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Milk producers face serious price squeeze

June 23, 2009
Jenn Brookens — Sentinel Staff Writer

FAIRMONT - While declining milk and dairy-product prices are good news for consumers, they spells disaster for dairy farmers.

Prices for a gallon of milk at the store are half of what they were last year, falling from about $4 per gallon of whole milk to $2 today.

In March, U.S. Secretary of Agriculture Tom Vilsack announced that about 200 million pounds of nonfat dry milk will be transferred from the Commodity Credit Corporation to USDA's Food and Nutrition Service for use in domestic feeding programs. The goal is to help support low-income families struggling to put nutritious food on their tables and dairy farmers who have been challenged by high feed costs and low dairy prices.

"President Obama understands that providing food to those in need will help many weather these tough economic times," Vilsack said. "At the same time, USDA's disposal plan will benefit dairy farmers, who have seen markets disappear and prices plummet in recent months, by increasing consumption of milk and other dairy products."

Nonfat dry milk was acquired under the Dairy Product Price Support Program. The dry milk, butter and cheddar cheese is purchased for the food programs at statutorily mandated prices. These purchases support the prices of dry milk, butter and cheese and the price farmers receive for milk.

An additional program has been set up to target the international demand and subsidized prices.

"We've provided immediate and targeted support to stabilize prices domestically," said U.S. Sen. Amy Klobuchar, D-Minn. "Now we need to ensure a level playing field for our dairy farmers as they continue to deal with international market forces that are beyond their control. Farmers are especially vulnerable during these tough economic times and Secretary Vilsack's actions will help protect our family farmers."

This newly enacted program is designed to help dairy exporters compete with world prices while encouraging competition in the international markets, where dairy prices are kept artificially low through subsidies. Foods such as nonfat dry milk, butterfat and various cheeses will be purchased and provided to food shelf programs in order to stabilize prices and boost the domestic demand. Administered by USDA's Foreign Agricultural Service, this program was reauthorized by the Food, Conservation and Energy Act of 2008.

However, the programs are not happily accepted internationally, nor by dairy farmers. Farmers as part of the National Family Farm Coalition and Farm Aid have circulated a petition to be sent to Vilsack urging him to set an emergency floor price for milk of $18 per 100 pounds. Farmers are now receiving $8 to $10 per 100 pounds, below 1970s prices, according to a NFFC press release.

Another action being supported by the National Family Farm Coalition is the proposed Federal Milk Marketing Act of 2009. The bill would, among other things, take into account a national cost of production as a factor in determining prices. It would also evaluate the quality of dairy imports and exports and give the Secretary of Agriculture power to reduce prices if there is excess production.

The bill has not yet been heard in either house of Congress.



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