The U.S. Department of Agriculture announced plans to purchase approximately 11 million lb. of cheese from private inventories to assist food banks and pantries across the nation while reducing a cheese surplus that is at its highest level in 30 years.
The purchase, valued at $20 million, will be provided to families in need across the country through USDA nutrition assistance programs while assisting the stalled marketplace for dairy producers, whose revenues have dropped 35% over the past two years.
"We understand that the nation's dairy producers are experiencing challenges due to market conditions and that food banks continue to see strong demand for assistance," Agriculture Secretary Tom Vilsack said. "This commodity purchase is part of a robust, comprehensive safety net that will help reduce a cheese surplus that is at a 30-year high while, at the same time, moving a high-protein food to the tables of those most in need. USDA will continue to look for ways within its authorities to tackle food insecurity and provide for added stability in the marketplace."
USDA received requests from Congress, the National Farmers Union, the American Farm Bureau Federation and the National Milk Producers Federation (NMPF) to make an immediate dairy purchase. Section 32 of the Agriculture Act of 1935 authorizes USDA to utilize fiscal 2016 funds to purchase surplus food to benefit food banks and families in need through its nutrition assistance programs.
The Farm Bureau had asked USDA to spend $50 million to purchase 28 million lb. of cheese. NMPF had asked for as much as $150 million worth of cheese to be purchased to alleviate the glut in the marketplace.
NMPF estimated that a cheese buying program of up to $150 million 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.
USDA also announced that it will extend the deadline for dairy producers to enroll in the Margin Protection Program (MPP) for Dairy to Dec. 16, 2016, from the previous deadline of Sept. 30. This voluntary dairy safety net program, established by the 2014 farm bill, provides financial assistance to participating dairy producers when the margin — the difference between the price of milk and feed costs — falls below the coverage level selected by the producer. A USDA web tool, available at www.fsa.usda.gov/mpptool, allows dairy producers to calculate levels of coverage available from MPP based on price projections.
On Aug. 4, USDA announced approximately $11.2 million in financial assistance to U.S. dairy producers enrolled in MPP for Dairy, the largest payment since the program began in 2014.
"By supporting a strong farm safety net, expanding credit options and growing domestic and foreign markets, USDA is committed to helping America's dairy operations remain successful," Vilsack said.
While 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 the sluggish marketplace for dairy producers.
USDA will continue to monitor market conditions in the coming months and evaluate additional actions, if necessary, later this fall.