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Helping dairy farms, USDA buys $20 million worth of cheese

Original Publication: Eagle-Tribune,
Article Author:
August 24, 2016

WASHINGTON -- Moving to bolster dairy farmers who are struggling to cope with price declines, the Agriculture Department announced Tuesday it is spending $20 million -- on 11 million pounds of cheese.

A taxpayer watchdog group complained that the deal smells.

“It’s yet another example of USDA caving to the demands of an agricultural special interest wanting taxpayers to foot the bill for lower-than-desired prices,” said Joshua Sewell, senior policy analyst for Taxpayers for Common Sense.

But the deal was much smaller than the $50 million worth of cheese that the American Farm Bureau Federation asked the government to buy. The National Milk Producers Federation wanted the government to buy $100 million to $150 million in cheese.

“It’s a small drop in a big bucket,” said Dean Norton, president of the New York Farm Bureau, one of several states where dairy farmers are hurting from milk prices that have fallen by 40 percent in the past two years.

Agriculture Secretary Tom Vilsack, though, told an agricultural trade publication Tuesday that the $20 million is the most the department could spend so close to the end of its fiscal year.

Chris Galen, spokesman for the milk producers federation, said it appreciates what the government could do just 12 days after receiving its request.

Dairy sales are dropping due to a downturn in China’s economy and Russia’s ban on Western imports.

At the same time, the European Union has lifted a quota and produced more dairy products, wrote Jim Mulhern, president of the National Milk Producers Federation, to Agriculture Secretary Tom Vilsack on Aug. 12.

Making matters worse, U.S. dairy farms stepped up production to compensate for the lower prices, Galen said.

The result is a glut of cheese. Surplus cheese stored in the United States, which keeps prices down, has grown to 759 million pounds as of June. In his letter, Mulhern noted that's the most cheese on hand since September 1986.

A government purchase of $150 million of that cheese, or about 90 million pounds, would have sliced down the surplus and pushed up prices by 16 cents per hundred pounds of milk, or 10 pounds of cheese, Mulhern wrote.

The USDA uses commodities it purchases in government-sponsored programs such as food banks, soup kitchens and the school lunch program.

A higher price of cheese would have generated $380 million a year for dairy farmers, or about $2.50 of farm income for every $1 spent by the government, Mulhern wrote.

It was not immediately clear how the $20 million purchase would affect prices, or how much it would generate for farmers.

In a statement Tuesday, Vilsack said called the purchase “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.”

Without the USDA's help, running a dairy farm “isn’t sustainable,” said Jennifer Huntington, who has 300 cows on an 1,100-acre dairy farm in Cooperstown, New York.

“It’s something I’ve always wanted to do. I enjoy working with the cattle, being outdoors, seeing things grow,” said Huntington, who has run the farm for 25 years.

“We pay taxes like everyone else. We generally don’t want to be taking assistance from the government, “ she said.

Norton, of the New York Farm Bureau, said dairy farmers will continue to struggle. Unless prices rebound, more farms could close, on top of 12,000 throughout the country that failed last year.

The USDA decision comes after a bipartisan group of 61 members of Congress -- led by Sens. Patrick Leahy, D-Vt., Bob Casey, D-Iowa, and Tammy Baldwin D-Wis. -- urged Vilsack to act “to make an immediate market injection and offer financial assistance that will directly support U.S. dairy farmers equally, while being cautious to not stimulate overproduction further.”

In a statement, Casey called the government's cheese buy a “positive development."

"But more must be done to ensure our dairy farmers have a fair shot to make a decent living," he added.

Rep. Lou Barletta, R-Pa., said in a statement that he was pleased with the purchase.

Barletta said he signed the group's letter to Vilsack out of concern for "the health and vitality of such an important industry."

"Dairy farmers are at the heart of American agriculture," he said. "They create jobs and help feed our citizens, and represent a facet of national security via food production."

Vilsack, in his statement, said the agency continues looking "for ways within its authority to tackle food insecurity and provide for added stability in the marketplace."

Sewell said that signals the prospect of more cheese sales to the government.

He noted growers of other commodities have lobbied for government money, as well, including a $300 subsidy requested for the cotton industry in June.

“Since $20 million falls far short of industry demands, one can only assume this is an appetizer, and an entrée-sized purchase of excess cheese is still to come,” Sewell said. “Every other commodity experiencing low prices is sure to swarm Washington looking for their own special program.”

Kery Murakami is the Washington, D.C. reporter for The Eagle-Tribune and its sister newspapers and websites.

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