Agriculture Secretary Tom Vilsack announced on July 31 that the Obama administration will raise the amount paid for dairy products in order to support dairy farmers that were hit by a collapse in dairy prices last fall.
Assistance from the U.S. Department of Agriculture (USDA) comes five weeks after the National Milk Producers Federation requested financial help for dairy farmers.
In his statement at NMPF (National milk producers federation) President Jerry Kozak said the problem that caused the milk price crisis is the global recession. “A worldwide decline in dairy demand, owing to the worst economic downturn in 75 years, is at the heart of the price crunch on the farm,” said Kozak.
The raise in dairy prices will increase dairy farmers’ revenue by $243 million. The increase that will boost farmers income most quickly is in milk prices. The price paid to farmers for nonfat dry milk will increase by 15%, for cheddar blocks by 16%, and for cheddar barrels by 16.36% per pound.
To effect the bolstering of prices, the government will purchase more dairy products from the farmers.
“The price increase announced today will provide immediate relief to dairy farmers around the country and keep many on the farm while they weather one of the worst dairy crises in decades,” said Vilsack.
“This step by USDA to raise farm-level milk prices comes at a critical time, and is yet another important effort the agency has made to help dairy farmers survive the worst recession in their lifetimes,” added Kozak.
The price for milk consumers eventually pay depends on the price of cheese that is set at the Chicago Mercantile Exchange, because cheese is produced from milk.
In 2009, the USDA expects to spend approximately $1 billion in dairy product payments to producers, which includes the 20,000 tons of nonfat dry milk it exported this past March.
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