USDA: Purchase of nonfat dry milk helps both farmers and low-income families

WASHINGTON — The USDA is transferring approximately 200 million pounds of nonfat dry milk from the Commodity Credit Corporation (CCC) to USDA’s Food and Nutrition Service for use in domestic feeding programs.

U.S. Secretary of Agriculture Tom Vilsack said the goal is to help support both low-income families struggling to put nutritious food on their tables and dairy farmers who have been challenged by high feed costs and low dairy prices.

Use up surplus

The nonfat dry milk was acquired by the CCC under the Dairy Product Price Support Program (fact sheet .pdf). Under this program, CCC purchases nonfat dry milk, butter and cheddar cheese at statutorily mandated prices. These purchases support the prices of nonfat dry milk, butter, and cheese and the price farmers receive for milk.

The movement of the powdered milk out of USDA storage will eliminate a source of surplus dairy products that could overhang commercial markets and delay a recovery of dairy farm prices, which are, on average, below $1 per gallon this month.

USDA will make available about 200 million pounds of nonfat dry milk for further processing or barter. Products should be moving through the supply chain starting in this spring and continuing through 2009.

The administration’s move may have been nudged by pressure from Capitol Hill. In January, a bipartisan group of 36 members of Congress sent a letter encouraging Vilsack to use USDA authority to make dairy purchases for feeding programs.

Welcome news

The March 26 announcement was applauded by most dairy farm groups.

National Farmers Union President Roger Johnson called the move “a win-win,” aiding struggling dairy producers and consumers.

“While there is no easy answer or simple fix to the extraordinary challenges facing America’s dairy producers, today’s announcement is the right step in the right direction,” Johnson said in a prepared statement.

“Using government surpluses in a way that doesn’t displace commercial dairy sales benefits everyone served by these programs,” added Jerry Kozak, CEO of the National Milk Producers Federation.

Should do more

Kozak said USDA should also consider using other tools at its disposal, such as purchasing additional quantities of consumer-ready dairy products, such as process cheeses and infant formula, for using in feeding programs through the so-called Section 32 program.

He also renewed the request NMPF made in January to resurrect the USDA’s dormant Dairy Export Incentive Program, to help boost overseas sales of U.S. dairy products in certain markets.

Not everyone happy

The National Family Farm Coalition criticized the USDA’s action, saying it’s not enough.

“Transferring surplus nonfat dry milk powder to feeding and nutrition programs will do little to halt the catastrophe occurring in rural America,” said the coalition’s dairy subcommittee chairman and Wisconsin dairy farmer Paul Rozwadowski.

“One of the critical problems facing dairy farmers is not overproduction, but a dairy pricing system easily manipulated by a few corporate entities,” he added.

The coalition has urged Vilsack to implement Section 608c(18) of the 1937 Agriculture Act, which gives him authority to set dairy prices to reflect farmers’ cost of production.