Dairy Demand Game Changer? U.S. Government Could Soon Buy 47 Million Pounds of Cheese
Government Cheese Purchase 053023
The U.S. Government could be looking to buy 47 million pounds of cheese for local food banks and schools. And while one dairy analyst says they’re still digging through the details, it could be a game changer for dairy demand and milk prices.
The solicitation for cheese was posted on the government’s website last week. While it’s the first step of a longer process, Mike North of Ever.Ag says the first part of the purchase was a big demand driver for cheese.
“We had part one of this purchase made last year and it resulted in about 2 million pounds of cheese being moved into the USDA, and this is going to be used for food banks, local food purchase assistance, schools, above and beyond their normal purchases,” says North.
This next round could be even bigger, which North says would ultimately boost demand and milk prices for producers.
“When you break it all down, they're looking for 47 million pounds of cheese, that's 1,900 truckloads of cheese to be delivered somewhere in that neighborhood, we believe, from about October out through next June,” he adds. “So, if we go through the bidding process stage by stage and can fully realize that amount of cheese being sold to the government, that's a little bit of a game changer.”
North days the bidding happens in multiple stages, which he describes as a complicated and convoluted process. However, if the purchases come to fruition, dairy producers could ultimately see it support milk prices.
“It starts to put some value back into those fall months, first on cheese and then the class three complex secondarily as it creates competition back into that class for the market as well,” says North. “So, it is a potential game changer if it's realized, but also know that the bidding process has multiple stages. And you know, they've unveiled what the opportunity could be. But now we have to see which sellers are willing to participate, how much they're willing to allocate.”
Stage two of the process is then seeing if those locations qualify, as well as where the delivery locations will end up being. He says the process could take a couple months.
