Following a roundtable discussion with dairy producers near La Crosse, Wis., on Tuesday, Agriculture Secretary Tom Vilsack announced that the U.S. Department of Agriculture is offering to purchase $20 million of cheddar cheese to reduce a private cheese surplus that has reached record levels while assisting food banks and other food assistance recipients.
Although USDA projects dairy prices to increase throughout the rest of the year, many factors — including low world market prices, increased milk supplies and inventories and slower demand — have contributed to a sluggish marketplace for dairy producers and caused dairy revenues to drop 35% over the past two years. Section 32 of the Agriculture Act of 1935 authorizes USDA to purchase surplus food to benefit food banks and families in need through its nutrition assistance programs.
"America's farming families are being called on to demonstrate their world-famous resourcefulness and resilience in the face of this current market downturn, and USDA is making use of every tool that we have to help them," Vilsack said. "For dairy farmers, this has included $11.2 million in payments in August through the Dairy Margin Protection Program, in addition to the surplus purchase offers. While our analysis predicts the market will improve for these hardworking men and women, reducing the surplus can give them extra reassurance while also filling demand at food banks and other organizations that help our nation's families in need.”
The National Milk Producers Federation (NMPF) welcomed the assistance. “We continue to look at ways to address the challenging economic situation facing dairy farmers and are appreciative of USDA’s efforts to improve the effectiveness of the dairy Margin Protection Program (MPP) established in the 2014 farm bill,” NMPF president and chief executive officer Jim Mulhern said. "Further changes are needed to improve the program as an effective safety net, but such changes go beyond the authority granted to USDA by Congress. We will continue working with congressional leaders to seek improvements to MPP."
Vilsack noted that farmers at other points in the supply chain are also receiving a boost, with more than $7 billion in Agriculture Risk Coverage and Price Loss Coverage payments made for the 2015 crop year. These payments, by design, kick in when times are tough. “As always, we continue to watch market conditions and will explore opportunities for further assistance in the coming months. For producers challenged by weather, disease and falling revenue, we will continue to ensure the availability of a strong safety net to keep them farming or ranching," he said.
A solicitation will be issued shortly, and cheese deliveries to food banks and other food assistance recipients are expected to occur beginning in March 2017.
Also at the roundtable, Vilsack shared details of a new report by USDA's Office of the Chief Economist, which shows that continued growth of the U.S. dairy sector is largely contingent on trade and that the Trans-Pacific Partnership could create an additional $150-300 million in annual U.S. dairy exports.
Free trade agreements have contributed to U.S. dairy export growth and have helped address tariff and non-tariff barriers that disadvantage U.S. products in overseas markets. U.S. dairy exports to free trade agreement partners grew from $690 million in the year prior to each agreement's entry into force to $2.8 billion in 2015, driven by lower trade barriers and increased U.S. competitiveness.