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The Boston Globe

Business

Changes to dairy subsidies may take Boston out of equation

WASHINGTON — No one would mistake Boston for a bovine bastion.

So it may come as a shock that the eyes of the nation’s dairy farmers are fixed not on the pastures of Wisconsin or the green valleys of Vermont, but on Boston, where the closest cows are fiberglass, grazing in front of the Hilltop Steak House on Route 1 in Saugus.

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Billions of taxpayer dollars, in fact, hinge on the price of milk in Boston, at least as it is defined under federal law.

Thus begins the unlikely tale of how the federal government relies on Boston to determine dairy subsidies across the country. Befitting the poetry of government code, it begins with term known as “Boston Class I Milk.”

This bureaucratic concoction is theoretically linked to the price of 100 pounds of milk produced on a farm in Eau Claire, Wis., and then shipped to a processor in Boston. If the price falls below $16.94, farmers around the country get a monthly check from the government. If it goes higher, no check.

The Byzantine system sounds more like a scavenger hunt than a government policy, confusing even bureaucrats, not to mention farmers in Eau Claire. And the price calculation seems to have only a passing relationship either to Boston or to what a consumer actually pays for a jug of milk at the cash register. (There is also a bit of powdered milk and cheddar involved in the math, along with an adjustment for feed.)

But Boston’s moment of dairy celebrity may be nearing its end. Lawmakers are crafting a new farm policy, and the Boston price, in all likelihood, will no longer set the official standard for handing out checks to dairy farmers, although the subsidies will likely continue in the form of an insurance program.

Taxpayers have doled out $3.3 billion since the current program, one of two benefiting the industry, began in 2002. The Congressional Budget Office estimates that the proposed replacement program would cost an additional $50 million over the next decade.

Critics say such programs waste money and that attempts to control the milk market have been futile.

“Instead of trying to limit production and set prices, then mailing monthly checks when those prices aren’t met, Washington should step back and let dairymen take more responsibility for managing their businesses,” said Joshua Sewell, senior policy analyst for Taxpayers for Common Sense, a nonpartisan government watchdog group. “Supply and demand is better left to the market than the election cycle.”

Larry Purdom, a farmer in Southwest Missouri who owns 140 head of cattle, said he has received monthly checks as large as $3,000, but has gotten just $30 or $40 in some months, and no money at all in others. Purdom, president of the Missouri Dairy Association, said the current program has been a crucial safety net for struggling dairy farmers, but argues it no longer provides enough money to keep up with feed, fuel, and fertilizer costs. He said he hopes the new insurance program will be an improvement.

But the news that Boston could lose its place in dairy lore is lamented by some, especially those who cherish Massachusetts’ previous claim on American curd history.

That came late in 1801 when the farmers of Cheshire, about 130 miles west of Boston, sent a message to Washington in the form of a mammoth wheel of cheese. The gift to President Thomas Jefferson, reportedly the work of 900 cows, included no Federalist milk, owing to Jefferson’s feud with that faction.

Jefferson, who wanted the smallest possible federal government, was delighted with the symbolism — and the cheese.

Kristen Demeo, a kindergarten teacher in Adams who recently published a book about the Cheshire cheese, said the modern dairy milestone also deserves its place in history.

“I’m hoping that it’s not forgotten,” Demeo said. “I guess you have to move with what century you’re in.”

The current law was written in 2002, by Senator Patrick Leahy, a Vermont Democrat on the Senate farming committee who has long championed the dairy industry. Before 2002, the Boston standard was used only for a program benefiting Northeastern states.

Leahy kept the Boston-based price for the national program. His staff said the Boston benchmark, which fell between higher milk prices in the Southeast and lower ones in the Midwest, was a compromise among various interests.

Policy specialists say that in many ways, it does not matter that the trigger price was pegged to Boston, because the minimum price for milk moves up and down at the same rate throughout the nation. In other words, the official price of 100 pounds of milk in Boston is always about $1.50 higher than it is in Chicago and about $2 less than in Jacksonville, Fla.

But why is Boston special?

“I don’t know what the rhyme or reason is behind that,” said Roger Hoskin, an agricultural economist with the USDA’s economic research service. “There’s certainly no analytic reason. They had to pick something.”

Soybean subsidies are determined in Decatur, Ill., he noted. “Who knows?” he said. “It’s wherever they happen to pick a point.”

Farmers in Wisconsin are just as baffled.

“Have you ever figured out anything that the federal government does and the reason for doing it?” said Carla Kostka, owner of Castle Rock Organic Farms, a family dairy farm about 15 miles south of Eau Claire.

Kostka said she doesn’t ship any milk to Boston and has never even been there. But, she added, “I wouldn’t mind seeing it some day.”

Noah Bierman can be reached at nbierman@globe.com. Follow him on Twitter@noahbierman.

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