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Dairy farmers getting some help on prices from USDA

By Howard B. Owens

With dairy prices at a 30-year low, Genesee County dairy farmers may find some relief in new USDA price supports.

The government is essentially agreeing to pay above-market prices for some dairy products as part of the Dairy Product Price Support Program. In this 60-year-old program, the government buys dry milk, butter, and cheese and stores these products until they can be sold on the open market or donated to domestic or international charitable programs.

From a Rep. Chris Lee press release:

The increase, announced this morning by Agriculture Secretary Tom Vilsack, 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. Temporarily raising the price of these dairy products increases the price that dairy farmers receive for their milk.

The price increase will be in effect for three months. It is expected to boost dairy revenue by $243 million.

In a press release, Sen. Kirsten Gillibrand is taking some credit for the USDA action, and she says:

“While this is great for New York’s dairy farmers, this is only a temporary solution to the fundamental problems with the dairy pricing system,” Senator Gillibrand said. “When I met with Secretary Vilsack on Wednesday, I made it clear that the current system is not working for New York dairy farmers – who have been pushed farther and farther toward bankruptcy. During these tough economic times, this increase will bring some much needed relief for our farmers.” 

Here's Lee's statement in support of the increase:

“While this is certainly good news and will provide some relief, Washington still needs to be doing more to support our dairy farmers,” Congressman Lee said. “Dairy is such an important economic driver in Western New York, but when you have milk prices declining rapidly, and the cost of feed and fuel going in the other direction, it makes it impossible for even the most experienced farmers to make ends meet.”  

Meanwhile, the Obama administration is apparently critical of the price-support program, saying in a report "the program has not demonstrated results."

Gillibrand says she has a three-point plan to help dairy farmers:

... including legislation to double the amount of money farmers receive from the MILC program, legislation to index the MILC rate to keep up with inflation, as well as plans to hold Senate hearings on dairy pricing both in Washington, D.C. and New York State.  

Gillibrand is not alone is seeking changes to the MILC program, according to the New York Times:

Several caucus members called for more federal action in the short term, including higher payment rates in the Milk Income Loss Contract subsidy.

"It still comes down to a supply-demand issue. We have a lot of supply, demand has decreased, exports are down, and we have mild temperatures here so cows are happy, at least in the Midwest, producing a lot of milk," said David Zaslavsky, a Chicago analyst with Downes-O'Neill.

Apparently, there's something to the cheese and milk marketing campaign in California: "California cows are happy cows." Temperate weather makes cows happy. And we always thought it was just a funny line. (Though, PETA never thought so.)

Additional information from Lee's PR:

New York is the nation’s third largest dairy state, generating $2.4 billion annually, more than half of the state’s total agricultural receipts. Wyoming is the state’s leading county for dairy production. Unfortunately, the economic crisis has had a significant impact on the dairy industry. For the first five months of 2009, the benchmark federal order average price was $11.59 per hundredweight, down 25 percent from the average of the previous five years. In June 2008, New York dairy farmers were paid $18.81 per hundredweight. Milk prices for June 2009 were expected to drop to around $11.40, while the latest USDA estimated cost of producing milk in New York is $25.27 per hundredweight. As a result, dairy farmers in Livingston County are projected to lose more than $23 million this year. In Wyoming County, dairy farmers are projected to lose $28 million, and in Genesee County, $60 million.

Adama Brown

I find it ironic that Chris Lee is supporting this, for two reasons. One, he seems to think that government cannot and should not do other things that benefit real people, like lower the price of health insurance, or try to stimulate the economy, but he'll mouth support for farm subsidies because he's got a lot of farmers in his district.

Second, he's putting out a press release like he had something to do with it, when the fact is he'd probably have a hard time even getting a phone call with Sec. Vilsack.

I sure as hell wish I could get cheddar blocks for $1.31 a pound.

Aug 3, 2009, 1:33am Permalink
E. S. Sherman

One thing i don't think this will make a whole lot of differance for the farms. Anyone who thinks that the farmers are making it right now should stop and talk to some of them. Farms are getting a little over 10 per hundred weight, when it costs them at least 15 to produce. There are some farms out there that right now they are loosing $30000 a day at least. I agree that Chris Lee probably had nothing to do with it. But I would like to see prices improve to help the dairy farms.

Aug 3, 2009, 6:02am Permalink
Peter O'Brien

If the price is dropping, its because demand is low and supply is high. Dairy farmers alone can fix this issue, not the government. Stop producing so much and you will drive the price back up. Simple.

The government shouldn't be supporting any farming.

On a side note, last night I watched an obese woman and her daughter buy 2 cartons of ice cream with her food stamps. On the way out I noticed her stop by the scratch off lottery ticket machine and make a purchase. Oh and she was driving a Buick. Foodstamps should be for the purchase of healthy essentials only. You can't earn enough to choose what food you want to eat, you don't get to choose.

When was Pride replaced by Handouts?

Aug 3, 2009, 7:29am Permalink
bud prevost

When was Pride replaced by Handouts?

I believe it was 1930 something. Thank you President Roosevelt. It was augmented in the 1960's by President Johnson and his great society. I am all for helping someone when they are sick, or a temporary hard time, but we have 4th and 5th generation welfare families! The art of working the system handed down from generation to generation. It is a fact, and even my left leaning lib friends on this sight cannot deny that!
If Gov Dave is serious about cutting the fat from the budget, I suggest start at DSS. Evaluate every case for status, progress, then implement a plan to help the recipient take care of themselves. I also believe mandatory drug testing should be done to receive and continue to receive assistance. I guarantee a quarter(very generous estimate) of DSS clients would be dropped immediately, and many potential abusers will think twice before applying.
I know I'm going to be called cold and callous, but something's gotta give.
Welcome to the jungle,baby

Aug 3, 2009, 8:20am Permalink
Adama Brown

Bud, do a little research before you start prognosticating. For starters, this is about farm subsidies, not social services. The laws governing milk prices were originally implemented during the Great Depression to insure that the nation's base of farmers weren't wiped out of existence.

Second, you'll find that the vast majority of people who receive social service assistance do so temporarily. The urban legends about all recipients of assistance being "welfare queens" are exactly that. The small percentage of people who abuse the system don't merit badmouthing society's safety net.

Aug 3, 2009, 2:06pm Permalink
bud prevost

I can give you names and numbers if you'd like Abama. I first hand have seen this "urban legend" in the city of Rochester and out here in rural WNY. And I was answering Peter's post. So, Mr. Brown, I stand by my opinion, and I will speak this opinion until something changes, or I no longer draw breath. Now, as for the article, since you mentioned it, the government should not subsidize dairy farmers, auto companies, insurance conglomerates, or democratic web sights. Just my humble, American opinion.

Aug 3, 2009, 2:20pm Permalink
bud prevost

The small percentage of people who abuse the system don't merit badmouthing society's safety net.

One abuser is one too many pal! I'm of the belief that temporary assistance is sometimes neccessary, but you nor I should be paying anyone to "milk" the system. (there, a dairy reference)

Aug 3, 2009, 2:25pm Permalink
E. S. Sherman

First place one thing i do know is demand is still high. The next thing i do know is that alot of our cheese slices comes from imported milk like substances. The biggest problem that the dairy farmers have is the way the pricing is set and then the government basically controls the price. The next thing i do know is money for food stamps comes out of the agriculture budget. So when you see what the government has for the ag budget some of it surely is not going to the farmer. I do agree the best thing would be to have the government get out of the ag business. You would sure see a lot of the mega farms done as they do get a lot of money from them.

Same thing though if we wouldn't import so many things there might be more at home to support our own country.

Aug 4, 2009, 7:02am Permalink

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