1930s to 1940s: Federal Dairy Pricing Established
The federal pricing system for milk was established in 1937 to try and maintain a stable milk supply. In 1949 a support price system was established for dairy farmers regardless of their proximity to the markets. Through the 1950's, 60's and into the 70's it worked well for Vermont, as Vermont had more cows than people and much of the milk produced here was shipped to southern New England for distribution as a Class I product. The problem came as productivity increased at a more rapid pace than did most industrial sectors of the economy and production outpaced demands. The government programs could not continue to maintain a floor price without controlling the increased production. The government policy makers decided that the best course of action was to move away from the support price and into a market driven supply-demand price. Over the last twenty years dairy farmers had to improve productivity at the rate of inflation or they fell behind on their profit margin. This price pressure has further driven the change we are now seeing of farm numbers dropping while overall production continues to rise.
