Mass. Dairy Farmers, Faced With High Costs, Laud Tax Credit

House Bill 2616, filed by Rep. Stephen Kulik, D-Worthington, would double the limit on the allowable tax credit from $4 million to $8 million when milk production costs exceed the price of milk

HADLEY, Mass. — “Right now, dairy farmers in New England are at that sweet spot where we are producing the right amount of milk for New England,” said Denise Barstow of Barstow’s Longview Farm.

But it won’t stay that way if dairy farms continue to disappear.

With 150 dairy farms left in Massachusetts, a state with high taxes and input costs, farmers like Barstow are becoming innovative.

“What we’re seeing is dairy farms trying to diversify,” said Rep. John Scibek, D-South Hadley, at a Sept. 28 media tour put on by Massachusetts Farm Bureau Federation. “Really state-of-the-art stuff is happening here. One of my issues and one thing that frustrates me is that if I look at economic development, they don’t recognize agriculture. For example, the workforce training fund that is used to train employees. We should have similar programs for farmers so that you get the same benefits that other businesses do because unlike the manufacturers who can take their operation and move to another state, you can’t readily move your farm.”

But the commonwealth’s steep cost of production can easily exceed milk prices, making it difficult to stay in business. According to Brad Mitchell, deputy director of Massachusetts Farm Bureau, taxes, labor and land costs in Massachusetts are among the highest in the U.S.

Jessica Dizek of Mapleline Farm in Hadley said her farm is working to build a business that is sustainable for future generations. They process their own products and sell direct to consumers. However, Dizek said, costs still remain high and their pricing must remain in-line with the market.

“We feel fortunate that this area that we live in is very supportive of local agriculture,” Dizek said. “But like our neighboring farms, we still have the same types of challenges, such as increasing feed supplies, equipment and labor issues, and although we have a little more flexible in setting prices, we can’t overprice and we’re still paying the premiums that everyone else is subjected to.”

To help dairy farmers in years where cost of production exceeds income, Massachusetts created a dairy tax credit program to provide dairy farmers a refundable income tax credit based on the amount of milk produced and sold.

“The dairy tax credit has been a very important component for all of us in the state,” said Darryl Williams of Luther Belden Farm. “What it essentially does is provides a tax credit to dairy farmers in years where our cost of production is below what we’re getting paid.”

According to Williams, one critical component of this program has been that dairy producers can establish their own cost of production, in conjunction with UMass.

“We have our own cost of production for right here in the state, which is really important because it takes into account higher taxes and that we pay more for services because there are fewer of us,” he said. “The dairy tax credit has been an extraordinary help to all of us in the dairy industry.”

House Bill 2616, filed by Rep. Stephen Kulik, D-Worthington, would double the limit on the allowable tax credit from $4 million to $8 million when milk production costs exceed the price of milk.

“In those years when our cost of production is just higher than what the world price of milk is, we have to have something to help keep us in business,” Williams said. “In those years where we get the tax credit and we get help from the federal government, it pretty much helps us pay our basic bills and that’s it. It’s not going to allow us to buy new land or pick up a new tractor. It’s survival money.”

The dairy discussion at Barstow’s Longview Farm was one of four stops on the media tour.

Katelyn Parsons, Massachusetts Correspondent