t be as strong as they would have been without the pandemic.
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