Washington — Connecticut’s dairy farmers are cautiously optimistic that a new federal safety net will help them survive rising costs and falling prices.
“Something needed to be done,” said Melinda Greenbacker, who runs a family dairy farm in Durham. “What we have now just isn’t working.”
In a massive farm bill, the Senate last week agreed to toss out the Milk Income Loss Contract program, known as MILC, that gives subsidy payments to dairy farmers when prices are low.
MILC would be replaced by a voluntary insurance program that would pay out when the cost of producing milk exceeds the money made from selling it.
Insurance premiums would be subsidized on a farmer’s first 4 million pounds of production, the amount produced by the average Connecticut dairy farm of 200 to 250 cows. Premiums would rise with the amount of coverage and range from about 1 cent for every 100 pounds of milk insured to almost $1.
Premiums for bigger producers would be higher.
Farmers who enroll in the insurance program would also participate in a price stabilization program that discourages them from producing large quantities of milk during a price dip.
Dairy farmers usually respond to decreasing prices by producing more, resulting in even lower prices. The new dairy program would pay farmers less for losses on milk that’s above their normal production.
“Most of the farmers around here are a little unsure of the insurance program, but it has the potential to be very helpful,” said Greg Peracchio, a fourth-generation dairy farmer in Coventry.
Greenbacker and Peracchio agree the problem with the current federal safety net for dairy farmers is that it doesn’t take into consideration the rising price of labor, gasoline and feed.
“The price support level was set decades ago, and those numbers are so low based on today’s cost of living,” Peracchio said.
He said his farm, which has about 240 cows, lost more than $100,000 when milk prices plunged in 2008. Peracchio, who belongs to a cooperative that produces Farmer’s Cow milk, said he hopes the new insurance program will cover any such losses he may have in the future.
Chris Galen, a spokesman for the National Milk Producers Association, said his group supports the new program.
But there are concerns from some dairy farmers who have never had to buy insurance before, unlike corn, wheat and cotton farmers, who depend on crop insurance.
“I don’t think you can get 100 percent consensus on anything,” Galen said.
Now the fate of the new dairy program rests in the House, where Rep. Joe Courtney, D-2nd District, is one of its biggest proponents.
“The existing system is not working,” Courtney said.
The current five-year farm bill, which authorizes all federal farm programs, expires this year. Besides changing the dairy program, the nearly $500 billion bill approved by the Senate would end one type of subsidy to farmers and cut about $4 billion from the federal food stamp program.
But conservatives in the House, who are calling the farm bill “the food welfare bill,” are balking at reauthorizing any money for food stamps.
Since House Democrats would reject the bill if it cuts food stamps too deeply, finding a majority for a farm bill in the House may be difficult.
Courtney said the legislation may be pushed off until after November’s elections and considered in a lame- duck session of Congress.
Meanwhile, Connecticut’s dairy farmers can count on a unique program run by the state government.
Financed through some of the money the state receives in land filing fees, the state program gives grants to dairy farmers every quarter that profit margins are bad. The smaller the profit margins, the higher the “Dairy Sustainability Grant,” which is usually in the thousands of dollars.