A report published by the state Department of Agriculture in January 2019 states that, at that time, there were “108 operating dairy farms in Connecticut.”
A coalition of state dairy farmers said this week that the number has now fallen below 80, a more than 25% decline in just seven years.
At least some of that decline is attributable to the COVID-19 pandemic, but dairy farmers say there’s much more to it — from the rising cost of maintaining a farm and producing milk to the low federal price set for selling it.
“I don’t think it’s too extreme to say we’re at a tipping point,” said Erica Hermonot, who along with her husband Jonathan owns Fairholme Farm in Woodstock, which has 760 acres and has been in her family since 1920.
In an effort to stem further losses in the state, Jonathan Hermonot has joined Very Alive, a coalition of state dairy farmers lobbying the state General Assembly to pass legislation this year to provide stability for the industry.
Refundable tax credit
Two bills, Senate Bill 74 and SB 98, both seek to accomplish the same goal — establish a $20 million aggregate tax credit program for dairy farmers to help offset cyclical downturns in milk prices.
The bills are based on a refundable dairy tax credit that was established in 2008 in Massachusetts. According to the Mass.gov website, the tax credit is intended to offset downturns in milk prices paid to dairy farmers.
When the cost of milk drops below a “trigger price” based on federal standards, a dairy farmer may be eligible for a tax credit, based on the price and the amount of milk sold. The credit can be used against either that state’s personal income tax or corporate excise tax.
The total amount of credits granted through the Massachusetts program can’t exceed $8 million in any year.
According to the Very Alive coalition, 97% of participating dairy farms in Massachusetts report the credit was critical to their economic viability.
In fact, the coalition states, “four out of five farmers (in Massachusetts) said they likely would not still be in business without the program.”
Milk prices
Lucas Young, owner of Valleyside Farm in Woodstock and the brother-in-law of Erica Hermonot, is also a member of the Very Alive coalition.
Young, whose farm was established on 600 acres by his ancestors in 1819 and features Woodstock Creamery, says there are “a lot of factors” that affect the profitability of dairy farms in the state.
He noted, for example, that it’s at least $5 less per hundred pounds (about 11 to 12 gallons) to produce milk in New York than in Connecticut.
“So we’re at a $5 disadvantage over essentially our competition,” he said.
The discrepancy is due to the higher cost of insurance, labor, electricity and supplies in Connecticut, Young said.
Erica Hermonot agreed, saying, “it’s the same reason it’s expensive for anybody in Connecticut, times 10 when you’re talking about farms.”
She also noted that because the price of milk is set by the U.S. Department of Agriculture, dairy farmers “can’t really set their milk price astronomically higher than it would be when customers can go down the road to the store.”
“It really straps us,” she added.
The coalition notes that milk prices have fallen as much as 25% in recent years, “reaching their lowest levels in over a decade and putting Connecticut’s generational family dairy farms at risk of closure.”
It adds that state dairy farmers are projected to lose $20 million in 2026.
To offset that, it is seeking to set the trigger price in Connecticut at $4.72 per hundredweight.
Not seeking a ‘handout’
In testimony presented last month to the state legislature’s Appropriations Committee, Jonathan Hermonot said dairy farming is not like other industries.
“We cannot shut off production during low milk prices or when feed or other costs spike,” he said. “Cows must be milked every day and bills continue to arrive.”
According to the coalition, dairy farms in the state own 19,000 cows combined. Each cow now costs $3,631 in local, state and federal taxes each year, “555% more than the average car taxes per year.”
Federal pricing formulas, Jonathan Hermonot added, do not account for the higher cost of milk production in Connecticut.
“No farmer wants a handout,” he said. “What we are asking for is a partnership — an investment in preserving an industry that provides value far beyond the farm.”
The state’s dairy industry supports nearly 5,000 jobs and generates approximately $2.2 billion in economic impact annually, he said.
“This economic engine reaches into rural communities, equipment dealers, feed suppliers, veterinarians, processors and local businesses across our state,” he added.
Other bills
In addition to the two tax credit bills, a third bill, SB 129, proposes appropriating to the state Department of Agriculture an unspecified amount from the General Fund for fiscal year 2027 to provide funding “for dairy farmer sustainability.”
That bill has been referred to the Appropriations Committee, while the other two bills have been referred to the Finance, Revenue and Bonding Committee. None of the bills, however, has been set for a public hearing.
Another bill, House Bill 5074, proposes increasing funding from the General Fund to the state Department of Energy and Environmental Protection (DEEP) for farmland preservation. That bill also does not specify an amount. It has been referred to the Appropriations Committee.
Young said each of the bills is a way for the state to invest in “what dairy is left in the state.”
“It’s a good investment, because all of what we earn goes back into the state in the form of what we spend money on,” he said. The two tax credit bills, he added, are intended merely to level the playing field.
“We’re still going to lose farms,” he said. “There’s going to be the next generation that doesn’t want to do this. So it’s really about trying to save everything we can at this point.”
Erica Hermonot agreed. “I think Connecticut is at a point where they need to decide, do you want to keep dairy farms here? And if you do, this is what they will need to succeed in doing that.”
