Reaction to Price Support Increase Varies

July 31, 2009 07:00 PM
Friday's announcement that USDA was increasing dairy price supports August 1 through October 31 by roughly 15% was met with varied reaction—ranging from grateful to "not enough.”
Following are statements by the National Milk Producers Federation, the International Dairy Foods Association and the National Family Farm Coalition:
National Milk Producers Federation:
Five weeks after the National Milk Producers Federation asked for additional economic assistance for struggling dairy farmers, the U.S. Department of Agriculture has agreed to expand the Dairy Product Price Support Program in a way that should boost farm-level income.

In a decision announced Friday by Agriculture Secretary Tom Vilsack, the USDA said it will temporarily increase purchase prices for cheese and nonfat dry milk. The prices will rise from $1.13 per pound for block cheese to $1.31; barrel cheese, from $1.10/lb. to $1.28; nonfat dry milk powder, from $0.80/lb. to $0.92.

"Once again, Agriculture Secretary Vilsack has used the tools at his disposal to help dairy farmers cope with the extreme drop in farm-level prices, and we appreciate his hard work on our members' behalf,” said Jerry Kozak, President and CEO of NMPF.

The new levels, which will be imposed as of Aug. 1st and expire after Oct. 31st, are higher than those requested by NMPF on June 26th. NMPF had asked that the USDA raise purchase prices for block and barrel cheese by six cents a pound, and for nonfat dry milk by four cents a pound. Higher product prices will translate into higher farm-level prices, according to NMPF. The USDA estimates this will raise farmer income by $243 million.

"This step by USDA to raise farm-level milk prices comes at a critical time, and is yet another important effort the agency has made to help dairy farmers survive the worst recession in their lifetimes,” said Kozak.

International Dairy Foods Association
The International Dairy Foods Association (IDFA) said it will continue to advocate for long-term reform of dairy policies in response to Secretary Tom Vilsack's announcement [Friday] that USDA will provide additional short-term financial assistance to dairy farmers. 
"Dairy farmers are our partners and are critical to maintaining a strong and viable dairy industry," said Connie Tipton, president and CEO of IDFA. "We recognize that Secretary Vilsack is responding to the current difficulties faced by many farmers, but everyone should be concerned that we will be right back here in a few years unless we review and update existing dairy policies." 
According to IDFA, the current low dairy prices are due to the economic downturn, a decline in global demand for dairy products and an increasing milk supply. IDFA believes that current dairy policies, which have been in place since the Great Depression, discourages innovation in dairy manufacturing and the use of risk management tools
that are routinely used by other U.S. farmers. 
Dairy is the only agricultural commodity for which USDA purchases surplus dairy products for government storage and determines pricesthrough government regulation. 
"Our members are concerned that an increase in government purchases of products, such as nonfat dry milk, does very little to expand the demand for nutritious dairy products, which is how our industry can grow," said Tipton. 
IDFA Chairman Paul Kruse, who is president and CEO of Texas-based Blue Bell Creameries, outlined IDFA's recommendations for long-term policychanges when he testified earlier this month before the U.S. House Agriculture Subcommittee on Dairy, Livestock and Poultry, which sets dairy policy for USDA. Kruse told the panel that product innovation and increased global demand are fundamental parts of any solution designed to address the economic conditions currently facing the U.S. dairy industry.
His testimony is available at:
National Family Farm Coalition
The National Family Farm Coalition [Friday] Secretary Tom Vilsack that USDA's plans to temporarily raise cheese and nonfat dry milk prices through the Dairy Product Price Support Program (DPPSP) still falls far short of a real remedy to stop the imminent bankruptcies of dairy farmers across the country.
The increase in dairy support price is likely to only produce a Class III price under $12 when costs of production for dairy farmers ranges from $17-30. Paul Rozwadowski, a Wisconsin dairy farmer and Chairman of the NFFC Dairy Subcommittee, said, "While we are heartened that Secretary Vilsack acknowledges the grave crisis dairy farmers are confronting, raising dairy support prices by these small amounts is unlikely to stop the economic devastation occurring in rural America. We need at least an $18 emergency floor price on all manufactured milk to be able to stay in business and survive. This would be a much less costly solution than USDA simply buying up more products.”

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