As America’s dairy farmers endure the lowest milk prices since the Great Recession of 2009, the National Milk Producers Federation (NMPF) joined the chorus of those asking the U.S. Department of Agriculture to provide a measure of relief. They have asked USDA to purchase at least $100 million worth of cheese products for donation to the needy – a measure that would help both farmers and food-insecure Americans who patronize food banks.
In a letter sent Friday to Agriculture Secretary Tom Vilsack, National Milk urged the department to use all of its available authorities to purchase $100-150 million of cheese. NMPF asked USDA to utilize its Section 32 program, as well as additional authorities through the Farm Service Agency, the Food & Nutrition Service and the Commodity Credit Corp.
“Dairy producers here in the United States need assistance to help endure this 18-month depression in milk prices,” said Jim Mulhern, NMPF president and chief executive officer. “This type of assistance would both help economically strapped farmers and also help those without ready access to nutritious dairy products.”
A cheese buying program of up to $150 million would allow for the distribution of as much as 90 million lb. of cheese to nonprofit food banks. Donating this quantity of cheese would remove the equivalent of almost 900 million lb. of milk from the domestic commercial market and strengthen farm-level prices by about 16 cents/cwt. over the course of a year, increasing the incomes of all U.S. dairy farmers by approximately $380 million.
Global dairy demand has sagged in the past two years due primarily to a reduction in purchases by China and Russia. Meanwhile, a global rise in milk production – particularly in Europe, where production quotas were removed last year – has led to a worldwide imbalance between supply and demand, pushing prices down for farmers around the world. U.S. dairy exports have slumped, leading to a large domestic buildup of American-type cheese (between 2014 and 2016, U.S. cheese exports dropped by almost 20%).
The current national price for farmers’ milk is $14.50/cwt., or $1.25/gal., the lowest price since October 2009, NMPF’s letter said. The cost of purchased feed has risen recently, producing a Margin Protection Program (MPP) margin of $5.76/cwt. for the May-June period, the lowest bimonthly margin since MPP began.
The American Farm Bureau Federation (AFBF) also sent a letter to USDA asking the secretary to make a $50 million purchase of cheese. AFBF president Zippy 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 in the AFBF letter. “If the department spent $50 million, it could purchase 28 million lb. 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.”
In its letter, NMPF once again reiterated its desire to work with USDA to make necessary improvements to MPP, the dairy safety net program created by the 2014 farm bill. Limitations of the program approved by Congress have caused few producers to sign up for coverage at levels that will provide sufficient support this year, and NMPF hopes to work with Congress and USDA in the future to alleviate the issue.