MONTPELIER, Vt. (WCAX) A new report presented to Vt. lawmakers concludes the state should take control of milk markets to keep the dairy industry from collapse.
"We are way under water and it's a very difficult problematic situation that we are in," said Dan Smith, the former director of the Northeast Dairy Compact.
Smith and former Vt. Agriculture Secretary Roger Allbee addressed the House and Senate Agriculture Committees Thursday with what would be a major transformation in the economics of dairy industry -- have the state take control of milk pricing.
Right now, with a complicated federally-regulated pricing system, Smith says farmers face price volatility and month-to-month farmers are unsure of what they will be getting paid. In many months the price is below the cost of production.
"Your dealing with an antiquated state regulatory program and that's not the starting point. The starting point is the new world, and the new world is manufactured milk -- in state," Smith said.
Smith and Allbee suggest the state step in with a task force from multiple agencies to work together to set regulations on the price and quality of milk. They say this is only possible because most of the milk produced here, stays here and is turned into locally produced milk, cheese and ice cream.
Asked whether this plan to raise prices for farmers, could drive dairy processors out of business, Smith said he didn't think that would happen."Why would Vermont, why would this board set a price at a level that is going to drive out of business. Hold a hearing and try to find a price that wouldn't drive them out of business and if that price doesn't exist, then you wouldn't set a price cause you're working against your own interest," he said.
"Our situation is not good and this is a radical change in how milk will be priced," said Committee Chair Sen. Bobby Star, D-Essex/Orleans County. He says the idea is worth exploring. "I mean, who else is putting anything else on the table. I mean you cant keep waiting."
State agriculture officials say there are still a lot of questions about the proposal that need to be studied before reaching a conclusion and that Smith and Allbee's are using some incorrect data on the amount of milk that stays in Vermont, which could effect the report's conclusions.
Ben and Jerry's officials agree that removing volatility would help farmers but say price is only one consideration where they source their milk.
Cabot officials say they say they have seen no real concrete plan yet for the proposal and that their farmers have already spent millions developing manufacturing plants and value-added markets in an effort to get better prices.