The Farmington Project; Troubled Harvest: The Market

<v Host>Production funding for the farming project has been provided by the Rural Development <v Host>Administration, assisting emerging rural businesses in agriculture <v Host>and other industries. <v Speaker>This land of my forebears, who conformed its wildness <v Speaker>to their own designs, who plowed measured furrows across <v Speaker>its random swails and described its boundaries <v Speaker>in rows of stone. <v Speaker>Who baptized it with their sweat and their blood and joined <v Speaker>in with their bones. [music plays] <v Farmer>That's three out of ten.

<v Farmer>Four, five and five is ten. Thank you very much. <v Mac Parker>Thank you. Whether it's apples or milk or any <v Mac Parker>agricultural product, every farmer faces the challenge of being both <v Mac Parker>grower and seller in spite of our society's sometimes <v Mac Parker>romantic notions. <v Mac Parker>Farming is more than just a lifestyle. <v Mac Parker>It's also a business, a big business that converts the <v Mac Parker>fruit of the land into a harvest of hard dollars and cents. <v Mac Parker>Conversion is the basis of Vermont's farm economy. <v Mac Parker>Farmers harvest raw foods and sell them to be converted into marketable food products. <v Mac Parker>Sounds simple until you realize that producing, processing and selling farm <v Mac Parker>originated foods involves much more than just money changing hands. <v Mac Parker>Vermont's agricultural balance sheet is more problematic than it's ever been, <v Mac Parker>and everyone in the system is feeling it.

<v Mac Parker>These days, it costs Arnold Tebbetts a dollar 16 to make a gallon of high <v Mac Parker>cream jersey milk. Most of his production costs goes into feeding his 40 <v Mac Parker>cows, paying the electric bill and the debt service on farm machinery <v Mac Parker>and his veterinarian genetic expenses. <v Mac Parker>Tebbetts keeps things simple, making do with an outdated barn, working alone or <v Mac Parker>with a son, and generally cutting corners on everything but the quality of his product <v Mac Parker>for his efforts. He'll see a return this week of a dollar eight a gallon, <v Mac Parker>almost seven percent below what it cost him to produce his milk. <v Mac Parker>A poor financial return is not one of Hank Besell's problems. <v Mac Parker>Maintaining a market is The Beseell's spend nearly as much time and effort <v Mac Parker>cultivating their customer base as they do their cabbages. <v Mac Parker>Unlike dairy farmers, Vermont vegetable farmers lack an existing marketing <v Mac Parker>infrastructure. They're entrepreneurs whose financial success or failure <v Mac Parker>depends entirely on skills.

<v Mac Parker>Having nothing to do with farming, <v Mac Parker>the laws of supply and demand can wreak havoc on apple growers. <v Mac Parker>A bumper crop in 1993 flooded the market, driving the price down <v Mac Parker>sharply for Vermont Max. <v Mac Parker>Despite the huge international demand for Vermont apples, Sandy Wetherall <v Mac Parker>has had to worry more about good harvests than poor ones. <v Mac Parker>The more apples he produces, the likelier he is to lose money. <v Mac Parker>This dairy processing plant symbolized order and financial security <v Mac Parker>to three generations of Vermont farmers. <v Mac Parker>It provided them with a dependable marketing outlet as well as a measure of personal <v Mac Parker>identity, both of which were nearly destroyed during a bitter debate. <v Mac Parker>Ironically oversaving, the company. <v Mac Parker>Changing. Economic times have shaken Vermont's agricultural institutions to the <v Mac Parker>core. <v Mac Parker>But through it all, the industry has maintained an importance to the state that goes <v Mac Parker>beyond the bottom line.

<v Mac Parker>The current estimate of Vermont's gross agricultural product is 292 <v Mac Parker>million dollars under three percent of the state total. <v Mac Parker>Not a particularly impressive figure until you consider how interconnected the rest <v Mac Parker>of our economy is to farming. <v Jeff Carr>The best way to visualize the impact of a farm on agriculture in a local <v Jeff Carr>economy is the image of a rock being thrown in a mud puddle where there is a ripple <v Jeff Carr>effect created, where the benefits of the activities, the economic <v Jeff Carr>benefits of the activities ripple throughout the local economy. <v Mac Parker>Dairy farming comprises 85 percent of Vermont agriculture, <v Mac Parker>and its ripple effect is considerable. <v Mac Parker>Bill and Jenny Nelson's Homemaker's is a typical dairy farm, both in appearance <v Mac Parker>and in the effect it has on the local and regional economy. <v Mac Parker>Just about every farming activity involves major cash outlays. <v Mac Parker>The Nelsons feed bill last year totaled ninety eight thousand dollars, Morrisson

<v Mac Parker>custom feeds and Barnhardt sold the Nelsons twelve thousand dollars worth. <v Mac Parker>Wes Morrisons trucks go through over 600 gallons of diesel fuel every <v Mac Parker>month. Fuel that's purchased from Jock Oil in Wells River. <v Mac Parker>When Chuck Angel decided it was time to add a new fuel tanker to his fleet, <v Mac Parker>he financed the purchase through the Wells River Savings Bank. <v Mac Parker>His loan officer, Hazen Wilson, just happens to be the man who recently <v Mac Parker>approved. Bill and Jenny Nelson's short term loan to cover the 700 dollar <v Mac Parker>a month lease on their new feed wagon from Black Mount Equipment in nearby <v Mac Parker>North Haverhill, New Hampshire. <v Mac Parker>And so it goes, farm dollars quietly filtering their way through the economy. <v Martin Harris>Every dollar spent in an rural economy, in fact, has a seven <v Martin Harris>fold impact on the surrounding economy <v Martin Harris>because farmers, when they earn money, don't keep it under the mattress. <v Martin Harris>They go out and spend it and those who earn it, then we spend it again and so on.

<v Jenny Nelson>This is a list of the businesses that we do business with. <v Jenny Nelson>And if you look here at the top pool and Green and Morrison custom feeds, <v Jenny Nelson>that's where we buy all our grain for our cows. <v Jenny Nelson>And that amounts to about ninety eight thousand dollars worth of the farm expenses <v Jenny Nelson>that we have in a year. Five credit well, service savings bank, Ford Credit Corporation, <v Jenny Nelson>John Deere Co. and Telemark Inc. <v Jenny Nelson>Those are all the financial institutions where we borrow money, pay interest <v Jenny Nelson>and pay principals back. <v Mac Parker>In a single year of farming, about fifty thousand dollars pass through Homemaker's <v Mac Parker>Farm. There were substantial receipts and just as substantial expenses. <v Mac Parker>In the end, the Nelson family netted twenty four thousand dollars. <v Mac Parker>Their community gained three hundred and twenty six thousand dollars. <v Jenny Nelson>Potter, he's the fellow that repaired our tractors this spring, cost <v Jenny Nelson>about six thousand dollars. <v Mac Parker>And it goes on and on. <v Mac Parker>Agriculture contributes to the existence of thousands of jobs both in and

<v Mac Parker>out of farming. The industry relies on a vast infrastructure. <v Mac Parker>There are retailers to provide equipment, wholesalers to buy products, <v Mac Parker>educators to teach the latest technologies, bankers to finance improvements, <v Mac Parker>even government workers to keep tabs on all of it. <v Mac Parker>And it doesn't end there. <v Mac Parker>Tourism is Vermont's second largest moneymaker, and tourists want <v Mac Parker>to see farms. <v Jeff Carr>Having farms on the hillsides with cows chewing their cudd. <v Jeff Carr>Is something that tourists and travelers to Vermont have grown to expect. <v Jeff Carr>It's an integral part of the tourism experience. <v Jeff Carr>And the sightseeing experience for you is very pretty. <v Guest>You're very pretty. <v Mac Parker>Every fall, Bill and Jenny Nelson open their firm to a bus load of visitors <v Mac Parker>in search of the real Vermont. <v Jenny Nelson>I'd like to welcome you here to Vermont. <v Jenny Nelson>It's always fun to think that I'm the first Vermonter that gets to say hi to you. <v Jenny Nelson>And it's a real pleasure to have you here at Homemaker's Farm today.

<v Jenny Nelson>I think it's a wonderful opportunity for people to really meet <v Jenny Nelson>the farmers behind the bottle of milk. <v Jenny Nelson>They have a chance to go and see some calves in some of the band cats and smell <v Jenny Nelson>the fresh aroma. <v Jenny Nelson>And we really stress the fact that we take pride in making a good <v Jenny Nelson>product. <v Jerome E. Kelley>The people that produce agricultural products are intensely proud of their <v Jerome E. Kelley>own individual efforts towards producing quality. <v Jerome E. Kelley>We've had this reputation that goes back to the early days of our history. <v Jerome E. Kelley>If we just on average products to the market, the chances <v Jerome E. Kelley>are they would not have gotten a premium price and turn <v Jerome E. Kelley>would not have paid for that very tenuous track between <v Jerome E. Kelley>here in Boston. They're from here in New York. <v Jerome E. Kelley>It's a consequence. We always send our best products and that reputation has stayed <v Jerome E. Kelley>with us.

<v Mac Parker>Vermont farmers are devoted to their profession. <v Mac Parker>They have a nationwide reputation for producing quality and in the process, <v Mac Parker>enhancing the entire economy around them. <v Mac Parker>These would seem to be impressive ingredients for success and most business sectors. <v Mac Parker>So what's the problem here? <v Mac Parker>Simply stated, most Vermont farmers produce milk and most of that milk <v Mac Parker>is sold at a price that's below their cost of production. <v Mac Parker>Only 15 percent of Vermont milk is actually consumed in state <v Mac Parker>of the rest. <v Mac Parker>Half goes into products sold nationwide and the other half travels as fluid <v Mac Parker>milk to the supermarket shelves of southern New England. <v Mac Parker>The father of product travels from its point of origin, and the more people who <v Mac Parker>handle it on its way through the marketplace, the more confounding are the rules <v Mac Parker>that determine its price. <v Mac Parker>Nowhere is Vermont's vulnerability to market forces outside our borders

<v Mac Parker>more evident than in the way the price of milk is set. <v Mac Parker>This is where the current wholesale value of most basic foods is established. <v Mac Parker>High powered commodities trading here at the Chicago Mercantile Exchange <v Mac Parker>affects the producer price of everything from grain to pork bellies. <v Mac Parker>Here, the law of supply and demand takes the form of a wild auction <v Mac Parker>known for the sudden roller coaster price swings. <v Mac Parker>By which investor fortunes are made and lost. <v Mac Parker>But not all food commodities are traded at the market. <v Mac Parker>This is the action at the National Cheese Exchange. <v Mac Parker>It's here in a 20 by 40 foot store front in Green Bay, Wisconsin,

<v Mac Parker>that one of the most unique phenomena in market economics has played out. <v Mac Parker>Each Friday morning at exactly 10 a.m. <v Mac Parker>here each day to reduce it off around here, off to 135 or what happens <v Mac Parker>in the next half hour will greatly influence the price that America's 170 <v Mac Parker>1000 dairy farms will get for their milk. <v Mac Parker>Because the common denominator for milk prices throughout the nation is cheese. <v Mac Parker>One third of the milk that America's dairy farmers produce becomes cheese, <v Mac Parker>whether it be Monterey Jack or cheddar. <v Mac Parker>It comes off the assembly line looking like this. <v Mac Parker>Known in the industry as block or barrel cheese, since big processors <v Mac Parker>aren't completely sure how much cheese they'll sell. <v Mac Parker>They store their surplus in cold storage warehouses like this one until the extra <v Mac Parker>cheese becomes a problem or an opportunity. <v Tina Seifert>The members can either offer cheese if they have cheese for sale or they <v Tina Seifert>can bid for cheese if they desire to buy cheese.

<v Richard Gould>People come here when they have an excess of inventory or when a processor <v Richard Gould>or a company has contracts to supply a customer and they find themselves <v Richard Gould>needing a little more cheese than they have on hand. <v Richard Gould>Basically, every major cheese company in the United States is a member. <v Richard Gould>We have the major co-ops, Mid-America Farms, <v Richard Gould>API, Land O'Lakes, and then we have the big <v Richard Gould>cheese companies like Kraft Board and Shreiber. <v Mac Parker>Attorney Richard Gould presides over the weekly writes of cheese trading, <v Mac Parker>as he has for over 30 years. <v Mac Parker>In fact, everything about the exchange is steeped in tradition, from the portraits <v Mac Parker>of past cheese giants to the original 1915 charter <v Mac Parker>that created a private sector institution that would ultimately become the barometer <v Mac Parker>of an entire industry. <v Guest>Now finalized reduces its offer to one thirty three fourths. <v Richard Gould>Our primary purpose is not to serve as a benchmark for establishing

<v Richard Gould>the prices of cheese. <v Richard Gould>It just turned out that way because people have found that the transactions here <v Richard Gould>are an accurate barometer of the value of cheese. <v Mac Parker>This day has not been a good one. <v Guest>Four barrels at 130 and a half offered by Kraft. <v Mac Parker>A single computer transmission of the morning's trading to the federal Milk Marketing <v Mac Parker>Administration will result in a four percent price drop nationally. <v Mac Parker>Among the losers will be Vermont farmers. <v Bernie Sanders>Their policy is precisely to drive prices down for farmers. <v Bernie Sanders>If the people who purchase the milk and distribute it can pay farmers lower prices, they <v Bernie Sanders>make more money. And that's what they've been doing. <v Lee Light>There's a lot of money being made off of the cheap milk prices. <v Lee Light>I mean, the processors who are buying the cheap, raw product <v Lee Light>have ample supply of as much milk as they want. <v Lee Light>They can turn it into a value added product, put it on the market and make a lot of

<v Lee Light>money. <v Richard Gould>Every time the market goes down, the national cheese <v Richard Gould>exchange gets blamed. <v Richard Gould>Just as the messenger gets blamed when he brings bad news. <v Richard Gould>Well, I, I can't account for that. <v Richard Gould>We demonstrate the free a free market economy. <v Mac Parker>A free market theoretically rewards all participants. <v Mac Parker>But in the case of American agriculture, one set of players seems to be losing <v Mac Parker>out at a party. <v Mac Parker>While Americans are paying more for their food. <v Mac Parker>Farmers are making less. <v Mac Parker>The United States Department of Agriculture found that the farm value for milk <v Mac Parker>what the farmer earned, dropped five percent from 1982 to 1994. <v Mac Parker>While grocery prices for dairy products rose 30 percent.

<v Mac Parker>Some blame the situation on greedy retailers. <v Dan Smith>Somebody in the milk business is making money. <v Dan Smith>The supermarkets are making the money. <v Dan Smith>Farmers are being paid a dollar. Ten dollar, 20 a gallon. <v Dan Smith>Consumers are paying 250 a gallon. <v Mac Parker>Or is it the processers fault? <v Martin Harris>Middle men are making up about what middle man in other industries <v Martin Harris>are making. But because farmers are making so little, the men of middle man <v Martin Harris>take looks abusive by comparison. <v Martin Harris>Or is it our own fault? <v Martin Harris>Milk is cheap because consumers have exercised their clout to <v Martin Harris>encourage enough of a state of overproduction that the milk prices are down <v Martin Harris>as low as they can get. <v Robert Wellington>There is no culprit in the current milk pricing situation. <v Robert Wellington>Basically, consumers have been the ones that had been the primary beneficiaries of low <v Robert Wellington>milk prices over the last several years. <v Mac Parker>Americans have long enjoyed the cheapest food of all the industrialized nations.

<v Mac Parker>Why? Well, one theory is that the government's been helping us with our <v Mac Parker>grocery bill as part of a deliberate policy of social engineering. <v Martin Harris>Well, the national keep food policy is not an American invention, it's a Western European <v Martin Harris>invention. And they're policy planners decided that if urban workers <v Martin Harris>did not spend money on food, they would spend it on urban products and services. <v Martin Harris>When the U.S. became Urban 1920 census records that <v Martin Harris>our policy planners then followed the European model, we adopted a <v Martin Harris>cheap food policy. The only difference is that we have been far more successful at it <v Martin Harris>than anybody else. And our food, therefore costs less in proportion <v Martin Harris>than in any other Western country. <v Mac Parker>Urban areas have played another key role in determining how Vermont milk is sold. <v Mac Parker>The cities of southern New England are Vermont's major dairy market, as they've been for <v Mac Parker>over 100 years.

<v Mac Parker>By the turn of the century, the distant urban thirst for Vermont's fluid milk was <v Mac Parker>unquenchable. <v Mac Parker>But farmers soon discovered that it took more than railroad tracks to get their product <v Mac Parker>to market. A sophisticated network of handlers and middlemen all wanted <v Mac Parker>a cut of the action. In response, farmers found strength in numbers <v Mac Parker>by joining co-operative marketing associations. <v Mac Parker>Though the new member owned co-ops were able to force price concessions in far off <v Mac Parker>Boston, they suffered some early setbacks. <v Mac Parker>Closer to home. <v Robert Wellington>In the first part of the century, co-ops tried to set and maintain the price of milk. <v Robert Wellington>However, they were often undercut by farmers who did not belong to cooperatives. <v Robert Wellington>This would send that price of milk spiraling downward. <v Mac Parker>Dairy co-ops have had a stormy history. <v Mac Parker>Milk strikes, bankruptcies and mergers have tested the system over the years. <v Mac Parker>Take the crisis that recently struck one of Vermont's oldest and most successful <v Mac Parker>cooperatives, a crisis that challenged the concept of farmer owned marketing.

<v Mac Parker>While revealing the stark realities of selling milk. <v Mac Parker>The old hill farms overlooking the sleepy village of Cabot are survivors <v Mac Parker>today, due in large measure to something that happened in 1919 <v Mac Parker>at a time when the Boston milk market must have seemed as remote as Mars. <v Mac Parker>A handful of Cabot farmers took control of their own destiny. <v Arnold Tebbetts>A group of farmers get together decided to form a co-operative. <v Arnold Tebbetts>They invested thirty dollars per cow or something and started the Creamer. <v Mac Parker>The character of the people who farm the hills around Cabot derives from the character <v Mac Parker>of this place, carved as it was out of a sharply defined upline <v Mac Parker>valley. The Cabot Creamery came to represent the independence and self-determination <v Mac Parker>of a community. Eventually, the local identity and that of its primary

<v Mac Parker>industry became one in the same. <v Mac Parker>The creamery gave local farmers like Knight Abbott and Arnold Tebbetts <v Mac Parker>their first lessons in cooperation and pride. <v Arnold Tebbetts>Everyone that we in Cabot shipped out to Cabot and there were hard <v Arnold Tebbetts>times along the way. <v Arnold Tebbetts>There were times I know there was one time when my father had to and some <v Arnold Tebbetts>other farmers had to sign a note. <v Arnold Tebbetts>The Caledonia Bank. <v Arnold Tebbetts>So everybody could get paid for their milk. <v Knight Abbott>When I started shipping there,there was a pride in being in the ownership of it. <v Knight Abbott>You still had a voice in what was happening there? <v Knight Abbott>It paid dividends. We got a little money back. <v Knight Abbott>That money, if we sold out and retired over a period of <v Knight Abbott>seven years, we would flow into our retirement.

<v Knight Abbott>Which was excellent. <v Knight Abbott>Because farmers don't put a lot away for retirement anyway. <v Knight Abbott>So it was was good. <v Knight Abbott>And I just gave you a strong, healthy feeling being there and belonging <v Knight Abbott>to it. <v Mac Parker>It was a perfect match. Hardworking local producers supplying <v Mac Parker>the seemingly endless needs of a well-run nearby processing plant <v Mac Parker>which they themselves owned. <v Mac Parker>And for the better part of a century, the marriage worked. <v William Davis>So what went wrong? This gem, this model of cooperative spirit. <v William Davis>Where did it go? Awful. It was lack of communication, lack of of <v William Davis>getting the entire membership to understand the complexities and <v William Davis>the changes in the market. <v Mac Parker>Bill Davis spent his first 11 years at Cabot as marketing director. <v Mac Parker>Over that time, he saw a pattern of declining profits for processors like Cabot <v Mac Parker>that supplied commodity products to brand name companies. <v William Davis>We were a commodity company in an area with much higher costs than anybody else.

<v William Davis>And either we took a risk and got into the value added consumer products business <v William Davis>or fold up our tent. We were literally at that point in time. <v William Davis>We had commitments like a ninety three thousand square foot warehouse. <v William Davis>We needed both a place to store an age, our cheese, so we built one <v William Davis>is a real high stakes gamble for the owners. <v William Davis>And I think many of them knew that. <v Lee Light>I mean, that was during the 80s. <v Lee Light>I mean, a lot of businesses over invested. <v Lee Light>And, you know, I think he over invested. <v William Davis>Many of the members recognized that this was a long term investment <v William Davis>and keep the money in the company and working and other members saw it <v William Davis>as an opportunity to have some cash to help them on their own farms. <v Lee Light>Here you have farmers that are severely economically stressed to begin with. <v Lee Light>And to say that you're going to have to spend 50 cents more out of every 100 pounds of <v Lee Light>milk to ship to keep Cabot going.

<v Lee Light>Most of the farmers couldn't afford to do that. <v William Davis>We brought in a couple outside consultants who said, you've got a great story <v William Davis>to tell. If you're gonna be a consumer products company, you need to get some more equity <v William Davis>in here. <v William Davis>We recommend that you take a look at selling part of the company. <v William Davis>This was not anything that was either understood or <v William Davis>supported by the board because we'd been doing so well. <v William Davis>They said, no, let's keep it all. We want a hundred percent ownership. <v William Davis>Hundred percent control. <v William Davis>And we went on with business. <v William Davis>And then all of a sudden, milk prices went to unprecedented high levels, which <v William Davis>were good for the dairy farmers. But increase the cost to make cheese <v William Davis>because the high milk price farmers produce more product. <v William Davis>We made extra cheese. And as a co-op, we had way too much product to market. <v William Davis>So the banks said, you can't do this. <v William Davis>You need some equity. You can't keep paying cash out. <v William Davis>You need to leave that cash in the company.

<v William Davis>Some of the owners said, let's get smaller. <v William Davis>And then and then we can finance it and let's keep it just the way it is. <v William Davis>And then there was another group that said, let's put more, more, more money in this. <v Guest>Board of directors is willing to work with all of the membership <v Guest>and making sure that what we come up with next for our plan is one that does represent <v Guest>everybody. <v William Davis>The board decided that the best way to keep the co-op was to get outside <v William Davis>resources to finance the manufacturing marketing company. <v Arnold Tebbetts>The news first came out that. <v Arnold Tebbetts>They were looking for outside investors. <v Arnold Tebbetts>We surmised that there was a problem. <v Lee Light>I mean, it was a total shock to all of us. <v Lee Light>When they started saying we're going to have to sell this place. <v William Davis>Local farmers had a real attachment to the co-op and had an emotional <v William Davis>tie with a co-op. <v William Davis>Didn't like that solution. And so we had a very <v William Davis>long and and bitter struggle internally <v William Davis>with the board and the membership, trying to decide what they wanted to be

<v William Davis>going on. <v Mac Parker>July thirty first nineteen ninety two, following a series of skirmishes between <v Mac Parker>management board and membership. <v Mac Parker>The Cabot Farmer's Co-operative Creamery became a subsidiary of the region's largest <v Mac Parker>dairy co-op, agro market. <v Mac Parker>For many, the merger meant being able to move ahead with the new cabinet. <v Mac Parker>Others saw it as a betrayal. <v Mac Parker>I just didn't want to deal with Selling. <v Mac Parker>Sold the herd got out. <v Mac Parker>Knight Abbott had come out of retirement and bought a new herd of cows just to be able to <v Mac Parker>vote against the merger. He refused to sign on with Agramark and lost <v Mac Parker>most of his equity. <v Arnold Tebbetts>They gave us an opportunity to take in 50 cents on the dollar, getting on. <v Mac Parker>Arnold Timbits quit the co-op. <v Mac Parker>His father helped start in 1919. <v Mac Parker>He lost two thirds of the equity he'd built just to be able to sell his milk elsewhere. <v Arnold Tebbetts>We were fed up with the whole situation and

<v Arnold Tebbetts>didn't want to be involved anymore and didn't want to support <v Arnold Tebbetts>what was going on. <v Lee Light>We were heartbroken. I mean, we had chipped our milk cabot for 50 years. <v Lee Light>Then we finally lost it. <v Lee Light>A part of us was lost. And until it was the beginning of us not <v Lee Light>feeling good about being in the dairy business. <v Mac Parker>In the aftermath of their defeat in the merger battle, Bob and Lee light would <v Mac Parker>eventually leave dairy farming altogether. <v William Davis>I mean, maybe we should have been just this little company that sold dairy products in <v William Davis>Vermont and that's fine. <v William Davis>And that would have been all right in a in a in a world that wasn't changing. <v William Davis>I love this. <v Mac Parker>As for Bill Davis, life as a corporate division head would mean a more receptive <v Mac Parker>audience for his gospel of market pragmatism and changing times. <v William Davis>That's clearly going to jump out. So that's why we are in a capitalistic <v William Davis>society. Some of us don't like it.

<v William Davis>Some of us do. But the reality is that's where we are with agriculture. <v William Davis>Supply and demand. <v William Davis>We are competing nationally and soon internationally. <v William Davis>And we need to to understand that competition and figure out ways to <v William Davis>maneuver around it. <v Mac Parker>The financial stakes have far surpassed anything the founders of this creamery <v Mac Parker>ever imagined. Where once quality was enough to keep farmers competitive, <v Mac Parker>the key to survival in today's marketplace is scale. <v Mac Parker>In 1931, there were 33 cooperative creameries based in Vermont. <v Mac Parker>Now there's only one. The 567 members of the St. Albans <v Mac Parker>Co-operative Creamery represent barely a third of the farms in the state. <v Mac Parker>Most of the others sell their milk to out-of-state companies that keep their competitive <v Mac Parker>edge through sheer size. Hi, welcome to Apple. <v Mac Parker>Mac AG Remarque is the largest dairy cooperative in New England here <v Mac Parker>from its suite of modern offices in suburban Methuen, Massachusetts. <v Mac Parker>The co-op oversees the shipment of one hundred and forty eight tanker loads of milk a day

<v Mac Parker>from over 2000 farms throughout the Northeast. <v Mac Parker>That's two and a half billion pounds of milk a year, 24 hours a day, <v Mac Parker>seven days a week, 365 days a year. <v Gloria Little>Right. Thursday, Friday and Saturday. OK. <v Gloria Little>Thank you. <v Gloria Little>I'm keeping track of a million pounds of milk per day that's picked up from <v Gloria Little>memberss. It's delivered to different customers all over New England. <v Gale Monidor>We do take this home with us on the weekends and at nights on call 24 hours a day. <v Mac Parker>The co-operative buys milk from eight hundred Vermont firms, Agramark <v Mac Parker>membership means farmers can do business with industry giants like HP, Hood <v Mac Parker>and Kraft. By virtue of the contracts their co-op negotiates with these large <v Mac Parker>processors. <v Guest>Let me put that one together and then I'll get back to you. <v Guest>Okay, very good. <v Mac Parker>It's a system that works for thousands of farmers taking advantage of collective might <v Mac Parker>to reach distant, lucrative markets.

<v Mac Parker>But it's not a system that works for everybody. <v Mac Parker>Many Vermont farmers are feeling increasingly disenfranchized by the growth <v Mac Parker>of what used to be a small local organization. <v Mac Parker>As the dairy industry has grown, many say it has grown beyond Vermont farmers <v Mac Parker>ability to understand it or control it, activated by 10 years <v Mac Parker>of stagnant milk prices. Some farmers are taking on their co-op. <v Karen Shaw>I think the tail has been wagging the tiger too long. <v Forest Foster>We're getting the same price as we were when they started in 1980. <v Mac Parker>In the spring of 1993, Agramark members Karen Shaw and Forest <v Mac Parker>Foster sued for disclosure of the salaries of co-op managers. <v Mac Parker>They argued that the co-op was being run for the benefit of management, not farmers. <v Mac Parker>Foster and Shaw stated that as member owners of the co-operative, it was their right to <v Mac Parker>know the salaries of their employees. <v Mac Parker>Agramark replied that since Foster and Shaw were members, but not shareholders in the <v Mac Parker>company. The co-op did not have to reveal the salaries. <v Guest>That is the way I see. The problem is that most of us work a lot of hours

<v Guest>and don't make a lot of money. <v Mac Parker>That summer, Agramark farmers from Vermont's Northeast Kingdom met to discuss <v Mac Parker>bringing the salary issue before their board of directors. <v Guest>We as the board of directors aren't gonna know unless we discuss it. <v Guest>So I've no problem with discussing it. <v Guest>I think the main feeling is that we want to be sure that they're <v Guest>earning their pay. <v Guest>What do the co-ops in California pay their management? <v Guest>How do you know that whole industry competes for jobs among themselves? <v Guest>Maybe we are overpaying ours. Maybe we're underpaid, but we don't know. <v Guest>Would you let me come to your farm and say, I want to know what you are on your farm. <v Guest>Let you make a profit. How much it cost you to make it and <v Guest>how much you get ended up with? Is your management wrong? <v Guest>You did it for you are going to sit there and tell me. <v Guest>I now so many dollars this way. <v Guest>That is none of your business. But this is a business because this is our <v Guest>company, right. We own it.

<v Mac Parker>One year later, a U.S. district court ruled in favor of foster and shore, <v Mac Parker>Agramark disclosed the predictably high salary of its general manager, <v Mac Parker>a salary that the company claims is simply a part of the cost of doing big business. <v Robert Wellington>That salary is based upon the duties and responsibilities of a general manager <v Robert Wellington>who is running a 400 million dollar business. <v Robert Wellington>Those duties and responsibilities are different from what a farmer who's milking 50 or <v Robert Wellington>60 cows would have. It's a very difficult task to run a milk marketing cooperative. <v Robert Wellington>We basically have to pick up all our producers milk every day and find <v Robert Wellington>a home for it at the highest possible price. <v Robert Wellington>However, at the same time, we have to meet the needs of remember owners, <v Robert Wellington>and often those needs are a conflict. <v Mac Parker>Some Agramark members applauded the release of salary information. <v Mac Parker>Others condemned the decision. <v Mac Parker>The situation reflects one of the major hurdles farmers face in controlling the sale <v Mac Parker>of their product. An inability to reach consensus among themselves. <v William Davis>You have many member owners of a co-operative and they have to agree on these type of

<v William Davis>issues. We have a large group together that can be a difficult task. <v Guest>If everybody wants to do something different than everybody else and we're not willing <v Guest>to give up a little bit of our freedoms to band together to achieve some overall good, <v Guest>we're really gonna be noncompetitive in the dairy world. <v Mac Parker>York, Pennsylvania, June 1993. <v Mac Parker>In a first of its kind event, farmers from around the nation have gathered for a dairy <v Mac Parker>summit. <v Mac Parker>At issue is the continued nosedive of milk prices and the loss of family <v Mac Parker>farms that goes with it. <v Curt Rothland>The average family farm is being squeezed harder and harder until <v Curt Rothland>there's fewer and fewer of us left. <v Duane Clark>We see corporate farming looming on the edge pretty well devoured the poultry <v Duane Clark>industry. They're working on the swine industry. <v Charlotte Pellegrini>We have an aging dairy infrastructure and an aging farm population. <v Charlotte Pellegrini>We don't have young people coming in that want to take over the family farm. <v Charlotte Pellegrini>There's no incentive.

<v Mac Parker>The summit has been organized by Senate Agriculture Committee chairman Vermont Senator <v Mac Parker>Patrick Leahy in attendance as U.S. <v Mac Parker>Agriculture Secretary Mike Espy. <v Mike Espy>As you know, we are dedicated to to be in farmer friendly. <v Mike Espy>And part of that farmer friendliness, is doing everything that we can do to try to <v Mike Espy>improve farm income. <v Mike Espy>That's our number one priority. <v Doug Clarke>Mr. Chairman. Mr. Secretary, I'm Doug Clarke from Franklin, Vermont. <v Doug Clarke>I would like you people to take back with you four important things. <v Doug Clarke>Number one, I'm not willing to have my farm taken away from me. <v Doug Clarke>Number two, I'm not willing to have to give my farm away. <v Doug Clarke>Number three, we must have a supply management system of some kind. <v Doug Clarke>And number four, we have to have our cost of production plus <v Doug Clarke>a reasonable profit.

<v Mac Parker>Maybe the best that can be said for the dairy summit is that it occurred. <v Sen. Patrick Leahy>We've never had a secretary of agriculture and chairman of the committee who are willing <v Sen. Patrick Leahy>to sit down and listen like this. <v Mike Espy>It depends on who you talk to. They seem to have a different opinion. <v Mike Espy>Time to sit and listen to everyone in order to construct a policy that <v Mike Espy>is fair and equitable. <v Mike Espy>We want to do everything that we can do to support production, agriculture, <v Mike Espy>everything that we can do. <v Mac Parker>The worst that can be said about the summit is that it would have little immediate impact <v Mac Parker>on the hard issues facing today's dairy industry. <v Mac Parker>Why? Well, some say it's because even if farmers can get together in <v Mac Parker>one room, they still can't get together on a single point of view. <v Curt Rothland>Unity is extremely important. <v Curt Rothland>If we're going to actually have dairy programs that can <v Curt Rothland>benefit us here in the Northeast. <v Guest>I voted and I looked across and I got no vote. <v Guest>If we do not come away from here today with some kind of a unity in a form of a program <v Guest>that we want for dairy farmers, we're not going to be here much longer.

<v Guest>And we're not going to need the processes to process our product because there won't be <v Guest>anything. <v Farmer>Nobody is going to get the absolute perfect plan because there is no <v Farmer>absolutely perfect government plan for any farmers. <v Farmer>And farmers have got to understand that's not going to happen. <v Lee Light>I think that in the agricultural community, there are very diverse <v Lee Light>views. The politicians thrive on that because if <v Lee Light>the farmers are divided, that means they don't have to do anything because, you know, <v Lee Light>they can't they can't get a clear cut solution to the problem. <v Charlotte Pellegrini>There's just not enough farmers. <v Charlotte Pellegrini>And I don't think there's enough people in Congress and Senate that have farm interests <v Charlotte Pellegrini>at heart. <v Bernie Sanders>A hundred years ago, farmers were an important political bloc because you had millions of <v Bernie Sanders>family farmers and their representatives had to listen to them if they wanted to get <v Bernie Sanders>reelected. What we know now is with the decline of the family farms, farmers do not have <v Bernie Sanders>the political clout. <v Bernie Sanders>Two years ago, there was a guy from Wisconsin.

<v Bernie Sanders>Who I have disagreements with where he comes from, a dairy farm state. <v Bernie Sanders>And he got on the floor of the house and he was talking about the serious problems facing <v Bernie Sanders>family farmers, dairy farmers and within the group of members in the Congress <v Bernie Sanders>were listening. So these guys are going moo. <v Bernie Sanders>They thought it was all very funny. <v Speaker>If we could come if we could come back and <v Speaker>order. <v Mac Parker>What neither the government nor farmers appear to be taking very seriously, is that <v Mac Parker>unless some kind of consensus is reached very soon, a vital economic <v Mac Parker>sector may suffer beyond the point of repair. <v Mac Parker>In New York, we've lost over 10000 dairy producers since 1980. <v Mac Parker>They have several choices. <v Mac Parker>Or do they? They can control the amount of milk produced, thereby increasing <v Mac Parker>its value and the farmer's profit margin. <v Guest>We need a two tier supply management program that will give us a cost <v Guest>of production plus a profit. <v Guest>We have been asking for this for years. <v Mac Parker>But self-regulation seems as unlikely a prospect as federal regulation.

<v Mac Parker>The government can further subsidize farm products. <v Mac Parker>But government is trying to cut costs, not increase them. <v Mac Parker>They can develop foreign markets. <v Mac Parker>But dairy products are perishable. <v Mac Parker>And many countries protect their own dairy industries with trade barriers. <v Mac Parker>Or they can simply sit back and let free market competition decide which farmers <v Mac Parker>will stay in business and which ones won't. <v Mac Parker>Whatever the choice, whoever produces milk the cheapest way may have the best <v Mac Parker>chance of surviving. <v Mac Parker>Dairy farmers are currently guaranteed a market for their product, no matter how <v Mac Parker>much milk they produce, someone will buy it. <v Mac Parker>The farmers who grow Vermont's other agricultural products aren't so fortunate. <v Mac Parker>What they grow. They also sell. <v Mac Parker>And they know some things about the free market that dairy farmers don't. <v Hank Bissell>I think that part of the problem the dairy industry has is <v Hank Bissell>they've given away their marketing to someone else.

<v Mac Parker>Hank Bissell is typical of the hard headed entrepreneurial realists who inhabit <v Mac Parker>Vermont's nondairy farming sector without the benefit of a marketing infrastructure. <v Mac Parker>Success in the wholesale vegetable business relies on the ability to sense <v Mac Parker>the buying mood of your customers and pounce on it. <v Hank Bissell>What the market demands is what drives my business determines what I grow. <v Hank Bissell>What quality it needs to be. <v Hank Bissell>Cause if I can't sell something, no matter how good it is, if I can't sell something, <v Hank Bissell>there's no money. The bottom line is I'm making a living. <v Hank Bissell>I may be really thrilled about growing winter squash and pumpkins, <v Hank Bissell>but if there's no one to buy it or buy the quantity, I swallow the loss. <v Hank Bissell>All the potatoes are in upstairs is, are you still getting the same number of chef's? <v Hank Bissell>I am growing food for other people. <v Hank Bissell>What they want drives what I grow and how I grow

<v Hank Bissell>it. <v Mac Parker>Control over a farmer's own sales comes at a price. <v Mac Parker>Entrepreneurship means all kinds of added responsibilities like market <v Mac Parker>analysis and product development. <v Hank Bissell>The problem with cauliflowers. People don't want a white vegetable. <v Hank Bissell>The only thing that sells cauliflower is this brilliant white cauliflower. <v Hank Bissell>I remember the first time I had to do shopping for myself and I went to the grocery <v Hank Bissell>store and I was just struck by <v Hank Bissell>this cauliflower. <v Hank Bissell>It's just the way it was whiter than a piece of office paper. <v Hank Bissell>It was just glowing there. <v Hank Bissell>And I know I bought it because I was just so struck by that <v Hank Bissell>item. And that's why people buy cauliflower, because it's almost a mystical <v Hank Bissell>experience to see this. This bright white thing.

<v Hank Bissell>And I've just been struggling for years getting that whiteness. <v Mac Parker>Uncompromising quality control gives the Bissell's one of the few advantages <v Mac Parker>they have to compete with large out-of-state growers. <v Hank Bissell>My philosophy has always been a good product sells itself. <v Hank Bissell>And I've spent very little on advertising. <v Hank Bissell>And found that that if I if I produce something <v Hank Bissell>good, they'll come back for. <v Hank Bissell>The other thing is getting the quality of crop that you need <v Hank Bissell>at a reasonable cost. <v Hank Bissell>You can jump through all sorts of hoops at great expense, but you may not make any money <v Hank Bissell>on it. You still have to make some money on yourself. <v Hank Bissell>It's gotta be some left over for me. <v Lee Light>Competition is the name of the game. We try to stay ahead of the game. <v Lee Light>It's a very small change from the field to the packing shed to me <v Lee Light>and then to the consumer. So there's a lot of accountability.

<v Mac Parker>Whether it's selling at a curbside farmer's market, selling directly to <v Mac Parker>the consumers. <v Cecilia Bissell>You get some very direct feedback. <v Mac Parker>Or hawking wholesale orders from her converted bedroom office. <v Mac Parker>Hi there. <v Cecilia Bissell>Sure. It's this pretty much the same list. <v Mac Parker>Like her partner, Cecilia Bissell's, sales marketing priorities are clear and to <v Mac Parker>the point. <v Cecilia Bissell>The customer is always right and we have to continually be vigilant <v Cecilia Bissell>in serving them well and accommodating their special <v Cecilia Bissell>needs, which I think small farmers can lend themselves to doing. <v Cecilia Bissell>The two pounders sell better for you than the one pound. <v Cecilia Bissell>Normally we sell carrots in a 50 pound bag. <v Cecilia Bissell>But if somebody asks for only 10 pounds, we will do that. <v Cecilia Bissell>They may be charged a little bit more, but we will do it. <v Cecilia Bissell>We smile and say, Sure. <v Mac Parker>To compete with supermarket chains that can offer the largest and cheapest selection,

<v Mac Parker>local growers like the Bissell's of Lewis Creek Farm are capitalizing on the things <v Mac Parker>only they can offer freshness, top quality and something more. <v Hank Bissell>It's that personal contact that ultimately makes the sale, <v Hank Bissell>makes the difference. It's the integrity of the of the personal <v Hank Bissell>relationships that people <v Hank Bissell>get out of buying locally. <v Hank Bissell>This feeling of some sort of personal connection with the product or the people <v Hank Bissell>that grew it, that is the satisfaction <v Hank Bissell>that sells local product. <v Mac Parker>Selling local products means more than just setting up a roadside stand. <v Mac Parker>It means getting out and meeting the customer, something that many Vermont farmers are <v Mac Parker>doing for the first time. <v Paul Stone>Would you like to try some Vermont, Turkey.

<v Paul Stone>This tells about our farm, we grow our own turkeys and have 10000 <v Paul Stone>this year. <v Paul Stone>This is our turkey breast. <v Paul Stone>This whole project that you're attending here is to help farmers market their products. <v Mac Parker>Eight years ago, Paul Stone would probably have spent a summer afternoon getting <v Mac Parker>in a second cut of hay. <v Mac Parker>Today, the former dairy farmer is serving up Turkey Galantine to a <v Mac Parker>crowd of upscale consumers. <v Paul Stone>This tells about our farm. These turkeys are grown in Vermont. <v Mac Parker>Paul Stone is a man more at ease on a tractor than in front of a crowd. <v Mac Parker>But if he wanted to keep farming, serving up a little turkey was a necessary change. <v Paul Stone>I farm because I like it. It's an emotional thing. <v Paul Stone>And the problem with that is when farmers or anybody makes a decision on an emotional <v Paul Stone>level, it may not make economic sense. <v Mac Parker>In 1989, Paul and Frances Stone sold their dairy herd.

<v Mac Parker>They were tired of making less and less money for their milk. <v Mac Parker>They wanted to try a new venture, one that would give them more control over the price of <v Mac Parker>their product. <v Mac Parker>Turkeys, thousands of them raised with care. <v Mac Parker>Out on the open range with no hormones or antibiotics, especially <v Mac Parker>product that the Stones can charge more for than average mass produce Turkey. <v Mac Parker>With this new product came the need to learn some new skills. <v Paul Stone>There are lots of opportunities in all areas of agricultural production as far as I'm <v Paul Stone>concerned, but the key to it is being willing to have some kind of a marketing ability. <v Paul Stone>Once we change turkeys, I've found that I've spent half my time <v Paul Stone>marketing the other half and trying to run the farm. <v Paul Stone>This is a turkey galantine turkey,. <v Guest>a trukey which? <v Paul Stone>Galantine. <v Paul Stone>Some points, marketing is all we do for extended periods of time. <v Paul Stone>Go to food shows. We're on the road going to stores, you know. <v Paul Stone>Would you like to handle our products? Here's what we have been turned down.

<v Paul Stone>Having enough gumption to go to the next store and not and <v Paul Stone>even though you're discouraged. And it's it's it's a new kind <v Paul Stone>of experience. Many farmers are not interested in it. <v Mac Parker>To the Stones, Marketing means more than just getting their product from the farm to <v Mac Parker>the customer. They found it's better advertising to bring the customer <v Mac Parker>to the farm. <v Paul Stone>Stop and look. <v Guest>OK we'll surley do that. <v Frances Stone>We decided early on that we were not only going to grow Vermont turkeys, <v Frances Stone>but we were going to grow Stonewood Farm, Vermont turkeys. <v Frances Stone>And I think we are the first ones in the state that actually have our own <v Frances Stone>label. Of course, we have our name and address and our phone number, and we make <v Frances Stone>it plain that our numbers there for you to call us. <v Frances Stone>And I found that people really like it when I can tell them personal things about <v Frances Stone>the farm, about the turkeys, they'll call me and say, well, I have a dumb question, <v Frances Stone>but, you know, and it's like, that's OK.

<v Frances Stone>You can have a dumb question. Just tell me what it is. <v Mac Parker>The Stones versatility has paid off. <v Mac Parker>In 1994, they raised, processed and sold over 12000 <v Mac Parker>birds. Shipping haul turkeys and turkey products all over New York and <v Mac Parker>New England. The new venture does have a downside. <v Mac Parker>The Stones now process what they raise. <v Mac Parker>It costs two hundred thousand dollars to build this new plant. <v Mac Parker>It's going to take a lot of turkey to pay it off. <v Paul Stone>If transferring from dairy to Turkey's wise. <v Paul Stone>I'm not sure I can answer that question yet on the economics <v Paul Stone>part of it. But on the other part of it, to be able to do some marketing. <v Paul Stone>Yes, I'm very glad I made the change. <v Paul Stone>This tells about how our turkeys are growing. <v Paul Stone>They're all Vermont turkeys. <v Paul Stone>The key to me is marketing. <v Paul Stone>One of the big advantages we have in Vermont is the name Vermont. <v Paul Stone>It has historically meant a lot to people in terms of quality and tastiness.

<v Paul Stone>And it's just a great tool that most other states don't have. <v Paul Stone>I feel that we have that advantage and we're not taking enough advantage of <v Paul Stone>it, particularly in Milk. <v Mac Parker>If the Vermont name can sell turkeys, can it do the same for milk? <v Mac Parker>Not long ago, Steve Judge was a typical Vermont dairy farmer. <v Mac Parker>He worked efficiently and produced lots of milk. <v Mac Parker>Yet his Jersey herd generated barely enough income to support his farming <v Mac Parker>operations, let alone his family of six. <v Mac Parker>Something had to change. <v Steve Judge>We realized very quickly that we needed to get more money for our milk. <v Steve Judge>I was stuck in a single guaranteed market, and because <v Steve Judge>the guaranteed price is so low, it doesn't really <v Steve Judge>cover our production costs. <v Mac Parker>At a time when most of the farm community was busy lamenting their economic plight. <v Mac Parker>Judge set out to find a better way to market his product.

<v Steve Judge>Since we were a farm that focused on quality and keeping our cows <v Steve Judge>clean and treating them humanely. <v Steve Judge>With a family or a heavy family orientation, <v Steve Judge>we felt that there was a market for for milk like that. <v Steve Judge>He liked the farms and we've price for the Wilfred's farm. <v Steve Judge>So the first thing we did was to identify a group of farmers that <v Steve Judge>would come together as a marketing organization. <v Jonathan Rutter>I heard of what Steve was trying to do and I pursued it. <v Mac Parker>One by one judge signed on nearby farmers who shared his vision of <v Mac Parker>a small local cooperative marketing their own premium priced milk <v Mac Parker>on the basis of unconventionally high standards. <v Jonathan Rutter>I felt that this was perhaps the wave of the future <v Jonathan Rutter>if we and other farmers were going to survive in the area. <v Mac Parker>The success of Vermont milk producers would depend on a subtle blending of reality <v Mac Parker>and image. Judge recruited only farms he knew would fit his

<v Mac Parker>demanding criteria. Member firms had to be family owned and operated. <v Mac Parker>The new company would market wholesomeness for all it was worth. <v Steve Judge>Consumers know where the milk comes from. <v Steve Judge>They can call and find out what the names of the farmer's kids are. <v Steve Judge>We then go beyond that and have identified concerns that consumers have about <v Steve Judge>the dairy industry, that the cows on the farms producing milk are well treated. <v Steve Judge>About the environmental impact of dairying on the land. <v Steve Judge>So we designed our production methods from start to finish to address <v Steve Judge>the concerns feeding once a day to the milkers. <v Paul Seiler>It's not something magic that we are doing. <v Paul Seiler>We're just trying to make good quality milk in a <v Paul Seiler>clean in an animal environmentally friendly atmosphere. <v Paul Seiler>It's it's it's not magical. <v Paul Seiler>And the magical part is trying to produce the product and then <v Paul Seiler>market it and get paid more.

<v Mac Parker>Judges personally signed guarantee on every carton announces the centerpiece <v Mac Parker>of his value added marketing campaign, quote, the best tasting <v Mac Parker>milk we can make. <v Steve Judge>Interestingly enough, since so probably the 1960s, there has been no emphasis <v Steve Judge>on flavor in the dairy industry. None flavor is a whole new dimension. <v Steve Judge>I don't know if you ever had a dream where you. <v Steve Judge>You walk into a room and off your house or apartment and so you enter a room you've never <v Steve Judge>seen before. Well, that's what flavor was to us. <v Steve Judge>We had never really dealt with it. <v Mac Parker>Following the common wisdom that milk flavor is closely related to two specific <v Mac Parker>laboratory measurements. Judge established the toughest testing standards <v Mac Parker>in Vermont. Even hired his own license field technician to expedite the <v Mac Parker>process. <v Steve Judge>Somatic cell count before the state is seven hundred and fifty thousand. <v Steve Judge>Our standards require that it be three hundred thousand and most of our farms <v Steve Judge>consistently come in around 100000 range. <v Steve Judge>Now, in many cases, the amount of bacteria and produces milk is too low to count through

<v Steve Judge>standard testing procedures. <v Steve Judge>Early on in this in the formulative stages of Vermont milk producers, it was <v Steve Judge>very clear that that we could make a high quality product. <v Steve Judge>We could get the farmers to produce it. <v Steve Judge>Getting that product to market was going to be the big question. <v Peter Lovis>The answer came in the form of Peter Luvvies, a savvy young Boston salesman, <v Peter Lovis>in search of a new marketing challenge. <v Peter Lovis>Not only do I think this is a product that would work, but <v Peter Lovis>I thought it was an important product that it should work. <v Peter Lovis>It was very important that it did happen. <v Peter Lovis>So I got into the mode of just whatever <v Peter Lovis>it took, just make this make this idea come to life. <v Steve Judge>Peter Canvased retail outlets in New York and in Boston and Providence and Hartford <v Steve Judge>found out what the mix of the sales were. <v Steve Judge>Did all our footwork to determine what what marketing opportunities and what numbers we <v Steve Judge>might expect. We've proven that the structure works

<v Steve Judge>to deliver the product to the market, and we've proven that people who will buy the milk. <v Mac Parker>Vermont milk producers currently buys two tanker loads of its members milk each <v Mac Parker>week, for which the farmers are paid a premium price. <v Mac Parker>The rest of the week's production is sold through conventional marketing and conventional <v Mac Parker>prices. <v Steve Judge>The reason we're able to do this is that all the milk from each individual <v Steve Judge>dairy farmer is not dedicated to our product. <v Steve Judge>We are essentially putting together a two tier pricing system where <v Steve Judge>we've got our base price, which is the regular market, six days a week, and then we have <v Steve Judge>AAB, our class one price, which is what the farmers get <v Steve Judge>when the milk goes into our cartons. It's just basically an attempt to get as large <v Steve Judge>a share of that price markup to the farmers as we possibly can. <v Steve Judge>It's fairly amazing. The increase of six cents on a half gallon of milk <v Steve Judge>is the equivalent of a dollar per hundredweight paid to the farm. <v Steve Judge>Regular milk sells for a buck 45 on the shelf ourselves for a buck ninety nine.

<v Steve Judge>So there's a lot of six senses in there. <v Steve Judge>We're one of the first entries into a whole new category of fluid milk. <v Jonathan Rutter>You are my friend. <v Jonathan Rutter>And I will see you next week. Yeah. <v Steve Judge>The big question was, would consumers buy it? <v Steve Judge>And consumers are buying it. <v Steve Judge>I think the hills look good. I think it's beautiful. <v Steve Judge>Can't we fill it full of milk? Right now, what we should be doing is going out and <v Steve Judge>looking for investors. We can't do that if we sold 51 percent of Vermont <v Steve Judge>milk producers to a group of venture capitalists. <v Steve Judge>The first thing they'd want to do is make Vermont milk producers profitable. <v Steve Judge>And the easiest way to do that is to pay the farmers less money. <v Steve Judge>So if the farmers are going to continue to profit through this, they've got to own the <v Steve Judge>company. All right. <v Jonathan Rutter>Two things. <v Mac Parker>At this early stage. The 20 farmer owners of Vermont milk producers <v Mac Parker>measure success in terms of mere existence.

<v Steve Judge>The ramifications of what we're doing is much greater than the impact of <v Steve Judge>the actual product itself. <v Steve Judge>We are completely swimming upstream in terms of the general wisdom of <v Steve Judge>the dairy industry. Right now, the rules of the game for dairy farmers are to produce <v Steve Judge>lots and lots of cheap milk. <v Steve Judge>If we can reintroduce new rules to the game here in the Northeast about <v Steve Judge>producing milk and marketing dairy products, we may be able to create a future <v Steve Judge>for Vermont dairy farmers for a few of them on dairy farmers anyway. <v Mac Parker>Despite its importance to our regional economy, agriculture is rewarding <v Mac Parker>fewer and fewer farmers with fewer dollars. <v Mac Parker>Yet the Vermont image, with its message of integrity and quality, still <v Mac Parker>offers opportunity to farmers savvy enough to bring superior Vermont <v Mac Parker>products to market. <v Host>Production funding for the farming project has been provided by the Rural Development

<v Host>Administration, assisting emerging rural businesses in agriculture <v Host>and other industries. <v Host>VHS copies of this program can be purchased for 24 ninety five each, <v Host>plus shipping and handling to order or for information on purchasing the entire <v Host>farming project series. Call one 800 eight six six one six <v Host>six six.