Q&A with: Dairy farmer Jeff Holmes

When the U.S. Department of Agriculture in July announced a temporary increase in the amount paid for dairy products through the Dairy Product Price Support Program, Jeff Holmes and more than 100 New Hampshire dairy farmers breathed a sigh of economic relief. It meant they would be paid more for their dairy products and might be able to break even and survive the severe economic downturn.

But as Holmes, who is in his second year as the president of the New Hampshire Farm Bureau Federation, points out, this short-term fix of up to five months for increased payments is not a long-term policy prescription. The remarkably complicated and convoluted formula that determines how dairy farmers are paid for their products has been in the making since the federal government took control of dairy pricing during the Depression (in part to insure a steady supply of milk to large urban areas.) The financial and political factors have only become more difficult for independent dairy farmers who are exposed to so many factors out of their control — the economy, commodity speculation, feed and energy prices, fierce international competition and, that most unpredictable of variables, the weather.

Holmes, a graduate of Cornell, told NHBR the long-term health of the independent dairy farm — of which the number has dropped from 131 to 123 in the state during the past year alone — will likely depend on taking a more regional approach in dairy policy, such as the former Northeast Dairy Compact which ran from 1997 to 2001 but fell victim to regional congressional politics and was not reauthorized.

As fourth-generation farmers, Holmes and brother Steve own and operate Holmes Farm in Langdon with a herd of 70 Jersey cows. They sell milk, sugarbush sap, and more than 12,000 bales of hay annually.

Q. How important was the dairy price support increase?

A. Before this was announced, I had been losing $3 or more per hundredweight for almost a year. The one thing the price supports never take into account is increased crop and fuel prices, and we were seeing those at the same time the financial crash took place last fall. The recession and a major drop in exports, while countries like New Zealand and Australia have increased imports — all these factors hurt us and all dairy farmers at once. It’s been a rough six to eight months. This has provided a solid floor for now.

Q. Aren’t there always price fluctuations?

A. Yes, but it’s getting more extreme. We had a very similar situation in 2006 when price supports dropped nearly to this level, but the price of production was less. The recovery was four to five months, but the overall economy is so much worse now.

One of the reasons is a major drop in consumer dairy product consumption. About 40 percent of our cheese production goes to restaurants, and they have seen a drop in business. It would help to get more exports going out. You can only plug the holes for so long. Obviously there will be some attrition. We’ve lost six dairy farmers this year alone and we’ve gone to 123 producers from 131 a year ago. More people are seeing some incentive in closing down and selling their land.

Q. What would be the consequences of losing more dairy farms?

A. Dairy farms make up 80 percent of open farmland, and it would be a huge impact. There’s going to be an economic domino effect because of the large business infrastructure (estimated at $1 billion in New Hampshire). Dairy farmers supply half of the horse hay, which is a sizable percentage, and we are obviously big equipment buyers and buy lots of feed and feed supplies. We could also lose more large animal veterinarians because they will have less work.

We also know it will have a big impact on the open space in the state.

Q. Milk prices rose rapidly last year and dropped as quickly this year. Is there a connection between what people pay at the grocery story and their local farm?

A. Only indirectly. The processors have to pay us a certain amount, but there are too many middlemen making profits from our products — and there are some who don’t want to see us make a dime more. People don’t realize that we are the only ones who have our prices dictated to us.

There’s always been a problem because there’s no national solution. It’s clear that the average consumer would like to have it made locally, and long-term we need there to be an adjustment in policy. I believe that consumers would pay a little more for their products if they knew it would go directly to dairy farmers.

Q. What can be done?

A. The Farm Bureau just signed a joint letter to look at federal market orders because we have to do something about price fluctuations. We can’t budget because the price peaks and valleys. We need a more stable price because we just can’t go on the way things currently are. Maybe the way we survive locally is set up a separate fund to take the national politics out of it and make it a regional effort, along the lines of the Northeast Dairy Compact of 1997-2001.

New England dairy pricing is based nationally, and it has to be approved by Congress and we’ve been tormented over that issue for quite some time.