Milk economist urges dairy group: ‘Keep involved’

AUGUSTA – A milk economist told the Governor’s Task Force on the Maine Dairy Industry on Wednesday morning it costs more and pays less to milk cows in Maine than anywhere else in the country.

But the task force also heard that Maine is the only state in the country where innovative, unique ideas are often applied by state officials to keep the industry alive.

Bob Wellington, a nationally recognized economist with the Agri-Mark Cooperative, told the 19-member panel, “I have been coming to Maine for 13 years and Maine is the only state that can actually get things done. You are willing to attempt thinking outside the box.”

The task force is charged with assessing Maine’s dairy crisis and making recommendations to sustain and grow the industry.

Maine has been a proving ground for such programs as a vendors’ tax that was used to model the defunct Northeast Dairy Compact, said Wellington. “When Maine had the vendors’ fee, it had the highest farmer prices and the lowest consumer prices. It was incredible.”

The program was ruled a violation of interstate commerce, however, and an attempt to legislate a similar, legal program this session was not passed. Gov. John Baldacci lobbied against it as a tax.

Wellington said Maine already has an advantage because its residents unilaterally support the struggling dairy industry, which is down to fewer than 400 farms.

After a two-hour presentation of the complicated, convoluted national and state milk pricing systems, Wellington said he really couldn’t understand why Maine farmers continue to milk.

One Maine farmer, Ralph Caldwell, piped up with a quick answer: “Farming is an illness that’s incurable. You either go bankrupt or you die.”

Wellington, who Maine Agriculture Commissioner Robert Spear said Wednesday “knows more about milk pricing than nearly anyone in the country,” urged the members to “stay at the table and keep involved.”

Wellington said New England farmers need $1.50 per hundredweight more for their milk than the rest of the country to be successful. Wellington carefully explained the federal pricing formula for milk, an 80-year-old system originally based on how far from Eau Claire, Wis., a farm was located, and a system that does not foster profitability.

As convoluted as it is, he said, the pieces of the system build on each other. To change any one part will shake the entire foundation. “If the milk supply or demand fluctuates by a small 2 or 3 percent, the price of milk paid to farmers can dramatically change by 20 or 30 percent,” he said.

With Maine farmers receiving $11 per hundredweight – $10 below what it costs them to produce – Wellington said it will be up to the task force, which will meet twice a month until next fall, to come up with innovative solutions.