On May 15, 2026, Gov. Ned Lamont announced the third iteration of a plan to use a $500 million emergency set-aside fund created to help Connecticut agencies, programs, and nonprofits absorb anticipated federal spending cuts. While much of the first two plans revolved around Medicaid and Supplemental Nutrition Assistance Program, this round led off with a $22.5 million appropriation to the Connecticut Department of Agriculture to support Connecticut dairy farmers.

According to the press release, Connecticut’s dairy farms were “at the edge of financial ruin.” Federally set milk prices and the effect of federal tariffs on fertilizer and farm equipment had not only driven up the cost for those products but set off “retaliatory trade actions from key export partners.” The war with Iran compounded the issue by driving up the cost of oil.

“Connecticut’s dairy farms are small, family-owned businesses that support jobs and provide fresh, nutritious food for our communities,” Lamont said in the press release. “Recent actions on the federal level are significantly driving up the costs of dairy production, causing devastating harm to this sector of our economy. We need to protect our dairy farms before they are permanently lost. Connecticut will continue standing with dairy farmers to help these businesses succeed.”

This was far from the first time state officials had either appropriated money to help Connecticut’s dairy farmers or specifically excluded them from legislation that would harm their business.

In September 2021, after businesses like restaurants and bars were beginning to open again to the public, Lamont directed $10 million in federal COVID relief funds to Connecticut’s dairy and aquaculture industries to bolster them against market disruptions that “negatively impacted sales.” At the time, Lamont said the funds were necessary to keep the farms open and in business.

Earlier in June 2021 during the closing days of session, lawmakers in the House of Representatives debated establishing a new highway use tax on trucks traveling in Connecticut under the auspices that heavy trucks cause more road damage and trucking companies should therefore pay more to maintain highways. It was a tax the Connecticut Motor Transport Association along with various other business associations warned would ultimately increase the costs for businesses and therefore consumers. 

During debate, Rep. Maria Horn, D-Salisbury, introduced an amendment that would exclude trucks transporting dairy products to or from dairy farms precisely because it would raise costs on the farmers who couldn’t absorb the shock by raising their prices on consumers.

“These refrigerated dairy trucks that our small businesses, which are our dairy farms throughout the state, use to transport milk and other dairy products are right in the crosshairs of this fee and they are just not in a position to be able to afford it,” Horn said on the House floor. “They are on a very thin margin, often a negative margin in current market conditions.”

Combined with property tax exemptions for farm equipment in general and farm animals, like dairy cows, one could be forgiven for believing the state’s dairy industry had some kind of leverage over state lawmakers, but the need to support Connecticut’s dairy farmers didn’t come out of the blue; for the past twenty-seven years at least, Connecticut’s dairy farmers and the expansive economy they support in the state, has been up against the ropes and, in Connecticut, dairy farms form the backbone or the state’s farm industry.

“They’re the number one user of land and number two producer of revenue in the entire farming industry, so they’re a significant contributor to the agriculture economy in Connecticut,” Connecticut Department of Agriculture Commissioner Bryan Hurlburt said in an interview with Inside Investigator. 

Because of the amount of land, feed, fertilizer, and equipment required by dairy farms, it provides an “economy of scale,” for the rest of Connecticut’s farming industry, which, in turn, provides lower production costs, and more food at lower prices for Connecticut residents.

“Everybody in agriculture benefits from having a strong dairy industry because they provide an economy of scale so that more feed is coming in at larger volumes that not only the dairy industry uses but everybody else uses,” Hurlburt continued. “That’s one of the reasons why you see so much interest in supporting the dairy industry. It supports the entire $4 billion Ag industry in the state.”

In public testimony, fifth-generation Connecticut dairy farmer Arthur Spielman wrote that when he graduated high school in 2000 there were three hundred dairy farms in Connecticut. By the time Rep. Horn introduced the amendment exempting dairy trucks from the highway use tax, she referenced one-hundred dairy farms. 

Today there are eighty dairy farms remaining in Connecticut providing 12,500 jobs and $2.6 billion in economic output, according to Connecticut’s Milk Promotion Board, a federally funded board established in 2008 within the Department of Agriculture whose job is to promote dairy farms and the consumption of milk. 

Liquid milk consumption, however, is down roughly 50 percent since the 1970s as fewer people drink milk as a beverage or put it on their cereal, according to the USDA Economic Research Service, which had little explanation for the trend outside of a generational shift, even noting that products like sugary beverages, soy milk and almond milk can’t account for the drop off.

Liquid milk aside, the dairy industry is booming, which could also be part of the problem. 

Consumption of yogurt and cottage cheese are up, and consumption of butter is “at an all-time high,” according to Don Wick of the Dairy Star, and U.S. milk production was 4.5 percent. Because milk is considered a commodity, the federal government sets the price based on supply and demand at a global level. The U.S. lowered the price of milk by 25 percent this past year.

“The supply has been really high, and demand has increased year-over-year for the past twenty years, but supply has increased,” said Seth Bahler, a fifth-generation dairy farmer and owner of Oakridge Dairy in Ellington. “Dairy farmers are getting more efficient and there’s been a lot of U.S. supply growth.”

Bahler says, however, that where the market is falling short is in exports. Roughly 20 percent of U.S. dairy products are exported, so a fluctuation in international trade by one percent, it will cause the domestic pay price fluctuate by 20 percent.

It isn’t the federally set dairy prices alone, however. Connecticut’s dairy farms, 97 percent of which are family owned, are not only subject to global economic headwinds like tariff wars and oil prices but are competing against a global market in which farmers in, for example, South Dakota have farms with massive acreage, thousands of cows, and lower costs combined with the ability to mass produce.

And while much of the concern around Connecticut’s dairy industry comes from the federal government’s control over pricing and commodity market, some of the economic pain facing the state’s dairy farmers is self-inflicted; Connecticut is a high cost of living state and as that cost-of-living increases, dairy farmers feel it more acutely than other businesses who are free to increase their prices.

“We have no control over our price,” Bahler said. “We are in a very high cost of production state. We have higher electricity costs, we have higher labor costs, we have higher land values so its harder to get land. Our costs in Connecticut are much higher than other parts of the country where there’s a lot of dairy – Michigan, Indiana, even New York.”

DEATH OF THE NORTHEAST DAIRY COMPACT

Space constraints mean the Northeast has never been in an ideal position to compete on a global or even national scale and costs in the Northeast have traditionally been higher than in other parts of the country. As a result there has also been a long tradition in New England states of subsidizing the dairy industry.

In 1996 Congress approved legislation allowing Northeastern states to enter into a compact allowing them to set their own minimum milk prices paid by processing companies separate from that of the federal government minimum – similar to how California can set its own vehicle emission standards and other states, like Connecticut, can join them. Connecticut was one of the six member states in the compact.

While the compact supported dairy farmers with higher milk prices, it faced criticism from free market organizations who argued it was inflating the cost of milk and dairy products in service to a special interest group, and opposition from dairy farmers in the Midwest and from the International Dairy Foods Association, who argued the compact had cost New Englanders $146 million in higher costs, according to a review by the Connecticut Office of Legislative Research.

The Northeast Dairy Compact expired at the end of September 2001 after Congress did not hold a vote to extend authorization; the vote was scheduled for September 11, 2001. 

Efforts to revive the Compact have fallen on deaf ears, as the federal government began to step through evolving legislation over the last twenty-five years to subsidize dairy farm losses when prices dipped, and Northeastern states began to take their own steps to keep their dairy farms afloat.

“It’s really an unfortunate situation that caused the Northeast Compact to dissolve,” Hurlbert said. “Granted, not everybody loved it across the nation from what I gather, but it’s a lot harder to recreate that opportunity after that door closed. There have been efforts to try to restart that [the Compact] and see if there’s any interest but it has not gotten any Congressional momentum, unfortunately.”

In 2002, the federal officials stepped in once again with the Milk Income Loss Contract (MILC), which compensated dairy farmers a portion of their losses when the price of milk in Boston dropped below 16.94 per hundred weight (cwt). Over the ten years the program existed, it paid out $1.6 billion to dairy farmers, according to a 2014 report by John Newton and Todd Kuethe at the University of Illinois.

The majority benefits of the MILC benefits, however, were not available to large farms due to production caps; the program primarily benefited smaller dairy operations. The program was scrapped in 2012 and then replaced with the Margin Protection Program, also known as Dairy Margin Coverage, which Newton and Kuethe labeled “all inclusive.”

The program essentially acts like an insurance plan; dairy farmers pay a premium for enrollment. According to the history of payments dating back to 2019, Connecticut dairy farms cumulatively received payments ranging from a couple hundred thousand to over $4 million, depending on the fluctuations in federal pricing and the number of farms enrolled. The latest numbers show 57 Connecticut dairy farms received a total of $128,379 in 2024. 

The $22.5 million dispersed by Gov. Lamont went not only to “direct subsidies,” but also “reimbursement for enrollment in the USDA Farm Service Agency’s Dairy Margin Coverage program.” 

Commissioner Hurlbert, however, says his department has already released $12 million of those funds in June in the form of “direct payments to farmers based on production,” and will release another $3 million in October. How the remaining $7 million will be dispersed in 2027 will be decided by a working group formed under a 2026 bill (more on that later).

Despite federal efforts, New England states tried to start their own supportive measures for dairy farms mimicking federal reimbursements after the Northeast Compact dissolved with limited success. 

Maine attempted to tax big box retailers and use the money to help dairy farms recoup their cost of production, and in 2005 attempted to provide a 50 percent property tax reimbursement to dairy farmers. Neither passed. In 2011, Maine established a loan fund, granting low interest loans up to $250,000 to eligible dairy farmers.

Vermont, likewise, tried to establish an insurance fund that would reimburse dairy farmers for losses, and then made an attempt at establishing their own Milk Income Loss Contract, both of which failed. Despite the state being well known for its cheese, it appears Vermont has concentrated their efforts on advocating for federal changes.

New York with over 3,000 dairy farms has over the years instituted a series of varying tax credits and exemptions for farmers, including tax credits for farm equipment; increasing and retaining farm employment; local school district property taxes; sales and use tax for equipment, supplies and even motor fuel and for farm expansion.

Connecticut made similar efforts with some success, resulting in millions of dollars per year in the form of grants going to state dairy farmers. 

Lawmakers moved forward with establishing the Milk Promotion Board in 2008 to essentially reinvest federal fees charged to dairy farmers that are used by state, regional, and federal entities to promote and advertise milk consumption.

In 2025, the Connecticut Milk Promotion Board received $423,855 from the federal government. According to meeting minutes from 2025, the board approved advertising payouts for magazine ads, sponsorships, and a donation to Auerfarm’s Discovery Barn; they also approved roughly $130,000 in invoices from New England Dairy, essentially and larger, regional milk promotion board. Overall, the board paid out nearly $351,000 to private companies in 2025.

A 2009 effort by Connecticut politicians to create an ongoing state subsidy to “make up the difference between what dairy farmers are paid for milk based on the federally set price and the estimated cost to produce it,” died before getting a vote. 

While that bill may not have passed, lawmakers in 2009 did amend the state’s Community Investment Act to create the Agriculture Sustainability Account that disperses millions in grant funding per year to dairy farmers to bridge the gap between production costs and federally set milk prices. 

Connecticut’s Community Investment Act funding comes from $40 recording fees for real estate transactions filed with municipal town clerks. The Agriculture Sustainability Account receives a flat rate of $10 per transaction, with the remaining $26 divided between the Department of Economic and Community Development, Department of Housing, the Department of Energy and Environmental Protection, and additional DoAg programs.

According to Connecticut’s open records website, since 2012 the sustainability fund has distributed between a low of $2.3 million in 2017 and a high of $6.3 million in 2021 and 2022 to dairy farmers. Since 2024, the distribution has been slightly less than $4 million. In 2019, state lawmakers supplied an additional $1 million per year for dairy farmers from the General Fund.

And while the state support has helped, it hasn’t stopped the loss of dairy farms in Connecticut as rising costs and declining federal prices have left them struggling for survival. While Lamont’s $22.5 million dispersal to dairy farmers was a welcome band-aid, lawmakers from agricultural districts, dairy farmers, and professors from UConn teamed up for a big push toward establishing a permanent tax program to support Connecticut dairy farmers going forward.

Despite the various attempts at creating state laws to back up dairy farmers in other states, all eyes were on Massachusetts and their dairy tax credit system.

VERY ALIVE

In March 2026, dairy farmers, farm workers, UConn professors, municipal associations and lawmakers from both sides of the political aisle lined up to support a new state tax credit for dairy farmers that would, again, bridge the gap between the federally set milk prices and the cost of production. More than one hundred and forty people submitted testimony in support of the legislation; there was not a single piece of testimony opposed.

Not content to sit on the sidelines and hope for a positive outcome during a year when they faced a $20 million loss due to declining milk prices, dairy farmers organized; they formed a new Connecticut dairy coalition called Very Alive, that peppered lawmakers with flyers, letters, and testimony about the dire straits facing dairy farmers, touted the industry’s $2.2 billion impact on the state economy, and proposed legislative solutions, and they hired a lobbying firm to push their message.

A flyer by Very Alive posted to the Town of Woodstock’s website lists a 63 percent loss of Connecticut dairy farms since 2005, “with several on the brink of shuttering operations.” Milk prices were at their lowest in over a decade, leaving farmers with a $20 million loss this year. They also pointed out the $69 million in local, state, and federal tax revenue generated by dairy farms that equated to $3,631 per Connecticut cow.

The Very Alive coalition and everyone testifying before the Finance, Revenue, and Bonding Committee wanted two things: temporary stabilization of dairy farms through a subsidy and a long-term solution in the form of a permanent tax credit program modeled on Massachusetts. 

Massachusetts, with a much smaller population of dairy cows and less dairy production than Connecticut, has nevertheless managed to stem the loss of its dairy farms with a 2008 law that awards a refundable income tax credit to dairy farms when the price of milk falls below a certain trigger point determined monthly by the commissioner of agriculture and the University of Massachusetts. The program is capped at a total of $8 million annually.

According to a presentation given to the Vermont Agency of Agriculture Food and Markets, the Massachusetts tax credit the rate of dairy farm loss in Massachusetts has been cut in half and 97 percent of dairy farmers reported the tax credit was “critical to their economic viability,” supporting income stability and offsetting production costs.

Sen. Jeff Gordon, a Republican from Woodstock where he says dairy cows outnumber people, proposed the dairy tax credit, along with several bipartisan co-sponsors, in 2025, but the legislation didn’t even receive a public hearing. This year was much different.

“I’ve been hearing for quite some time that things are getting much more difficult for them,” Gordon said of the dairy farmers in an interview. “A lot of the farmers more and more are getting squeezed and this is becoming an even worse situation right now. To me, their concern is can they keep their operation afloat and some of them are really struggling. If they close, they close, or they sell the farmland, which we really don’t want to keep losing good farmland in Connecticut. Once it’s built on, it’s gone.”

“This year I worked with the Connecticut dairy people,” Gordon continued. “They mobilized, they hired a good lobbying firm, they really were more active. I tried to model this on Massachusetts. They actually have a good program there.”

There is a problem with the Massachusetts model, however, that makes replicating the tax credit in Connecticut difficult in some respects: the Massachusetts tax credit is based on an individual’s income taxes, but often dairy farms are owned by entire families or they are part of a co-op or association of dairy farms in which multiple farmers pool resources in order to lower costs and negotiate with bigger buyers. 

During the committee process, this issue was raised by the Department of Revenue Services, which would be charged with dispensing the tax credits. In the case of multiple owners or co-ops, DRS needed to understand how the tax credit would be awarded and to whom.

“There were a number of challenges with the Massachusetts program that couldn’t get sorted out in a short session,” Commissioner Hurlbert said. “One of the big challenges in the refundable tax credit in Massachusetts goes back to the farm owner individual, not the farm entity. Our program goes to the farm entity.”

“The expectation is that you’re using those tax credit dollars to cut down on the cost of production, make investments in your operation, pay your vendors, so there’s a pretty significant difference,” Hurlbert continued.

“That’s why things needed to be looked at a bit differently in Connecticut, given some of the arrangements we have with dairy farms that are, at times, a little bit different than Massachusetts,” Gordon said. “Even when I talk to some of the dairy farmers in Connecticut, they’re aware that this stuff needs to be sorted out because of some of the arrangements they have. That’s why we couldn’t base it one hundred percent on Massachusetts.”

While the dairy farms got their subsidy, the long-term tax credit bill never materialized, being replaced with a working group to study the issue, and while working groups and task forces are occasionally used to delay potential legislation or placate a vocal group rallying around an issue, that does not appear to be the case for the proposed dairy farm tax credit. Instead, the working group is tasked with, among other things, examining the Massachusetts tax credit model and crafting a tax credit that fixes some of the problems with it.

The Dairy Farming Sustainability Working Group was formed under Senate Bill 148 this past session, the second so-called “farm bill” passed by the General Assembly in two years and held its first meeting on June 26. The working group is tasked with not only coming up with a dairy tax credit that will work for Connecticut, but also how to better use Community Investment Act funds, opportunities for dairy processing expansion, and the use and impact of property tax exemptions available to dairy farmers.

Although figuring out how a tax credit would best work in Connecticut is now in the hands of the working group, the 2026 farm bill included other supportive measures, including creation of the Dairy Modernization Grant Program, which requires DoAg to develop a grant to help dairy farmers “invest in equipment, infrastructure, and operational upgrades,” by January 2027. 

The bill also expanded on 2025’s Farm Investment Tax Credit Program, which awarded tax credits for the purchase of farming equipment, to include “Connecticut taxpayers whose federal gross income from farming for the income or tax year is at least $250,000,” according to the bill summary. 

Despite current support from the state, however, dairy farmers and those who study the dairy industry say a more permanent solution in the form of a Massachusetts-style tax credit is necessary to move forward and prevent further loss of dairy farms.

“With costs going up and up and their only real way to every year leverage money in loans is their property, their land. They really don’t have much else,” Gordon said. “That’s why it’s becoming more unsustainable. If they didn’t have the milk price limitations, it’d be a different story, but then milk might be unaffordable for many people.”

“Others may say, ‘well, why aren’t we doing this for other businesses?’ but, again, dairy farming is unique in their structure and that they’re handcuffed in what price they can get for milk,” Gordon said. “I don’t know what other industries are handcuffed that way.”

“FARMS CAN’T PAY THEIR BILLS”

Less than a month after Gov. Lamont’s announced the $22.5 million in support for Connecticut’s dairy farmers, a dairy processing plant in New Britain announced they were closing, putting more than two hundred people out of work and forcing milk producers to reroute their product to other processing plants in the state.

The Guida-Siebert processing plant was owned and operated by the Kansas-based dairy cooperative Dairy Farmers of America, and the majority of the milk being processed at the plant came from dairy farmers who were part of the DFA co-op or the AgriMark co-op; only five independent dairy producers sold milk to the plant. 

Those farms who were part of either co-op have little to worry about. They don’t technically sell their milk to Guidas, but rather to their respective co-op and it is the co-op’s responsibility to get the milk processed.

“We are concerned about the five independent farms that were selling to Guidas, and we’re going to be reaching out to them now that the dust has kind of settled after the announcement,” Hurlburt said. “DFA did say that that they would be offering those farms the opportunity to join the co-op. We want to make sure that is being upheld and that it’s done in a process and a manner that is beneficial to the farms.”

The notice provided by DFA to Connecticut’s Department of Labor indicated the plant will close by the end of August but gave no reason for the closure. DFA is also closing another processing plant in Vermont.

“I think it’s indicative of the continued affordability crisis that hits businesses,” Gordon said.

Seth Bahler says the Guidas plant closure will affect his farm “logistically,” as they send “three to four loads there a day,” and will now have to start shipping to other plants, like the Garelick plant in Franklin.

“That does change things,” Bahler said. “There’s still going to be milk on the shelves and all that but it’s just going to come from a different plant. But us personally, as a farm in Ellington, Connecticut, it affects us; we will have to send milk to Herd or Garelick or a cheese plant.

With Connecticut’s dairy farmers having captured the attention of lawmakers in the General Assembly – including holding their own dairy day at the Capitol – the $22.5 million in support from the state’s emergency fund, combined with the efforts of the newly formed working group may finally bring a stability to the state’s dairy farmers that they haven’t seen since perhaps the days of the Northeast Compact.

Naturally, the recommendations of the working group will require the General Assembly to act upon them, but with the state’s dairy farmers banding together, Sen. Gordon says they became a more effective force at the Capitol this past session.

“When they coalesce that way, it makes our job a little bit easier as legislators who are on top of this issue from around the state to then do our work, to advocate. We were able to work with them,” Gordon continued. “We had a great dairy day at the Capitol, which I think brought the message home to a lot of legislators who don’t have dairy in their district. I think it was good that they did it.”

Despite the challenges faced by Connecticut’s dairy farmers, Bahler says there are also some advantages for Connecticut’s dairy industry.

“I look at it differently than probably other farms in the state,” Bahler said. “We have to farm differently in the state of Connecticut. What worked for us the past hundred years is not going to work for us the next hundred years. We have thirty million people within a hundred mile of us. Big dairy in South Dakota has nowhere near that, so how we’re looking at it from our farm is how do we build a brand around transparency? How do we connect with our community?”

“I think all farms are taking a different approach, thinking how do I diversify? How to bring other sources of income so dairy is a portion of it,” Bahler continued. “Most farms around the country are growing their cow numbers and consolidating. We need to think different and use our location as an advantage, but that takes time and resources and capital to do it.”

The problem for Connecticut’s dairy farmers is whether they can adapt, adjust, and compete with no control over regional and state costs like electricity and labor and their hands effectively tied behind their back when it comes to prices.

Right now, Connecticut’s dairy farmers have access to roughly four to five million per year in state grant assistance through the Agriculture Sustainability Account, a few property tax exemptions – with more on the way under the 2026 farm bill — and a varying amount of possible help through the federal government’s Margin Protection Program.

Even if Connecticut adopts a Massachusetts-style tax credit program, conditions in the Northeast remain challenging: the big boast of the Massachusetts tax credit is that it slowed dairy farm closures, not that it necessarily stabilized the industry or built it back up. 

This year has been a difficult one for Connecticut’s dairy industry due to federal price changes, and next year doesn’t look much more promising, as the United States is producing a record amount of milk using a smaller herd size, and other countries are increasing their output; the global market for milk is highly competitive and with tight margins.

“The dairy industry (in Connecticut) is on the verge of collapsing because of high costs and the price just dropped from summer 2025 to January, it dropped twenty percent,” Bahler said. “If twenty percent of your revenue just disappears but you still have minimum wage going up and fuel price going up, if the state of Connecticut doesn’t subsidize something – and I don’t even look at it as a subsidy, I look at it as a stimulus – we have challenges where farms can’t pay their bills.”

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