America's increased appetite for ethanol is contributing to the hardships of the Massachusetts dairy farmer. Demand for ethanol is driving up the price of corn, a staple of dairy cows. It's just one factor that is squeezing dairy farmers caught between the soaring costs of feed, fuel, and fertilizer, and the low price they get for their milk. In the second part of our series, WBUR's Fred Thys reports looks at the costs that are squeezing dairy farmers out.
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FRED THYS: The Larkin Farm is in Sheffield, along the Connecticut border. Jim Larkin grew up on the farm. It was his grandfather's. He and his son have about 300 cows. Although some of their land is on the floodplain of the Housatonic River, and so not suitable for development, Larkin says they do get offers.
JIM LARKIN: But farmers don't want to sell. You can't farm and sell the farm. Farmer's kinda the glue that keep this open space open space. A field doesn't look like a field if there's not a farmer handlin' it.
THYS: Larkin's is one of 180 or so dairy farms left in Massachusetts. If the dairy farmers go, Larkin says, the New England character of the state will go with them.
LARKIN: You take the cows away, and I don't like the looks of that picture. I wouldn't want to live here if it got cashed in so that we're going to have a house on every acre-and-a-half.
THYS: Along with most of Massachusetts' remaining dairy farmers, the Larkins have signed a petition asking the Commissioner of Agriculture to declare an emergency. If he does, one option open to him would be to raise the price that processors pay farmers. Assistant Commissioner Kent Lage says that might raise another problem:
KENT LAGE: There's a large amount of milk coming into Massachusetts for processing from outside the state, because Massachusetts is such a large consuming state. If we would set a wholesale price for Massachusetts milk that is at what level the dairy farmers have testified they would like to see it at, we're concerned that the processors will buy milk from other states where the price is not as high.
THYS: Massachusetts farmers are also asking the legislature to set up a long-term program that would add up to 12 cents a gallon to the price of milk that consumers pay. The money would go into an Open Space Preservation Fund, which would compensate dairy farmers for the benefits the state derives from the open land they maintain. They're also asking the state for 12 million dollars to pay for their unpaid bills from last year. Connecticut, Vermont, and Maine have already passed or are considering passing similar proposals. Kent Lage says for constitutional reasons, it's important that the program be structured so that it doesn't take money from consumers to benefit farmers directly.
LAGE: You can have a processors' fee, and you can have a support system for the dairy farmers, but the two cannot be linked.
THYS: Sheffield, in the southern Berkshires, is also home to the state's largest dairy farm, Pine Island. It's owned by the Aragis. Chico Aragi came to Pine Island in 1962, with his father.
CHICO ARAGI: In bad times, being the largest is the worstest, because you lose the most. I'd rather have a little hundred-cow herd right now than take the losses we've been takin'.
THYS: They own 1500 cows, 720 of them of milking age, and they milk 24 hours a day. Chico's son, Louis, now runs the farm.
LOUIS ARAGI: Ten on each side. We can milk about 90 cows an hour, and it keeps going and going.
THYS: Like all the other farmers, the Aragis are hurt by the low prices they're getting for their milk, but it's really the increased costs of dairy farming that threaten to put a lot of farmers out of business. Louis Aragi says this could be their farm's last year.
LOUIS ARAGI: From September on up to today, the price of corn meal has just gone absolutely crazy.
THYS: Demand for ethanol has driven the price of corn up.
RON COTTERILL: Corn is twice as expensive as it was a year ago.
THYS: Ron Cotterill is the director of the Food Marketing Policy Center, at the University of Connecticut.
COTTERILL: It's now $4 a bushel. This adds a huge amount to the dairy farmer's input costs, because corn is the primary ingredient in the dairy ration the cows eat.
THYS: And because corn is in such demand, Louis Aragi says the price of the other grains that the Aragis feed their cows is also going up.
LOUIS ARAGI: This is Western Alfalfa. We buy it on rail cars, 85-ton loads on the rail, and we booked it for the year, actually, because now they're talking about how a lot of crops are going to be rolled out of alfalfa crops to go into corn and ethanol, and no matter you feed, it looks like it's going to be high-priced.
THYS: The Aragis also spend a bundle on electricity. It takes a lot of power to run the fans that keep the cows cool in the barns in the summer.
LOUIS ARAGI: Our electric bill in the summertime this last year was really killing us. We were approaching $8000 on our electric bill every month, so that's really been giving us a heck of a whack.
THYS: Their annual fuel bill to run the machinery is $85 000. Chico Aragi compares some of this year's bills with last year's. There's the one for soy meal. As Aragi adds it up, it's $28 a ton more than last year.
CHICO ARAGI: At $28 a ton, you figure a trailer load, 24-ton, times 28, that's $670, and we go through a load like every ten days.
THYS: The Aragis grow some of the corn and hay they need to feed their cows, and planting season is coming up. They say for the first time in 45 years, they have missed a payment: they still haven't paid for last year's fertilizer bill; it's $150 000. They'll need another $140 000 just to pay for fertilizer this year. Louis Aragi says they're going to have to make a decision soon about whether to get out of the dairy business.
LOUIS ARAGI: If May rolls around and you didn't pay last year's crop bill, it's goin' to end up hurtin' us guys. You're goin' to see a lotta guys not puttin' crops in this year.
THYS: Massachusetts has been losing 25 to 30 farms a year. One economist working for Agrimark/Cabot, the dairy cooperative that many Massachusetts farmers belong to, is predicting that this year, the rate of failures could double. That would mean that 1/3 of Massachusetts' dairy farms could go under this year.
This program aired on April 3, 2007. The audio for this program is not available.