Against a backdrop of plummeting farm-level milk prices and farm cash receipts for milk sales, the American Farm Bureau Federation this week asked the Agriculture Department to provide emergency assistance for the nation’s dairy farmers.
In a letter to Agriculture Secretary Tom Vilsack, AFBF president Zippy Duvall said AFBF supported a recent request from 61 members of Congress asking USDA to provide emergency assistance.
Duvall noted the U.S. all-milk price fell to $14.50 per hundredweight in May, the lowest level since 2009. In addition, he told the USDA, dairy farm cash receipts from milk sales have fallen $16 billion since the record highs of 2014.
“The decline in dairy farm revenue has led many dairy farm families to exit the industry,” Duvall wrote. “In 2015 we lost 1,225 dairy farms – many of those small dairy farm operations where the average herd size is fewer than 200 milking cows.”
The AFBF president said lower dairy exports, increased production in Europe, expansion of the U.S. dairy herd due to economic signals in 2014 and a record high domestic cheese inventory continued to weigh on domestic markets. USDA is projecting a 2016 average milk price of $15.70 per hundredweight, down 35% from 2014 and the second lowest level in the past decade.
U.S. dairy producers, meanwhile, have been slow to adopt USDA-sponsored tools to manage dairy market price risk, due to the program costs and benefits being less attractive to some production segments. In 2015, just 25,000 of the 45,000 U.S. dairy farms signed up for the new Margin Protection Program enacted in the 2014 farm bill. Only 23,000 enrolled this year – a majority of them at catastrophic coverage only.
Duvall said AFBF was “extremely appreciative” of USDA’s deadline extension to sign-up for MPP as well as the expansion of a farm's production when new family members join the business. He noted AFBF also believes the $11.2 million in MPP assistance announced last week will help, but more can be done.
Duvall asked USDA to buy additional dairy products to be used in USDA’s nutrition programs and for donations to food banks.
“Specifically, we believe cheese could be purchased in a quantity that would help the dairy industry and yet not negatively impact our exports of cheese products,” Duvall said. “If the Department spent $50 million, it could purchase 28 million pounds of cheese for domestic feeding programs. This would not only be beneficial to those in need of food, but also would help reduce the record high inventories and would provide a positive price impact for dairy producers.”
For more insight on the dairy situation and what legislators are seeking, read this week’s Inside Washington column.