Coming cuts in dairy supports send chill through wintry Vermont

The bone-chilling, 5-degree air doesn't seem to faze John Hall as he surveys his herd of Holstein milking cows. But like dairy farmers across the United States, this ruddy-cheeked Vermonter shudders at the thought of that wintry blast from Washington, D.C. -- the Gramm-Rudman law. ``It could be devastating,'' he says, shaking his head.

Mr. Hall worries that the budget-cutting measure could spell the demise of many state-run farm programs in Vermont, where federal funds make up a whopping 35 percent of the state's annual budget. But his major concern is that by whittling away at dairy price supports, the law could force many small farmers out of business.

In Vermont, the most rural state in the US, the dairy farms that dot the rolling countryside define both the economic and aesthetic landscape. So what's at stake is not just the state's dairy industry, which accounts for 90 percent of Vermont's agricultural income and nearly half the milk in New England. What's at stake is a way of life, Vermonters say.

Farmers here feel a certain sense of injustice: ``It would be a shame to see farmers leave Vermont,'' Hall says, ``because we have a market for our milk.''

In the West and Midwest, where the supply of dairy products far exceeds demand, farmers have piled on to the 12 billion-pound milk surplus that officials in Washington hope to eliminate. But now Vermont farmers must share the burden for the surplus, even though they haven't contributed to it.

Not all agricultural experts agree about the glum forecast for Vermont. Some say plummeting feed prices will help dairy farmers cope with the projected 4.3 percent price cuts scheduled for April 1. Others say that, unlike larger farms of the Midwest and California, Vermont's small family farms can pinch pennies and survive.

On one point, however, most observers agree: Gramm-Rudman will trim most farm operations and even shut down some struggling ones. But on the whole, they say, it will help the industry become more efficient.

In Vermont, that point is hard to swallow. Gathered around a wood-burning stove in the family living room, John Hall, his wife, Donna, and other farmers quietly talk about the fading of a way of life, the crumbling of a community spirit. They worry about the loss of rural farmlands and what it might do to the tourist industry and the entire rural community.

Like farmers across the country, the average Vermont farmer stands to lose as much as $7,200 a year come April 1, according to state Senate president pro tempore Peter Welch, a Democratic leader in agricultural issues. His estimate is based on the ``double whammy'' of Gramm-Rudman (a projected 50-cent cut in the support price of $11.60 per hundredweight) and a federal whole-herd buyout program designed to reduce the number of dairy cows (an assessment of 40 cents per hundredweight).

The state is in no position to fill the gap: not when it faces additional Gramm-Rudman cuts of $18 million or more in fiscal 1987; not when it is still emerging from the shadows of a $20 million state budget deficit; and not when the poor, rural state depends on federal funds more than all other states except Alaska and Wyoming.

Still, most outside observers feel panic is unwarranted. David Dyer, an economist with the United States Senate Agriculture Committee, says he sees ``a lot of hand-wringing and gnashing of teeth over the effects of Gramm-Rudman.'' His advice: ``Don't overreact. Let's see what happens first.''

Former Vermont farmer Steve Kerr, now the agricultural aide for US Rep. James Jeffords (D) of Vermont, goes even further.

``I do not see calamity coming from this thing,'' he says, noting that Vermont farmers benefit both from dropping feed prices and a strong regional market anchored by New York and Boston. While the cuts certainly hurt farmers everywhere, he says, ``we are net winners comparatively.''