December 17, 2009

USDA Uses Gillibrand Model To Distribute Direct Payments To New York Dairy Farmers

Senator’s Legislation Ensures Small, Family Farms Receive Bulk of Assistance

Washington, DC - Today, the U.S. Department of Agriculture (USDA) adhered closely to the formula in U.S. Senator Kirsten Gillibrand's model legislation to distribute emergency assistance funds to dairy farmers. Senator Gillibrand introduced the Family Dairy Preservation Act this summer to provide emergency funding to small, family farms like those in New York.

This fall, Senator Gillibrand helped secure $350 million for the USDA to help New York farmers struggling during the dairy crisis in the final Agriculture Appropriations Bill. The agreement includes $60 million in cheese and dairy product purchases for food banks and other nutrition and feeding programs, and $290 million in direct support to dairy farmers. At Senator Gillibrand's urging, the USDA will use the Milk Income Loss Contract (MILC) program to distribute the direct payments to help keep dairy farmers solvent during this current crisis. Specifically, farmers will receive payments based on their total pounds of production, from February 2009 to July 2009, multiplied by 2. There is a poundage cap of 6 million pounds per operation. This cap will help New York, as most producers fall under this cap. USDA estimates that the payment will be around 32 cents a hundredweight, based on preliminary data.

"During these tough economic times, this increase will bring some much needed relief for our farmers," said Senator Gillibrand, the first New York Senator in 40 years to serve on the Senate Agriculture Committee. "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. I will continue to work for a long term fix for our farmers."

"This emergency aid comes just in the nick of time, as dairy farm families struggle through the end of the year with dramatic cash flow problems," said Dean Norton, president of New York Farm Bureau.  "We are hugely grateful to Senators Schumer and Gillibrand for getting this emergency aid pumped into the industry in quick fashion.  It will surely help keep some of our farms in business to the long-term benefit of the Upstate rural economy."

Last month, in a letter to USDA Secretary Tom Vilsack, Senator Gillibrand urged the USDA to utilize the MILC program, since the infrastructure for the program is already in place. Using an existing program will ensure that MILC checks that farmers received were able to provide real help in a time of crisis. Senator Gillibrand cited that in the North Country alone, 15 dairy farms closed, leaving many without jobs. She argued that we are losing the economic driver for many of our rural communities and a cultural heritage that we may never again regain.

Senator Gillibrand is giving a strong new voice and a real seat at the table for New York's dairy farmers and agricultural communities struggling in these tough economic times.

In June, Senator Gillibrand introduced the Family Dairy Preservation Act that would index the MILC rate of $16.94 to inflation. The MILC program payments were originally designed to help dairy farmers in their time of need, but have remained stagnant. The price floor of $16.94 per hundredweight has not changed since the 1990s, yet the cost of production has increased exponentially.

In July, after meeting with Senator Gillibrand, the USDA 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 went into effect in August and will continue through the end of October.  The increase is expected to generate an additional $243 million in revenue for dairy farmers.

In August, Senator Gillibrand held a field hearing in Batavia, New York that focused on identifying major problems with the current dairy pricing system and determining effective solutions moving forward.  Just last month, Senator Gillibrand chaired an Agriculture Committee Hearing on dairy pricing in Washington, D.C. which explored the various proposals currently being presented as a response to historically low dairy prices.

On October 30, Senator Gillibrand met with North Country dairy farmers to discuss short-term and long-term fixes to the dairy pricing system. Senator Gillibrand is working with stakeholders and economists to develop a proposal before the next Farm Bill is written in 2012 that will mitigate the boom and bust cycle that dominates the American dairy industry.