How we got here: farms, industry, policy

by Mary White

Farms

It is no secret. Vermont has experienced a dramatic decline in dairy farms. From 2000 to 2012, the state lost nearly 60 percent of its dairy farms, a trend that continues today.

Let’s take a closer look at what’s happened in the past 10 years. Vermont fell from 838 farms in 2016 to 414 farms by the first quarter of 2026. Current projections indicate the state will lose 50 farms by year’s end, and if this trend continues, under 200 will remain by 2036. During the same period, the average herd size has nearly doubled to 273 cows per farm.

Despite these farm number losses, Vermont milk production has remained relatively stable, declining from 2.7 billion to 2.5 billion pounds annually. This accounts for two-thirds of New England’s milk production and contributes approximately $5.4 billion to the state economy each year. Production has been sustained by a fewer number of farms rather than a healthy, growing system.

The majority of Vermont’s milk is conventional raw milk, which is priced through the Federal Milk Marketing Order (FMMO) 1, regulated by the USDA. Prices are calculated per hundredweight (cwt) and are heavily influenced by the use-class of the milk, butterfat/component levels, and regional location adjustments. The Northeast has one of the highest input costs in the U.S. due to the need for infrastructure, a short growing season, and transportation costs. Despite recent FMMO changes, the average milk price has not kept up with the cost of production, leaving farmers with financial pressure, compounded by declining access to capital.

U.S. dairy consumption reached a record 661 pounds per person in 2023. Despite this demand, the economic benefits are not consistently reaching the farm level along with continued economic and regulatory stressors within the Vermont economy.

Perhaps the most concerning development is not simply the number of farms being lost, but the quality of farms that are exiting in both conventional and organic sectors. These are well-managed operations run by experienced dairymen and dairywomen who have invested a lifetime in their businesses. After years of a volatile milk market, rising costs, regulatory pressures, and a dwindling labor market, many farmers feel they are simply becoming the next statistic.

Industry

The crisis is no longer limited to farms. It is rapidly moving through the Northeast’s broader dairy supply chain. Over the past decade, Vermont has seen growing pressure on the processing infrastructure that determines where milk is handled and where economic value is captured. The Northeast conventional dairy market is essentially closed as dairy co-operatives limit new farm members from joining. The organic market signaled stress with Danone/Horizon cancelling all contracts with farmers in the Northeast. New start-ups in either market are rare, as existing farmers continue to experience uncertainty in the stability of their market. During the COVID-19 pandemic, cooperatives adopted local supply-management measures that have since been repealed.

These market signals carried through to 2026, which marks a significant shift in Vermont’s dairy processing capacity with 4 plants scheduled to close.

Booth Bros. Plant — operated by Hood since 1997, had processed Vermont milk for 80 years before closing its doors in April. The closure marked the end of Vermont’s last commercial bottled milk processing facility. Most of this milk is now being processed at the HP Hood plant in Concord NH, with transportation costs passed to the farm producers. Plant capacity of over 500,000 pounds/day.

Hochland — announced the closure of 2 dairy plants, including Vermont’s Franklin Foods in Enosburg Falls which has operated for 125 years, processing cream cheese products. The German-based company announced they are getting out of the cream cheese business in the United States and is working with a group to reopen under different ownership and operations. Plant capacity of over 500,000 pounds/day.

Perrigo Nutrition — announced its closure of the Georgia plant that produces infant formula, citing the age of the facility and shifting federal regulations as its reason. Plant capacity 10,000–50,000 pounds/day.

Dairy Farmers of America — recently announced its closure of the former St. Albans Co-operative Creamery plant in St. Albans. The plant was operating as a balancing plant for broader operations, manufacturing dry products, including condensed products and cream for Ben & Jerry’s. Despite a $30 million plant upgrade in 2020, and a negotiated union employment contract in 2025, the plant faced ongoing wastewater issues. The company commented that the closure “reflects broader operational and network changes needed to best serve our farmer-owners and customers.” Plant capacity of over 3,000,000 pounds/day.

Together, these facilities have long played a significant role in handling Vermont milk with a processing capacity of over 4 million pounds per day. Their closures are expected to result in approximately 390 lost jobs, and an increased volume of milk is now being processed out of state, with transportation costs shifted to farmers. While some facilities may reopen under different ownership or operating models, their future role in Vermont dairy remains uncertain.

Common local trends between closures are wastewater and municipal infrastructure constraints, aging infrastructure with increased maintenance costs, and overall capacity. The dairy market is signaling it is more economical to invest in new infrastructure in dairy growth states, including New York, South Dakota, and Texas, and consolidate Northeast milk production to larger facilities outside of Vermont.

Vermont’s on-farm processing sector has been expanding, but these processors, in most cases, are not set up to process excess milk and will not be able to offset the processing capacity due to these closures. It is not logistically practical for every Vermont farm to process its own milk at this scale.

Policy

In 2017, Act 77 directed the Vermont Milk Commission to explore equitable dairy pricing and supply management systems. The Commission’s 2019 report recommended national supply management combined with state-level support measures.

The Vermont Legislature soon thereafter enacted Act 129, establishing a formal Dairy Task Force and directing a comprehensive review of milk pricing systems and farm viability. The Task Force’s 2021 recommendations called for serious exploration of state-level pricing tools, including over-order premiums, stronger oversight, and greater transparency to help ensure farmers are paid at levels that more closely reflect their actual cost of production.

Through Act 162, the Legislature continued the Task Force’s analysis of milk pricing reform and development of state-level pricing proposals. In 2025, H.475 — an act relating to establishing an equitable pricing system for milk production — was introduced by Rep. John O’Brien to the House Committee on Agriculture, Food Resiliency, and Forestry. The bill would establish a tiered system to set an equitable minimum price that milk handlers pay to milk producers for milk processed and manufactured within the state. The bill also proposed an over-order price enhancement to be paid to Vermont milk producers. This was stalled in committee and did not advance.

Full text can be found here: January 2019 Report | December 2021 Recommendations | H.475 as Introduced

The Legislature did enact two one-time payment programs in 2023, including Dairy Margin Coverage reimbursement and Organic Dairy Relief. However, despite years of reports and recommendations, Vermont has not yet enacted a durable stability program for its dairy sector.

What This Means for Vermont

The impact on Vermont will reach well beyond the farm dooryard. Prior to the 2026 closures, Vermont dairy supported more than 17,000 jobs, accounted for 58 percent of the state’s agricultural sales, and sustained more than half of Vermont’s farmland. With more milk being shipped out of state and fewer local facilities available to process it, Vermont is losing economic value and supply-chain resilience.

These losses threaten the stability of rural communities and the foundation of Vermont’s agricultural economy. Along with it, Vermont is losing the generational knowledge and stewardship that have shaped its working landscape, along with the open land that defines its rural identity.

A Call to Action

Vermont must invest in keeping dairy viable. Stabilizing Vermont dairy requires action from everyone.

Policymakers must advance practical legislation that strengthens infrastructure, supports sustainable dairy price reform, and invests in Vermont agriculture.

State agencies and lenders must expand risk-management tools, improve access to capital, and offer flexible solutions that reflect the realities of modern dairy farming.

Industry leaders must work together to keep more value in Vermont and ensure farmers have the tools, markets, workforce, and infrastructure they need to operate successfully.

Consumers can help by choosing local dairy, asking where their food comes from, and speaking up for the farms that sustain Vermont’s landscape and communities.

Dairy producers have the hardest job of all: Lead the change by showing up and sharing your story. Make the reality of Vermont dairy impossible to ignore.

Vermont must act now to stabilize dairy and the foundation of our agricultural economy.

Sources

Presentation of Final Report and Draft Legislation Amending Vermont Milk Commission Statutes 6 V.S.A. Chapter 161 Vermont Dairy Relivers Report, Vermont AAFM 

TASK FORCE TO REVITALIZE THE VERMONT DAIRY INDUSTRY: RECOMMENDATIONS December 17, 2021 

Vermont Milk Commission Report , Vermont AAFM 

https://legislature.vermont.gov

Farm Credit East Northeast Dairy Farm Summary 2011-2025 

Vermont Dairy Update June 2026, UVM