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Dozens of dairy farmers from across the state drove to Grand Isle on July 2 with the intention of talking about a recent dairy plant closure. Instead, a larger issue emerged: Some dairy processors are giving up on Vermont, and the state is failing to cash in on a national investment in dairy amid a craze for protein.

A recent wave of three dairy plant closures in just two months has highlighted pressures facing the local industry, including high overhead costs and aging infrastructure. As large processing plants move West, where land is cheaper and production is more dynamic, Vermont farms are buckling under consolidation, increased prices and low profitability.

The result? Vermont dairy farms are being left in the dust by the competition from states like Texas where the economics of dairy farming are more favorable.

VTDigger analyzed U.S. Department of Agriculture data and found that dairy farming costs exceed sales by the largest margin in Vermont compared with 18 other states. Vermont farmers face a $8.65 loss per 100 pounds of milk produced, while California farmers, for instance, see $2.49 in profit.

For one Vermont farmer, the costs of overhead stack up to as high as $72,000 per month.

“I’ve spent a lot of time trying to figure out how to budget those numbers, and I can’t move them. It’s really just because of where we’re located,” Kylie Chittenden, who operates a family dairy farm in Shoreham, said at the meeting. Lt. Gov. John Rodgers and other elected officials and state agency representatives turned up to listen to farmers’ concerns.

Chittenden said she pores over the numbers each month when she financially benchmarks her farm against dozens of others across the country. Steep fees unique to operating in Vermont, including transportation surcharges due to poor road quality in the state, leave her at a disadvantage, she said.

As the concerns reach a flashpoint, larger questions loom about the future of the hallmark industry in a state built heavily around it, where dairy racks up $5.4 billion in annual economic impact — nearly 12% of the state’s gross domestic product.

“Vermont is definitely at a tipping point, and it’s heartbreaking to see, and I don’t know what the answer is, other than the farmer just can’t meet the demands of the overhead anymore,” said Kassie Stannard, who produces small-scale dairy products for her Vermont homestead.

Dairy in Vermont had a big setback in June when Dairy Farmers of America, a national farmer-owned cooperative, announced that it would shut down operations at its St. Albans milk processing plant and the adjoining St. Albans Creamery & Supply in August, putting roughly 80 employees out of work. The news from the large facility came after similar announcements from other dairy production plants, including HP Hood, which in April closed the Booth Bros. dairy manufacturing plant in Barre, and Franklin Foods, which announced in June plans to shutter its plant in Franklin County. Perrigo, which uses dairy for its products, also said in March that its infant formula production facility in Franklin County would close, affecting more than 400 workers.

“We potentially may continue to see an exodus of dairies from the state,” said Kevin Kouri, chair of the Vermont Dairy Producers Alliance and director of nutrition and sales at Phoenix Feeds & Nutrition. “And the trickle-down effect that that has not only to local communities and what these dairies bring in terms of employment opportunities in rural Vermont, but also the infrastructure and the allied businesses like mine.”

‘Increasing pressures’

For years, the dairy industry has been on the decline in the state, with the number of cow dairy farms decreasing nearly 50% over the past decade.

“I remember when my husband’s grandfather was still alive, he wrote down 54 names he could call off the top of his head of dairy farmers in the town of Corinth in his lifetime — 54 farms. Now we are just one of two operating dairy farms,” Stannard said.

The trend of consolidation — fewer farms but larger remaining ones — has largely been fueled by high overhead costs, leading smaller farms to struggle from low profitability while larger operations are able to produce milk at a lower per-unit cost.

As farms have consolidated, the cooperatives that market the milk have too. DFA, the large cooperative, is one of a few co-ops that control nearly 85% of all milk marketed by U.S. producers, according to one study, and it covers large regions, leaving some members to feel a loss of local control.

DFA said its decision to close the St. Albans plant was driven by broader operational and network changes. Tom Bellavance, who represents Vermont on the DFA board, provided more specific reasoning at the Grand Isle meeting: Milk production rates have been flat over recent years in Vermont, while demand from Americans for protein — including protein powder and yogurt — has risen.

American dairy consumption, in pounds, has increased by around 60% from 2010 to 2024, according to USDA data on per capita dairy product consumption.

Vermont needs more cows to compensate for stagnant production, Bellavance said, and while farms out West have increased their ability to meet the new demand, in New England capacity is shrinking.

“The idling of the St. Albans plant is just an example of changing dynamics in the milk market,” Bellavance said.

To meet demand for milk-based protein, dairy processors throughout the country have invested $11 billion in 19 states through 2028, according to the International Dairy Foods Association. Vermont was not one of those states, with aging infrastructure among the reasons processors choose to go elsewhere where it’s less expensive to build.

As Vermont lags behind the protein craze, Bellavance said the state should “embrace those changes,” because they will “deliver higher value,” putting more money into farmers’ milk checks.

But right now, for farmers’ checks, the processing plant closure does not seem like a positive.

The St. Albans plant’s “idling,” as DFA put it, means day-to-day production will end, but the group will retain ownership of the facility. What’s more, farmers have to pay to transport their milk out of Vermont to DFA facilities in nearby states, adding an unknown sum of money to members’ hauling fees.

“I guess our immediate concern is this is going to probably lead to some financial stress on some smaller dairies within the state, and we don’t want to see our dairy population, in terms of licensed dairies, shrink any further,” said Kouri, of the Vermont Dairy Producers Alliance.

Vermont DFA members also raised alarms about the money they have already poured into the facility.

As farmer-owners, DFA members financially contribute to the cooperative. Vermont dairy farmer Josh Blake questioned how members can trust the cooperative with their money given the shutdown, especially as DFA previously invested $30 million in an upgrade to the St. Albans plant that will now sit idle.

“How does an upgraded plant of $30 million invested into it now have water quality problems? That makes zero sense to me. And who do we hold accountable in DFA for this?” Blake asked.

The St. Albans plant has faced significant environmental enforcement over recent years, including more than $200,000 in civil penalties for dumping milk into the local wastewater system. DFA admitted to the allegations to settle the case last year.

Aging infrastructure, such as pipe infrastructure to handle wastewater volumes, is cited as a reason why, despite large investments, plants still struggle under regulatory pressure.

“We have a lot of aging infrastructure, but you go to places like Texas, where you can build a brand-new facility, and it’s going to cost them a lot less to do that than to try to invest in an old building here,” said Mary White, a Vermont dairy farmer and president of the Vermont Farm Bureau. “And that’s regulations again. That’s based on what you need for climate, regulatory, etc.”

Dairy farms and processing plants are, in fact, increasing in Texas, and the West at large, while many die out in the Northeast. Of 66 new dairy processing plants that are currently underway or recently opened across the country, funded by the $11 billion investment, none are in New England, while several are concentrated in Texas and the Midwest. As DFA closes up shop on its plant in St. Albans, and in May closed another in Connecticut, the cooperative is simultaneously investing in the Midwest, recently opening a plant in Michigan that produces in-demand products like whey protein powder.

Profitability is especially hard to come by for small farmers because they do not set their prices for their products. Milk prices, which are the minimum prices dairy processors must pay farmers for their milk, are established by the USDA in a multi-step process. Although prices have risen over the years, some farmers say they have not increased enough to keep pace with inflation.

“Our family works pretty hard, and we take very little salary away from the farm,” Tim Taft, a dairy farmer in Huntington, said in a statement at the Grand Isle meeting. “We reinvest it for the future. It’d be nice if the state felt the same. Currently, they say they are a farm first state? I think they need to prove it to us.”

‘What can we do?’

As farmers bring their concerns to the fray, elected officials and local agencies say they are seeking to make reforms to support the local dairy industry.

U.S. Sen. Peter Welch, D-Vt., and U.S. Sen. Bernie Sanders, I-Vt., recently introduced legislation aimed at combating consolidation in the industry by creating a government program that helps small and midsize dairy farms manage milk supply and demand. The bill would also match the national dairy production to national demand in an attempt to fight against volatile milk prices.

“The idling of the DFA’s St. Albans plant is heartbreaking news for the plant’s workers, Vermont’s dairy farmers, and this community,” Welch wrote in a statement to VTDigger ahead of introducing the bill. “I’m working with local, state, and federal partners to support plant workers and Franklin County as they navigate next steps.”

Rodgers, the lieutenant governor, said at the Grand Isle meeting that he thinks “there is opportunity sometimes when the door closes,” referring to the national craving for protein, though he didn’t offer a specific plan.

Rep. Lisa Hango, R-Berkshire, is worried about the lingering impacts of the plant closures, particularly on the state’s tourism and overall brand.

“Vermont tourism, which is one of our biggest revenue drivers in Vermont, depends on aesthetics, upon what our state looks like,” Hango said. “If that landscape changes due to declining working lands, tourism will most certainly suffer.”

Stannard has already seen it change.

“You always see pictures like grazing cows, grazing on the mountainside, and that’s the way it used to be when I was a kid,” she said. “There was so many more farms in the area, and I would just turn down any road and there’d be a farm. It is not like that anymore.”

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This story was originally published by VTDigger and distributed through a partnership with The Associated Press.

The Vermont Lottery offers several draw games for those willing to make a bet to win big.