USDA Provides Needed Assistance to Dairy Producers

Bloomberg writers Alan Bjerga and Lydia Mulvany reported yesterday that, “The U.S. Department of Agriculture plans to buy $20 million of stockpiled cheese to distribute to food banks and pantries nationwide in an attempt to stem farmer losses after dairy prices plummeted amid a global milk glut earlier this year.

“The purchase of about 11 million pounds of cheese, which the USDA reported Tuesday in a statement, comes in addition to $11.2 million in subsidies for dairy producers announced earlier this month. A dairy lobbying group had asked for as much $150 million in cheese purchases.”

Despite a slight uptick in global dairy prices in recent weeks, the Bloomberg article explained that, “The pain is also being felt on other continents. In the past year, the European Union has issued two aid packages totaling 1 billion euros ($1.1 billion), including incentives to cut output. In New Zealand, farmers are culling herds due to depressed prices and annual production there is forecast by the USDA to drop 2 percent in 2016. That’s prompted the New Zealand central bank to stress-test the main lenders in the country, where the dairy industry accounts for 10 percent of bank lending.

One reason for the dairy’s recent difficulties was a slowdown in Chinese demand, but the country may now be back in the market, with milk imports up 87 percent this year through May, according to the USDA. The price of whole milk powder sold by GlobalDairyTrade, an international dairy sales platform owned by New Zealand’s Fonterra Cooperative Group, jumped 19 percent to $2,695 a metric ton in the most recent auction held last week.”

In a statement regarding this development yesterday, House Agriculture Committee ranking member Collin Peterson (D., Minn.) indicated that, “Today’s announcement is welcome news. The combination of declining milk prices and record high cheese stocks has left many dairy farmers struggling. Through this cheese purchase, both farmers and those utilizing USDA nutrition programs, will get some relief. Additionally, dairy farmers will have more time to enroll in [the Margin Protection Program (MPP)] and protect themselves against potential future volatility.

MPP is an improvement over the past dairy safety net but as we look ahead to the next farm bill, I will be working closely with my colleagues and dairy farmers across the country to improve upon the program.”

This entry was posted in Agriculture Law. Bookmark the permalink. Both comments and trackbacks are currently closed.