USDA takes action on several dairy fronts

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WASHINGTON – The USDA stepped up to take actions affecting both domestic and international dairy program operations.

Specifically, USDA announced program actions affecting imports of American-type cheese, the Milk Price Support Program, use of surplus nonfat dry milk for humanitarian foreign assistance, and the Dairy Export Incentive Program.

Payments to producers. The USDA has begun issuing payments under the new farm bill’s Milk Income Loss Contract, a program that compensates producers when milk prices fall below a Congressionally specified level.

In addition, the department continues to make payments to dairy producers affected by drought under the Livestock Compensation Program. Dairy producers in counties that have received primary disaster designations due to drought in 2001 and/or 2002 are eligible for the program and will receive a fixed payment of $31.50 per head for dairy cows they owned as of June 1, 2002.

To date, USDA has paid $100 million to dairy producers under this program.

Import controls activated. USDA is now applying the volume-based World Trade Organization safeguard duty to above-quota imports of American-type cheese.

The duty rises 16 cents per pound to its maximum permissible level through Dec. 31, 2002.

Under the Uruguay Round Agreement on Agriculture, the United States is entitled to apply an additional duty on imports of American-type cheese when imports exceed a specified trigger.

The trigger quantity has grown over four-fold in three years, from just under 9 million pounds in 1999 to over 36 million pounds this year.

Imports as of Sept. 30 were just over 48 million pounds, well above the trigger level of 36 million pounds.

The additional 16 cents per pound increases the overall duty to 64 cents per pound.

Price support. The 2002 farm bill extended the Milk Price Support Program to Dec. 31, 2007, at the support price of $9.90 per hundredweight. The Commodity Credit Corporation supports the price of milk by purchasing cheese, butter and nonfat dry milk at announced prices.

Commodity Credit Corporation has continued to accumulate large supplies of nonfat dry milk over the past two years, but has not purchased any butter. Commodity Credit Corporation purchase prices for butter and nonfat dry milk currently are out of balance with each other and their respective market prices.

To bring better balance to the markets for butter and nonfat dry milk, Commodity Credit Corporation will increase the price it pays for butter 19.52 cents to $1.05 per pound, and decrease its purchase price of nonfat dry milk 10 cents to 80 cents per pound.

At the end of FY 2002, USDA held an accumulated 1.3 billion pounds of nonfat dry milk in inventory, or 166 percent of annual domestic commercial utilization. The average annual disposition of CCC inventory over the last three years has reached only 120 million pounds.

The USDA has also made available nonfat dry milk for the production of casein, a high protein product used in cheese, other food products and some industrial applications. Just over 1 million pounds of nonfat dry milk has been used to date for this purpose.

It is anticipated that as much as 50 million pounds could be used over the next 12-month period.

Humanitarian aid. USDA has also designated up to 441 million pounds of non-fortified, nonfat, low-heat dry milk available for humanitarian assistance.

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