By Patrik Jonsson Special to The Christian Science Monitor

The Christian Science Monitor

November 19, 2002, Tuesday

USA; Pg. 03

PIERMONT, N.H.

New England producers are dumping their milk and calling for new protections as nation's dairy demand falls.

If milk prices don't start rising soon, the mighty Connecticut River that cuts through New England's prime dairy farming region may soon swirl with a new color: white.

Earlier this month, 11 farmers in Maine dumped 2,500 gallons of the rich liquid into a manure pit in Fairfield. Their action was a protest over how much farmers are being paid for their milk: the lowest levels since 1978. Prices have fallen to about $ 11 for 12 gallons of milk - at least $ 3 less than most farmers pay to produce the same amount. It's not the first time dairy farmers have threatened to dump their milk - even in the Connecticut River - in order to force distributors to give them better prices for their product. But with consumer taste for American milk and cheese dipping precipitously and milk production in the West up by nearly 6 percent this year, the small dairy farms that dominate the rolling valleys of the north country are in their most precarious situation in decades.

A lot of people are saying that we should just let the urban areas eat up New England and keep the milk production in the West, says Hal Covert, who runs 50 cows from his big, red barn here in Piermont.

To be sure, the Covert family, all clad in tall rubber boots, aren't ready to cut [off] their nose to spite their face, by dumping milk, says his wife, Lisa, as she takes time out of farming to play with her two daughters on a farmyard swing.

But experts agree that the least efficient and smallest farms, which dominate the New England industry, are the most susceptible to folding at this point. They've finding themselves increasingly caught between the crucible of supply and demand.

Cows aren't limited to New England

Supply of milk is up elsewhere across the country, making it difficult for many of New England's small dairy farms to compete. California, for instance, has increased its milk production by 178 million pounds this year. Comprised of overworked couples, often with one of the spouses working at another job off the farm, dairies in the Northeast stand little chance against the churning milk conglomerates taking over in the West, Mr. Covert says. Indeed, new technologies now allow farmers in New Mexico to ship to New England markets.

Worse for the New England farmers, the nation is consuming fewer American dairy products than ever before. At the dinner table, Americans increasingly favor foreign camembert over cheddar. Domestic cheeses aren't necessarily all-American either. An increasing amount of 'milk concentrate' from European factory farms are making their way into American cheeses. And for the first time, Americans today gulp more soft drinks than milk. Even the demand for cheese on pizza has fallen.

I think people are trying to eat healthier, and that pizzas and bacon double cheeseburgers are a big splurge, says Kathleen Nelson, a spokeswoman for the International Dairy Foods Association (IDFA) in Washington.

In supermarkets, little price change

But many dairy farmers are not ready to blame natural market forces for their plight. Milk and cheese prices are steady - or rising - in supermarkets. Meanwhile, many of the middlemen, the milk processors, are reaping hefty profits. As a result, many dairymen claim there's a milk conspiracy churning. Already, there are calls to investigate why milk prices in stores haven't gone down as prices paid to farmers fall. Today, the University of Connecticut is hosting a crisis conference, titled, Who makes money on milk?

The organizer of the recent milk dump in Maine, Konrad Bailey, argues that it's processors and grocery store conglomerates - with the help of politicians - who are manipulating the market to raise profits to stockholders. In fact, the farmer says that some processors in Maine can't find enough raw milk for their operations, and that the growing Hispanic population in California is chugging most of that state's surplus.

The question for many farmers is whether you can afford to dump milk, says Mr. Bailey. My question is: How long can you afford to give it away so people can get filthy rich on it?

Dairy processors, meanwhile, say that farmers' complaints are unfounded.

It's not like they're out there with no safety net at all, says Ms. Nelson of the IDFA. There are many different levels of subsidies available to farmers today.

Souring the debate is Congress's decision to kill the five-year-old Northeast Dairy Compact, a price guarantee by which consumers paid into a milk trust fund that guaranteed New England milk producers a baseline profit. But Congress eliminated it last year and established the Milk Insurance Loss Contract (MILC), a new taxpayer subsidy, in its place.

Processors argued there was no production cap under the now-defunct compact, so New England farmers could hurt other regions by producing too much milk. What's more, they said higher prices meant less consumer demand for milk. It was a bad program, which is why it went out of business, says Nelson.

But not long after the new farm bill came into effect, prices to farmers began sliding.

To stem that slide toward despair and more farm closings, some hope Congress will consider bringing back the compact.

The compact did convince some farms not to go out of business, says Susan Harlow, the managing editor of Northeast DairyBusiness, an industry journal in Lowell, Mass. Psychologically, it was a few more bills you could pay, and it meant that people cared about dairy farms.

Responding to consumer demand

For now, milk dumps may be good theater, but they're not likely to change the current pricing predicament. What may change is a growing movement among dairy farmers to stop dealing with national processors and instead sell to local cheesemakers who are catering to Americans' growing taste for European-style cheeses. Also, more farms are now processing their own milk and delivering it to local grocery stores in old-fashioned bottles.

But Bailey hopes farmers will withhold milk to scare the processors into raising prices. This is our last stand, he says.