July 31, 2009

At Gillibrand's Urging This Week, USDA To Increase Dairy Pricing

After Meeting With Senator, Sec. Vilsack Moves to Increase Dairy Pricing, Expected to Increase Dairy Farmers’ Revenue By $243 Million

Washington, DC - After meeting with U.S. Senator Kirsten Gillibrand this week, U.S. Department of Agriculture (USDA) Secretary Tom Vilsack announced immediate action to support struggling dairy farmers by increasing the amount paid for dairy products through the Dairy Product Support Program (DPPSP). The increase will be in place from August 2009 through October 2009 and is expected to generate an additional $243 million in revenue for dairy farmers.

"While this is great for New York's dairy farmers, this is only a temporary solution to the fundamental problems with the dairy pricing system," Senator Gillibrand said. "When I met with Secretary Vilsack on Wednesday, I made it clear that the current system is not working for New York dairy farmers - who have been pushed farther and farther toward bankruptcy. During these tough economic times, this increase will bring some much needed relief for our farmers."

New York farmers are facing a dairy pricing crisis. According to Farm Credit, it costs dairy farmers $17.58 to produce a hundredweight of milk. Yet the market is only paying $13.33 per hundredweight.  The Milk Income Loss Contract (MILC) program was designed to be a safety net when there is a large price discrepancy. However, as the MILC program currently works, farmers are not even receiving enough income to cover the cost of staying in business. New York farmers have been forced to either take on massive debt to cover their costs or go out of business.

Senator Gillibrand has been working tirelessly to bring relief to New York's dairy farmers. Wednesday, Senator Gillibrand wrote to Secretary Vilsack urging the USDA to follow the Farm Bill, which she helped craft as a member of Congress, when establishing an advisory board to review issues surrounded milk pricing and dairy competitiveness.

Earlier this month, Senator Gillibrand unveiled her three-point plan to bring relief to New York's dairy farmers, including legislation to double the amount of money farmers receive from the MILC program, legislation to index the MILC rate to keep up with inflation, as well as plans to hold Senate hearings on dairy pricing both in Washington, D.C. and New York State.

The increase announced today will raise the price paid for nonfat dry milk from $0.80 per pound to $0.92 per pound, the price paid for cheddar blocks from $1.13 per pound to $1.31 per pound, and the price of cheddar barrels from $1.10 per pound to $1.28 per pound. This increase in the support price will have an immediate effect upon dairy farmers' bottom line. Temporarily raising the price of these dairy products increases the price that dairy farmers receive for their milk.