SHAHEEN: USDA TAKES STEPS TO HELP DAIRY FARMERS

Secretary Vilsack Takes Action Following Letter, Meeting with Shaheen

July 31, 2009

(Washington, DC)-U.S. Senator Jeanne Shaheen announced today that the Department of Agriculture (USDA) will increase the amount paid for dairy products through the Dairy Product Price Support Program (DPPSP) beginning in August. Shaheen recently sent a letter urging Secretary Vilsack to make these changes to the DPPSP, and she met with him to discuss options to help dairy farmers earlier this week. Today, Shaheen also introduced an amendment to the Fiscal Year 2010 Agriculture Appropriations bill to increase MILC payments to multigenerational farms.

"Increasing the amount paid to dairy farmers is the first step in helping small and medium sized dairy farms stay in business," said Shaheen. "This is great news, but there is more work to be done. We must continue to find ways to reduce volatility in the market, and help dairy farmers profit so that they can keep their farms."

The USDA will raise the price paid for nonfat dry milk from $0.80 per pound to $0.92 per pound, the price paid for cheddar blocks from $1.13 per pound to $1.31 per pound, and the price of cheddar barrels from $1.10 per pound to $1.28 per pound. The agency estimates that these increases, which will be in place from August 2009 through October 2009, will increase dairy farmers' revenue by $243 million.


"We are happy to hear the Secretary is responding to existing market conditions," said Jeff Holmes, New Hampshire Farm Bureau President.  "This increase should equate to a market price for milk that is closer to our actual production costs, and we hope this increase translates into increased milk checks in the near future."

Since joining the Senate, Shaheen has met with Vilsack in New Hampshire, recommended former New Hampshire Commissioner of Agriculture and Plainfield resident Stephen Taylor to be appointed to the USDA's commission to review the federal milk marketing order system, sent Vilsack a letter on July 16 with 11 Senate colleagues urging for increases to the DPPSP, and met with Vilsack to reiterate the need for swift action.

The full text of the July 16th letter and USDA press release announcing today's policy change follow:

The Honorable Thomas Vilsack

Secretary of Agriculture

U.S. Department of Agriculture

1400 Independence Ave., SW

Washington, DC 20250

Dear Secretary Vilsack:

We are writing to request your immediate attention to the current crisis in the dairy sector.

As you know, America's dairy producers are facing the worst prices in nearly 30 years. Dairy farmers from every region of the country are losing money each month which is jeopardizing the long term stability of the industry and the livelihood of thousands of our rural communities. We appreciate your actions to implement the Dairy Export Incentives Program and your recent comments supporting additional lending opportunities for dairy producers. Despite those welcome actions, we believe more aggressive action is needed to halt the current crisis.

As you know, Congress in Section 1501 of the enacted 2008 Farm Bill (P.L. 110-246) updated the Dairy Price Support program to set price floors under individual dairy products (butter, cheese and non-fat dry milk). While specific prices at which USDA is mandated to purchase product were included in the legislation, Congress clearly gave the Department the authority to increase the purchase prices if necessary. We are therefore urging you to temporarily increase the Dairy Price Support program products purchases by a significant level to restore a meaningful safety net for America's dairy farmers.

We believe bold and swift action to increase the purchase prices under the Dairy Price Support program is needed to avert further crisis. During January through April this year, the U.S. all-milk price averaged $4.80 per cwt. below the U.S. average cash cost of production. And in the months since, dairy farmers have continued to lose significant equity. A meaningful but temporary increase in the Dairy Price Support program will begin to restore farm level prices and help restore producers' ability to produce basic cash flow for their operations during these difficult financial times.

Thank you for your immediate attention to this issue. We look forward to working with you to support America's dairy producers.

Sincerely,

Senator Jeanne Shaheen

Senator Patrick Leahy

Senator Herb Kohl

Senator Russ Feingold

Senator Bernie Sanders

Senator Chuck Schumer

Senator Patty Murray

Senator Tim Johnson

Senator Carl Levin

Senator Robert Casey

Senator Arlen Specter

Senator Kirsten Gillibrand

Contact

USDA Office of Communications:

(202) 720-4623

AGRICULTURE SECRETARY VILSACK ANNOUNCES IMMEDIATE RELIEF FOR STRUGGLING DAIRY PRODUCERS

Obama Administration to raise dairy support prices, will increase

dairy farmers' revenue by $243 million

WASHINGTON, July 31, 2009 - Agriculture Secretary Vilsack today announced that the Obama Administration is taking immediate action to support struggling dairy farmers by increasing the amount paid for dairy products through the Dairy Product Price Support Program (DPPSP). USDA estimates show that these increases, which will be in place from August 2009 through October 2009, will increase dairy farmers' revenue by $243 million.

"The Obama Administration is committed to pursuing all options to help dairy producers," said Vilsack. "The price increase announced today will provide immediate relief to dairy farmers around the country and keep many on the farm while they weather one of the worst dairy crises in decades."

The increase announced today will raise the price paid for nonfat dry milk from $0.80 per pound to $0.92 per pound, the price paid for cheddar blocks from $1.13 per pound to $1.31 per pound, and the price of cheddar barrels from $1.10 per pound to $1.28 per pound. This increase in the support price will have an immediate effect upon dairy farmers' bottom line. Temporarily raising the price of these dairy products increases the price that dairy farmers receive for their milk.

USDA estimates that today's announcement is expected to increase the all milk price received by dairy producers.  The increase will result in the government purchase of an additional 150 million pounds of non-fat dry milk (NDM) and an additional 75 million pounds of cheese.

Prior to today's announcement, USDA had taken several steps to provide support for dairy farmers, including the following:

  • In March, USDA transferred approximately 200 million pounds of nonfat dry milk to USDA's Food and Nutrition Service, which will not only remove inventory from the market, but also support low-income families struggling to put nutritious food on their tables.
  • USDA expects to spend more than $1 billion in fiscal year 2009 on purchases of dairy products (Dairy Product Price Support Program) and payments to producers (Milk Income Loss Contract (MILC).
  • On March 22, 2009, USDA reactivated USDA's Dairy Export Incentive Program (DEIP), to help U.S. dairy exporters meet prevailing world prices in addition to encouraging the development of international export markets in areas where U.S. dairy products are not competitive due to subsidized dairy products from other countries.

o       Since March 22, USDA has encouraged the export of 20,000 tons of nonfat dry milk.

o       From July 2008 through June 30, 2009, DEIP has announced allocations of 68,201 metric tons of nonfat dry milk; 21,097 metric tons of butterfat; 3,030 metric tons of various cheeses and 34 metric tons of other dairy products.

  • USDA is working with the Department of State to identify foreign assistance programs such as U.S. Agency for International Development (USAID) and McGovern-Dole International Food for Education and Child Nutrition Program to make the following available:

o       At least 1 million pounds on a competitive basis, for the production of casein;

o       About 500,000 pounds for use in the McGovern-Dole International Food for Education and Child Nutrition Program; and

o       About 1 million pounds for use by the U.S. Agency for International Development, based on anticipated requests from the State Department.

  • USDA is currently reviewing federal dairy policy to determine what changes are needed to reduce price volatility and enhance farmer profitability.

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