AUGUSTA, Maine — Legislators knew the state’s unique Dairy Stabilization Program — which is managed, but not funded, by the state and provides subsidies to Maine dairy farmers when the price of milk plummets — was in trouble early last year when dairy prices hit crisis levels.
Their worst fears were realized when the program ran out of money in September.
The program was established in 2004 and operates on a tiered system, depending on the size of an individual farm, and to date has paid out more than $24 million to dairy farms from fees paid by processors. Payments kick in when the price of milk drops below the cost of production, set for average size Maine farms at $20.70 per hundredweight.
The program is called innovative and is envied by dairy experts in other states.
Still Maine continues to hemorrhage farms.
Maine now has just 315 dairy farms, a loss of 78 farms in the past five years. Since 2000, Maine has lost 106 dairy farms, according to Maine Department of Agriculture.
To attack the problem and find new solutions, a Governor’s Dairy Task Force was created this summer, composed of 21 experts in agriculture and dairy issues. Their report was issued last week and was to be presented to the Legislature’s Agriculture Committee Wednesday, before a severe winter storm canceled the event.
Any changes have to be passed quickly and signed by the governor by Feb. 1 to be effective. A tentative date of Jan. 8 has been set for a public hearing on the report and Jan. 13 as a workshop date.
“It is really critical to get these recommendations into law,” Julie Marie Bickford, executive director of the Maine Dairy Industry Association, said Wednesday.
“Right now, Maine farmers aren’t receiving anything,” she said. “Milk prices are going up, thank goodness, but not as fast as the farmers need help.”
The report outlines a series of actions that can help revive and sustain the state’s $570 million dairy industry, an industry which has become more erratic and extreme during the recession, dropping to new lows in both 2008 and 2009.
Maine’s farmers and the task force blame a failed federal pricing system for the crisis.
In its summer deliberations, the task force found that Maine continued to lose farms but at a slower rate than the rest of the country, due to help from the stabilization program.
The task force made 10 recommendations. They include:
— Continue the highly successful stabilization program and add a fourth tier for payments. Tiers are set by farm size and Maine’s largest farms do not receive a subsidy. The fourth tier would allow that and decrease the range of the lower tiers so that farmers move into the second tier more quickly. This was not a unanimous report. Five of the 20 task force members disagreed.
— Change the handling fee that now funds the stabilization payments. That could raise an additional $4 million over two years.
— Increase consumer awareness about Maine’s Quality Seal and the importance of dairy farms to the state’s economy.
— Work toward review and revision of the Federal Milk Market Order.
— Direct the Agriculture Commissioner to find ways to provide some level of payment for November and December 2009, which would be paid in January 2010.