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U.S. Secretary of Agriculture Tom Vilsack announced today that his agency will increase the amount paid for dairy products through the Dairy Product Price Support Program. Vilsack estimates that that the increases, which will be in play from August 1 to October 31, will increase dairy farmer revenue nationally by $243 million.
“The price increase announced today will provide immediate relief to dairy farmer around the country and keep many on the farm while they weather one of the worst dairy crisis in decades,” Vilsack said in a prepared statement.
The price paid for nonfat dry milk will increase from roughly 80 cents per pound to 92 cents per pound. Cheddar blocks are expected to rise from $1.13 per pound to $1.31 per pound, while cheddar barrels will move from $1.10 per pound to $1.28 per pound. Temporarily raising the price of these dairy products typically increases the price that dairy farmers receive for the milk they produce.
Under the Dairy Product Price Support Program, the USDA serves as a buyer of last resort to help clear commodity dairy markets during periods of exceptionally low farm-level prices. For instance, if cheddar barrels sell for $1.20 per pound in the private market, the government provides the difference to dairy farmers up to the guaranteed price it has set.
Today’s news is the latest attempt by the USDA to aid struggling dairy farmers who are receiving the lowest payments for raw milk the industry has seen since the 1970s, and a move praised by the National Milk Producers Federation.
“This step by the 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 Jerry Kozak, president and chief executive of NMPF.
Federal action was also praised by U.S. Rep. Leonard Boswell (D-IA) who said that Iowa’s “2,390 dairy farms will benefit directly” from the additional government assistance.
“I applaud Secretary Vilsack for taking action on behalf of the country’s dairy farmers and for responding so immediately to the concerns voiced by myself and other members of Congress,” he said.
The USDA has already boosted purchases through the support program and resurrected a subsidy program that pays to export non-fat dry milk.
Vilsack also indicated that he and other federal officials are reviewing dairy policies to determine what changes are needed to reduce price volatility and enhance farmer profitability. Federal and private banks are being encouraged by Vilsack to be lenient with dairy farmers who have outstanding loans, although the USDA has offered no details as to the extent or tone of the encouragement.
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