It's very likely USDA will announce some new purchases of cheese through various program authorities in the very near future as a way to help dairy farmers deal with a glut of production and the lowest prices since 2009, which was the peak of the recession.
Following a bi-partisan letter from 62 members of Congress calling for dairy aid, USDA announced $11.2 million in payments earlier this month from the 2014 farm bill feed-cost program, the Margin Protection Program. Still, farm groups are calling for USDA to purchase $50 million to $150 million in cheese to take some of the domestic milk off the market.
Late last week saw a spate of letters and news releases from farm organizations calling on Agriculture Secretary Tom Vilsack to take additional actions because the payments from the MPP have been inadequate to help farmers with the fall in dairy prices over the past three years. The MPP program paid out very little before the $11.2 million payment announced earlier this month.
In a letter Friday, the National Milk Producers Federation called on USDA to use the Section 32 program to make direct purchases of cheese to distribute to the poor, as well as use other authorities in the Commodity Credit Corporation to help dairy farmers.
The National Milk Producers Federation noted "the current national price for farmers’ milk is $14.50 per hundredweight, or $1.25 per gallon, the lowest price since October 2009." Additionally, "July's milk price was almost $4 less than the price just last November."
The World Agricultural Supply and Demand Estimates report on Friday lowered milk production for 2016, but forecasts more U.S. milk production for 2017 because of projected higher milk prices and lower feed costs from now through 2017. The report projects a modest expansion in the cow herd, but a boost as well in milk production per cow.
USDA increased the average price range for Class III, Class IV and All-milk prices roughly 45-65 cents per cwt. Still the All-milk price for 2016 and 2017 (running from $16.25-$16.45 per cwt in 2016 to $16.15-$17.15 for 2017) runs roughly $7.72 to $6.82 per cwt below what farmers received for the same milk in 2014.
NMPF asked USDA to provide anywhere from $100 million to $150 million in assistance, which would buy roughly 90 million pounds of cheese. That would remove nearly 900 million pounds of milk from the market and boost prices roughly 16 cents per cwt over the course of the year, NMPF noted.
The American Farm Bureau Federation sent a similar letter to USDA earlier in the week. Both the Milk Producers Federation and Farm Bureau cited problems with exports as China and Russia have reduced demand and the European Union scrapped its quota system in 2015 (only to create new subsidy supports this summer). Farm Bureau noted if USDA spent $50 million, it would buy 28 million pounds of cheese for food-aid programs. http://www.fb.org/…
National Farmers Union also put out a letter on Friday. NFU also noted dairy farmers are facing a "precipitous declines in net farm income, and a glut of dairy products within domestic and international markets,” NFU President Roger Johnson stated in the letter. “It is critical that the USDA take action to alleviate, in part, the challenges that tens of thousands of struggling dairy producers face today.”
NFU has established an emergency dairy planning committee to address shortcomings in the current federal dairy program and build support for a stronger safety net and emergency assistance for U.S. dairy producers. NFU also pointed out the U.S. has 18,000 fewer dairy farmers than just a decade ago. According to the letter, the dairy industry provides roughly $140 billion in economic output and more than 900,000 jobs in the U.S.
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