Dairying has been the largest ag sector in New England since the end of the 1800s when the sheep business fizzled out. The result has been a major change in the scenery across the region.

In Vermont, forest accounted for 30 percent of the landscape with 70 percent of the land open, with a lot of mountain sides cleared for pasturing sheep.

Today, those percentages are exactly the opposite in Vermont and New Hampshire is now more than 80 percent forested as the steeper pastures were reclaimed as forest.

In the lower level elevations, farmers began dairy farming, with small herds producing milk and dairy products that were shipped to East Coast cities. Dairy was so prevalent that a number of the dairy breed associations built their main offices in Brattleboro, Vt.

In more recent times, we have seen dairy slowly disappear from most of New England and become concentrated in Vermont.

In 1965, Vermont produced 43.6 percent of New England milk. Today, Vermont produces 63.9 percent.

Overall, milk production in Vermont has grown about 30 percent, to 2.67 billion lbs since 1965. In comparison, Pennsylvania has experienced nearly a 50 percent growth and U.S. production has grown 68 percent.

From one perspective, declining milk production would be expected in this region as urban pressures have made the land too valuable for dairy farming. In many parts of the coastal New England states, farming in the suburbs became common as houses were built to the farm’s fence rows.

Correspondingly, milk production in the coastal New England states dropped from 2.66 billion pounds in 1965 to 1.50 billion pounds today.

While Vermont has increased production by nearly 0.6 billion pounds, the region has lost milk producing capacity.

On the national scene, Vermont produced 1.7 percent of the milk supply in 1965. Today, that has dropped to 1.3 percent as we have seen dairy farms move to the western United States.

What may be more remarkable is that Vermont still remains a competitive milk production state. Vermont is not able to raise much grain like other Northeast and upper Midwest states. Corn is grown in Vermont, but up to 95 percent of the acreage is cut for silage. Grain is imported from Quebec — 50 to 60 percent — and from the western U.S.

Vermont does have good weather for grass production, which likely accounts for 23 percent of Vermont’s 850 dairy farms joining the organic farming ranks. With the grass production comes a short growing season.

But with the short growing season and dependence on imported grain, Vermont does not have many competitive disadvantages. In fact, Vermont has succeeded in dairy because dairy is the one area where it has the least comparative economic disadvantage.

As a result, dairy accounts for nearly 80 percent of ag income in Vermont, making it the only state with that degree of dependence on one commodity.

Will the Vermont dairy sector remain competitive in the future?

That depends on a number of things. Vermont is close to the Eastern seaboard population, but so are dairy giants New York and Pennsylvania.

The state’s average herd size is competitive with New York and bigger than the average herd size in Pennsylvania. Farm facilities are modern and we have seen significant growth in herds with more than 500 cows.

On the other side, the region is lacking adequate processing facilities. Aging facilities has caused milk dumping in periods of reduced consumer demand, Christmas, New Year’s, and summer. New facilities cost money and processors have been hesitant to invest hundreds of millions of dollars in new plants if they are unsure about future production.

Milk pricing is a challenge. While other states can set minimum prices, like Maine or Pennsylvania, through a state run milk commission, Vermont has little state influence due to 85 percent of milk leaving the state for consumption.

Another challenge is meeting environmental regulations coming down the pike. Lake Champlain has experienced significant algae outbreaks in recent years causing the Environmental Protection Agency to force the state to come up with stricter regulations to control phosphorus runoff. These regulations are still being developed, but it is sure another round of controls will make manure more expensive to manage than in past years.

So combining all of the location, infrastructure, marketing, environmental and other challenges with a short growing season and $14 milk, the farmers are still guardedly optimistic, but aware they will have additional challenges to remain competitive in dairy production.

Bob Parsons, is an Extension economist with the Department of Community Development and Applied Economics at the University of Vermont. He works in the area of farm financial management, dairy farm management and marketing, farm succession issues, other farm management issues. He can be reached at 802-656-2109 or Bob.Parsons@uvm.edu.