Farmers think it will only get worse.
After years of low milk prices, about 75 dairy farms closed across Vermont in 2018. Harold Howrigan of Fairfield, Vermont, says the past year set a new low for dairy farmers in the state.
And this year isn’t looking any better. In fact, dairy farmers say it’s looking worse.
President Donald Trump’s tariff actions and the resulting trade war shut off access to foreign markets for U.S. dairy farmers. The U.S. Dairy Export Council, an organization funded almost entirely by dairy farmers, has worked for decades developing those same markets around the world for their dairy producers.
“Those markets were taken away with the stroke of a pen,” Howrigan said, referring to Trump’s move in July that imposed billion of dollars of tariffs on Chinese goods and prompted China to impose retaliatory tariffs of its own. The trade war then expanded to other countries like Canada and Mexico.
Now that U.S. farmers have been cut off from those markets, there’s no guarantee that they will get them back.
“It’s going to take some time,” said Mark Magnon, another dairy farmer in Fairfield, who owns and operates a fourth-generation dairy farm.
Magnon said if the trade war ended tomorrow and U.S. dairy farmers were allowed to sell to the foreign markets they lost, they’d have to compete to get back. And to do that Magnan says they’ll have to lower U.S. milk prices.
And lower prices are the last thing dairy farmers need right now. Years of low prices have already taken a heavy toll. Aside from just not covering costs, Magnan said sustained low prices have driven down the value of cattle and devalued other assets that farms rely on for collateral at the bank. That lack of value means farmers can’t borrow as much money for things like seed for the next year’s feed crop or to buffer financial losses from the previous years.
And back to those foreign markets, when U.S. dairy farmers were forced out by the trade war, other countries started moving in to fill the void. So competition is fierce, from countries like Canada, Australia, New Zealand and more.
“There is tremendous competition from the European Union now for those same export destinations,” Howrigan said.
The government did make a one-time payment to dairy farmers to help limit the impacts of the trade war, but of the estimated $1.5 billion lost in 2018, according to the U.S. Dairy Export Council, that payment covered just $127 million of what dairy farmers lost.
“It’s a slap in the face,” Magnan said.
He would much rather see some kind of program to drive up milk prices by reducing production which he says would not only solve cash flow problems farmers are seeing now, but would also serve as a long-term benefit after years of financial loss because of low milk prices.
Adding insult to injury, an additional payment scheduled for December never happened because of the government shutdown, which is also preventing dairy farmers from taking advantage of any other farm programs that might help.
“When you force farmers into the economic position we are in now, it makes me wonder where we are going to be in five years,” Magnan said.
Magnan doesn’t see a viable future for his farm if things continue the way they have for the past four or five years.
As for the Trump administration’s trade war and the impacts on his livelihood, Magnan doesn’t think there is much hope at the moment.
“I don’t think they fully understand (the problem), nor do I think they care.”
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