Dairy Production in Rhode Island
Sustenance and Sustainability Taylor Lanzet Katherine McKeen
History of the Rhode Island Dairy Industry The history of dairy farming in Rhode Island reaches back to the state’s earliest days. Even before European colonists brought cattle farming to the New England region, Rhode Island’s natural landscape was naturally suited to dairy farming; although Rhode Island is twothirds forested woodland, the remaining space is rich, fertile pastureland which provides excellent fodder for cattle. State founder Roger Williams and religious dissident Anne Hutchinson were both notable cattle farmers during the early 17th century (“Brief ”). By the mid 18th century, although “almost all New England communities had dairy farms with 4 to 8 cows per farm”, the South County (now Narragansett County) region of Rhode Island was the “only true dairy section of New England” (“Brief ”). Large farms in South County often kept more than 100 cows. Rhode Island dairy was so renown for its quality that it was considered to be “the best in the country”; top quality cheese came to be called Rhode Island cheese (“Brief). Rhode Island’s dairy economy helped establish the state as a successful, albeit small, agricultural center. However, the beginning of the 19th century brought a strong trend away from agriculture and toward industrialization. The development of the cotton textile and fine metalworking industries expanded the state’s economic life, but also caused a “substantial out-migration” (“Chapter IV”) from rural towns as people left to find work in larger cities. By the end of the Civil War, many farmers were also lured away by cheap land in the West. At the beginning of the 20th century, only about 80 dairy farms remained within Rhode Island (“Rhody Fresh”). A century later in 2009, the number of dairy farms had dropped to 17, with 9 of the 17 belonging to the Rhody Fresh dairy cooperative (“Rhode”). The steep decline in dairy farms can be attributed mostly to the ongoing trend of industrialization, but more modern problems have also emerged. An aging farm population, urban development in rural areas, and “issues around the price of milk and high land values” (“Rhody”) have all made dairy farming increasingly difficult in Rhode Island. Land prices have become a particularly daunting issue, with taxes rising so high that many farmers “cannot afford to farm” (“Rhody”) over extended periods of time. Recent years have also brought low dairy prices, which make living off a dairy farmer’s salary increasingly difficult. New England dairy farmers are currently receiving 0.97 cents per gallon of milk, although it costs about $1.80 a gallon to produce (“Conservation”). The downward trend in Rhode Island’s dairy industry is reflected more broadly throughout neighboring states, where dairy farming still is a crucial part of the agricultural economy; as a whole, New England has 7,472 dairy farms which annually produce $3.3 billion in dairy cattle and milk sales (“Conservation”). New England dairy farmers own or manage 3.5 million acres of land in farms, with an additional 2.7 million acres being used for hay and corn production to feed dairy cows. This means that approximately 55 percent of New England’s agricultural land is devoted to dairy farming. Dairy farming has clear benefits for economies in the region; according to Penn State’s Center for Dairy Excellence, 85 percent of a dairy farm’s income is spent locally and each farm dollar recycles 2.5 times through the economy (“Conservation”). Considering this multiplier effect, the dairy industry has numerous benefits for not only the Rhode Island agricultural economy, but also for the economy of the greater Northeast region at large. While Rhode Island ranks 49th out of the 50 States in terms of how many milk cows are within the area, it is important to keep Rhode Island’s small size in consideration. While Rhode Island also ranks 46th out of 50 in terms of net farm income, it is actually second in terms of net farm income per farm (“Brief ”). This indicates that although Rhode Island’s revenue from farming may not appear impressive in comparison to the rest of the country, farmers within the state tend to bring in more money than farmers in many other areas around the country.
An Overview of America’s Federal Dairy Policy, and the Implications for Rhode Island
Throughout its history, the dairy market in the United States has stayed impressively domestic. Although the U.S. imports more than $1 billion in dairy products annually, this sum accounts for less than six percent of the total dairy products consumed in the U.S. every year (Sumner 1). The domestic nature of the U.S. dairy market is largely attributable to trade barriers, which have historically have been one of the most important feature of U.S. dairy policy. The government influences the economic side of the dairy industry in two primary ways. The first is by placing tariffs on imports, and the second is by giving price subsidies to domestic exporters (Sumner 2). A fairly recent change in the U.S. dairy tariff system was the Uruguay Round trade agreement, which took effect in 1995. The trade agreement set up a system of tariff-rate quotas (TRQs) that set a low tariff on imports up to a determined quota, and a higher tariff on over-quota quantities. Although the agreement replaced a system of absolute import quotas, the dairy industry saw little change in the amount of dairy products being imported into the U.S. An important example of the government subsidization is the Dairy Export Incentive Program (DEIP), which has provided price subsidies for dairy products (including milk power, butterfat, cheddar, mozzarella, Gouda, feta, cream, and processed cheeses) since the 1980s. The dairy export market is highly lucrative; the USDA paid dairy exporters $145 million in 1999, and $77 million in 2000 (Sumner 2). Although the federal government is heavily involved in the import and export of dairy products, the dairy market is also largely controlled by state economies. Eleven federal marketing orders have regulated the sale of 70 percent of all milk in the country, but California alone also regulates the sale of an additional 19 percent. The rest of the dairy market is regulated by other state marketing orders (Sumner 3). California’s dairy policy is different from the federal system in that its milk quota program does not restrict production or marketing. Both federal and California milk marketing orders use price discrimination to raise the average price received by consumers, which makes the product more expensive on the demand side but also encourages milk production. Prices vary based on what end-use class the milk falls under. The four end-use classes are fluid products, soft/ frozen products, cheese, and butter or dry milk powder. Regulations discourage the transport of milk across regions in order to keep different minimum prices in each marketing order. This creates separate, regional fluid milk markets. Rhode Island falls into the Northeast marketing area, which is governed by the Northeast Dairy Compact. The compact is a regional modification that sets a minimum Class I milk price, independent of the federal pricing system. It raises the average producer price for dairy farms delivering milk to New England processors. At $33.91 per kilogram, milk in the Northeast is the second most expensive in the country (Sumner 5). Florida has the highest values for milk price at $35.56. Its pool price, which is the “market-wide weighted average of all minimum end-use class prices” (Sumner 9), is also the highest at $35.49 per kilogram. However, the Northeast’s pool price is not the second highest. This appears to mean that although the Northeast has some of the highest milk prices, its minimum dairy prices also tend to be lower than elsewhere in the country. This could represent the wide spectrum of dairy prices throughout the region; the Northeast has some of the most expensive, perhaps high-quality dairy, but it also has some of the most cheaply produced.
Continued... This could also indicate that some dairy farmers are willing to use growth hormones or extensive antibiotics, creating large quantities of dairy products which must be marketed cheaply instead of smaller quantities of higher-quality products. The Rhody Island Dairy Farms Cooperative and its brand, Rhody Fresh, can be viewed as a direct response to the low-quality, high-quantity dairy production model. While Rhody Fresh does not produce enormous amounts of milk, it feels justified in asking consumers to pay slightly more for its “premium product” (Rodriguez). Rhode Island’s legal requirements for dairy producers and distributors tend to be strict. Historically, the Northeast was central to the development of the nation’s dairy industry; in the industry’s early days, poorly treated cattle and unsanitary conditions led to “swill milk dairy barns” (DuPuis 7) which produced bacterialaden milk, a danger to public health. A century and a half later, dairy producers have apply for and receive dairy business permits before they can market their product. The form requires also requires producers to specify where their milk is processed, either within the state or out of state. Behind greenhouse and nursery products and sweet corn, milk is the third-ranking agricultural product of Rhode Island. Dairy products account for about 5% of Rhode Island’s total agricultural receipts (“Rhode Island Economy”).
Remaining Dairy Farms in RI Farm • • • • • • • • • • • • • • •
Arruda Dairy Bailey Brook Farm Breene Hollow Farm Brook Knoll Farm Cloverdale Farm Cottrell Homestead Elmrock Farm Emma Acres Highland Farm Highview Farm Meadowburg Farm Ocean-Breeze Tomaquag Valley Farm Whaley Farm Wright’s Dairy Farm Inc.
Owner Antonio Moniz Rodney Bailey Kevin Breene Georte & Kathy Reynolds Anthony DiMuccio Oliver Cottrell Gary Marsh Scooter & Cynthia Laprise Louis Escobar Arthur Smith Francis Kenyon Frank Panciera Barry James George & Karen Whaley Wright Family
Town Tiverton East Greenwhich West Greenwhich Hope Valley Cranston West Kingston Hopkinton Exeter Portsmouth Tiverton Wyoming Westerly Bradford Wakefield North Smithfield
Wrights Dairy
Cloverdale Farm
Highland Farm Bailey Brook Farm
Breen Hollow Farm
Emma Acres Meadowburg Farm Elmrock Farm Tomaquag Valley Ocean-Breeze
Cottrell Homestead
Brook Knoll Farm
Whaley Farm
Arruda Dairy Highview Farm
Labor in the Rhode Island Dairy Industry Uncovering the experience of labor within Rhode Island’s dairy industry is a complex process. To start with, it is helpful to understand the changes in general New England farm demographics in recent years. Between 2002 and 2007 in New England, the number of farms increased from 28,254 to 33,112 and the amount of land in farms increased from 3,996,503 acres to 4,044,104 acres (“Division”). However, the average farm size decreased from 142 acres to 122 acres. Of all the states within New England, and perhaps of all the states in the U.S. as a whole, Rhode Island saw the sharpest increase in both the number of farms and total land in farms; in the 2002 to 2007 period, the number of farms in Rhode Island increased up 42 percent to 1,219 (“Division”). These figures indicate that farms are growing both smaller and more numerous, perhaps representing a new generation of Rhode Island farmers who are just getting started in the industry. Farms which gross less than $50,000.00 annually in sales make up the majority of the increase. Although this information does not specifically pertain to dairy farmers, it probably is reflective of what is happening within the dairy industry as well. The demographics indicate that small farms are on the rise; with the success of Rhody Fresh, it is clear that small to mid-sized dairy farms operating within a cooperative are also becoming increasingly prominent. Due to their moderate size, Rhode Island dairy farms appear to draw most of their labor from the friends, family, and community members of the farm’s owners. For many of these workers, farming may not be their main occupation; in 2007, 49 percent of Rhode Island farm workers reported another primary occupation, compared to 48 percent in 2002 (“Division”). This could be at least partially due to the economic strain of living off a farmer’s salary alone. Twenty-four percent of farm laborers are women, reflecting a seven percent increase from 2002 (“Division”). Finally, the average age is of farm labor is 56.3 years, compared to 54.3 years in 2002 (“Division”). While this may seem to indicate that the farming population is getting older, the fact that the population only increased in age by an average of 2 years over a 5-year period seems to indicate that more young farmers are joining the industry. Another aspect of labor are the racial demographics of the laborers. In the 18th and early 19th century, a lack of urban development and rich pastures meant large herds of cattle could roam freely. During this period, much of labor of milking and caring for these large herds was done mostly by slaves (“Brief ”). With the abolition of slavery, labor within the dairy industry became a mostly white workforce, a trend which has continued to this day. There are 1,834 white farm workers, 26 Asian farm workers, and only 1 African American farm worker within Rhode Island.
Rhody Fresh is the marketing brand name of the Rhode Island Dairy Farms Cooperative, a group of Rhode Island dairy farmers who decided to “band together” in order to create a “locally-produced, home-grown brand of milk” (“Rhody”). When they began in 2004, the group had a $125,000 loan and additional funding from the State of Rhode Island for startup costs. From the beginning, Rhody Fresh also had an effective marketing campaign. Within the first six months of operation, Rhody Fresh met its “three-year projected goal” (“Rhody”), and in 2007 the brand saw a 30% increase in sales. When the price of milk plummeted in 2009, Connecticut and Massachusetts subsidized their dairy farms, but Rhode Island didn’t. The strong following Rhody Fresh had established was one of the reasons why the diary farms were able to continue to produce. The Rhode Island Cooperative is comprised of nine dairy farms, out of a total of 14 dairy farms in the state. Currently, one of those nine farms is not milking and acts as an associate member still attending meetings and dealing with administrative work. The dairy farms involved in the operation range from small to mid-sized. The smallest farm in the cooperative, EMMA Acres, ranges across 12 acres and has 28 milking cows from a total herd of 60. Larger farms, such as Elmrock Farm and Wanton (Dutra) Farm, own hundreds of acres of land and about 120 cattle, although only about half are typically milked. Farms had to invest $25,000 to join Rhody – but the equity a farmer puts in, is the equity the farmer gets back. Gary Marsh of Elmrock farm has already received $16,000 of the $25,000 back in just 3 years. Rhody Fresh add more money to a farmers milk check – farmers receive and an extra $1-2 per hundred pounds of milk through Rhody Fresh. Rhody Fresh’s processing plant, Guida’s Dairy, is located in New Britain, Connecticut. The plant processes 160,000 gallons of raw milk a day (“Rhody”), using a pasteurization method known as HTST, or high temperature, short-time (Rodriguez). Guida has a completely separate silo for Rhody Milk – to ensure the quality and promise of its local label. Guida’s Dairy is also involved in the transport of the milk from the plant to various retailers in the region, including Stop & Shop, Dave’s Market, CVS, and other local food stores. In 2011, the partnership between Guida’s Dairy and Rhody Fresh led Guida’s Dairy to add the Rhody Fresh milk logo to two of its dairy delivery trucks (“Milk”), which was an important step for the cooperative’s marketing. Rhody Fresh is not an organic brand, owing to the fact that the corn fed to the cows is not organic (Rodriguez). In addition, there is a likelihood that the grass the cows graze on could be effected by herbicides, which have drifted over from Rhode Island corn fields. However, all the farmers involved in the cooperative have made a commitment against using bovine growth hormone (rBGH). They also abstain from adding Vitamin A, and traces of antibiotics never are never detectable in their milk. However, federal law requires the farmers to add Vitamin D (Rodriguez). In 2010, Brown University chose Rhody Fresh as its exclusive milk supplier (“Brown”). The decision was made as an extension of Brown’s Community Harvest Program, which began in 2002 as an effort to “support small farms that employ sustainable practices” (“Brown”). Adding Rhody Fresh as its exclusive dairy producer reflects Brown’s larger effort to support small, locally-producing farms and food producers by providing a “large-scale, steady market” and “economic stability” (“Brown”). Rhody Fresh is in about 200 stores in MA and RI - it is helping to keep the RI dairy farmers in business. People value the Rhody label, the advertisement team has succeed in creating a label that embodies local. Rhody Fresh is one of the few co-ops where money goes directly back to the farmer and creates a more reliable and secure form of income.
Analysis on Elmrock Farm Gary and Trina Marsh own 250 acres in Hopkinton RI, a family farm which has been in the dairy business for 5 generations. After taking it over in 2009, the price of milk collapsed and Elmrock was getting paid what they were making 35 years ago. The decline in milk prices corresponds to the global financial collapse. In 2010, the prices of milk began to rise again – what drives the price is the Chicago Stock Exchange as speculators bid on the price of milk. China purchases a lot of our milk products and in 2009 they were not importing as much so US farms a gluttonous amount of extra milk – but in 2010 they began to purchase milk products again. Our government defines milk products by classes; class one is fluid milk, class two is ice cream, class three is cheese products, class four is powered milk, and class five is animal consumption. Elmrock produces 10,000 gallons of milk a month – they are one of the nine members of the Rhody Fresh Co-Op. On the business side of things, Gary sells his milk to Agro-Mart who picks it up every other day, and Rhody Fresh purchases it back from Agro-Mart. Rhody Fresh buys about 80% of his production, and the other 20% stays with Agro-Mart. Gary explained one of the largest challenges that Elmrock faces is their need to modernize – they are currently using 1970s equipment. He explained the need to purchase a new barn and robotic milkers. Robotic milkers are an equalizer for small farms – allowing farmers to do a lot of production without a lot of labor. The robotic milkers would be set up to a computer system which would read the collar of each cow and ration our a certain amount of grain depending on how much milk she gives. Gary explained, cows produce milk every six hours; so robotic milkers would allow them to milk the cows more. The most efficient system would be to milk four times a day – that keeps them at the curve of milk production. Elmrock’s approach is to raise more efficient animals – pumping up the productivity of each animal – rather than a system that increases profit only through more cows. Currently, Elmrock is milking a herd of 68 cows, at their peak about ten years ago they were milking 100. However, strip grazing keeps their cows healthy, producing more, and living longer. Not including Gary and Trina, Elmrock has 3 employees. Lucus, their son and Polly are the two full time employees. Maria is a part time employee and a college student getting a doctorate in animal research. Elmrock has an extremely intimate and efficient system – the employees enjoy working on the farm and their happiness is evident. For the most part, Gary explained that cows are pretty much maintenance free – a vet comes every six weeks to do pregnancy check but they prefer to treat and do as much as they can without the vet. Between raising and production, if a cow is lost to illness, Gary would expect a loss of about a $6000 investment. Ultimately, joining Rhody Fresh was the underlying factor that kept Elmrock Farm in business. Rhody Fresh adds more money into the milk – an extra $1-2 on every hundred pounds of milk. Gary explained joining Rhody was a no brainer – although it cost $25,000 to invest and join – he has already received $16,000 of that investment back in only 3 years time. This allows Elmrock to remain in production even as the large factory farms in CA, NV, and TX drive the price of milk and small farms out of business.
Analysis on Wrights Dairy Wrights Dairy is a 4th generation family farm in North Smithfield. Producing year round, Wrights has four full time farmers and 1 part time farmer. On the farming side of the business, it is all family members – but between the bakery and store they have an additional 70 employees, and ten of those employees are family members. Their employees were a mix of women and men and a range of ages, but mostly Caucasian. After speaking with Elizabeth Wright, we learned that her great grandfather started the business with 5 or 6 cows, which he milked by hand and sold to neighbors. He had seven children, and his son Ernest decided to continue the dairy business when pasteurization became mandatory. At this time, many small dairy farms around the area decided to get out the dairy business, to avoid the regulations and new laws. Ernst bought a truck, started a delivery route, and milked his herd of about 30 cows. When Elizabeth’s father took over the business he decided to ditch the delivery route and open up a store and bakery – to keep all the selling directly on the farm. This is what Wrights continues to do today. After speaking with Elizabeth, we learned how important the family farm mean to the Wrights. Simultaneously seeing it as a burden, a privilege, and a lot of work – they ultimately have a lot of pride. By investing and building a new barn in 2009 – they committed to continue and grow their dairy business. The farm sits on 90 acres of swampland, the cows do not graze, but Wrights does grow their own corn, which they turn into corn silage, so they can control the quality of their feed. Milking a herd of 130 cows, two times a day, Wrights produces 13,000 gallons of milk daily. After milking, the milk is chilled immediately and then heated quickly for a minute to kill any bacteria and then cooled back down before processing. Within 24 hours after milking, the milk is processed in their own facilities. They bottle about 270,000 pounds of milk a month; 80% of this is sold in their retail store as milk and the other 20% goes into cheese, ice cream and bakery products also sold in the store. If there is any left over milk, they call Agro-Mart to pick it up. Elizabeth explained that they have consistent sales for the most part – the same families come to pick up milk week after week. Their price is somewhere in the middle of the market – Wrights believes keeping a stable price while offering the experience of seeing the farm, the cows, and the milk production process – keeps costumers returning. Although Wrights is not apart of Rhody Fresh, the emergence and strength of Rhody Fresh has not affect their sales. They fully support Rhody Fresh because it draws so much attention to dairy production in Rhode Island. They were approached to join Rhody Fresh back in 2004 – but by that time they had already established a Wrights brand for themselves. Wrights believes their competition are the grocery stores and CVS’s that sell milk cheaper. However, they promote their milk as an experience, not only because of the freshness and quality but because one can see how the animals are being treated. Elizabeth explained that the government helps when milk prices are depressed, but what sustains the farm and business is what they sell in the store. She continued to explain the federal milk market, and the current role of government in milk production. After the depression, milk prices were all over the place and most farmers were either going bankrupt or having to abandon their farm – so the government stepped into to set a price that was paid to the farmer. Elizabeth explained, at the time this seemed like a good idea, but the government really doesn’t understand what it takes to farm or deal with animals. Wrights believes the less input from the government, the better. Fortunately for Wrights, they do all the production and selling directly on the farm, so the government doesn’t tell them what prices they should get for their milk. Wrights is committed to providing food at a local level to people in the area. They want to continue to provide an experience and education for people to come and see where their food comes from and show people what it is to farm; keeping Wrights Dairy as a destination for milk.
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