Dairy Processors Ask Lawmakers to Find More Constructive Use for $350 Million in Dairy Relief Funding

Responding to a Senate decision this week to fund additional U.S. Department of Agriculture purchases of nonfat dry milk and cheddar cheese, the International Dairy Foods Association asked the U.S. Congress to find better ways to help dairy farmers than to use government spending to increase dairy prices that will ultimately be paid by U.S. consumers.

In a letter sent to Senators, IDFA President and CEO Connie Tipton asked the lawmakers to reconsider the proposal to add another $350 million for USDA purchases of dairy products under the Dairy Product Price Support Program.

"We appreciate that under existing dairy programs, USDA has already provided significant financial support for dairy farmers," Tipton said. "Direct payments to dairy farmers this year under the Milk Income Loss Contract program are expected to exceed $1 billion."

IDFA believes that additional government purchases of nonfat dry milk and cheddar cheese will have a number of negative consequences for dairy farmers, manufacturing companies and consumers. In her letter, Tipton noted that a price support increase will result in higher costs for USDA food and nutrition programs at a time when there is a growing number of people dependant on those programs.

She added that the proposal will most likely prolong the low price period by encouraging more milk supply when there is already too much and will discourage the industry from seeking long-term policy solutions to milk pricing, which are needed so that the government does not find itself in the same position in a few years.

"The USDA has already spent nearly $300 million this fiscal year to buy and store more than 270 million pounds of nonfat dry milk and nearly 5 million pounds of butter under this program," said Tipton. "Just last week, Secretary Vilsack announced that he was going to spend an additional $243 million to buy even more nonfat dry milk and cheddar cheese."

Rather than adding another $350 million to the Dairy Product Price Support Program, IDFA urged Senators to consider using those funds to:

* Make more milk available to school students by increasing the funding for USDA's Special Milk Program, which subsidizes the cost of milk in the a la carte line in school cafeterias;
* Make temporary, emergency payments directly to small dairy farmers if they enroll in USDA's revenue insurance programs;
* Provide funding for the USDA to subsidize risk management programs for dairy farmers similar to those routinely used by all farmers of other commodities; and
* Include yogurt as an eligible dairy product in the supplemental program for women, infants and children, as recommended by the Institutes of Medicine.

According to Tipton, the current low dairy prices are due to the economic downturn, a decline in global demand for dairy products and an increasing milk supply. "Short-term assistance must be tied to long-term reform of our current milk-pricing and dairy-support policies," said Tipton. "Everyone surely agrees that we must not find ourselves in the same situation in a few years, or hopefully ever again."

Dairy is the only agricultural commodity for which USDA purchases products for government storage and determines prices through a government-run system.

The International Dairy Foods Association (IDFA), Washington, DC, represents the nation's dairy manufacturing and marketing industries and their suppliers, with a membership of 550 companies representing a $110-billion a year industry. IDFA is composed of three constituent organizations: the Milk Industry Foundation (MIF), the National Cheese Institute (NCI) and the International Ice Cream Association (IICA). IDFA's 220 dairy processing members run more than 600 plant operations, and range from large multi-national organizations to single-plant companies. Together they represent more than 85% of the milk, cultured products, cheese and frozen desserts produced and marketed in the United States.