July 31, 2009

USDA Heeds Udall & Teague Calls to Help Struggling N.M. Dairy Farmers

Ag Secretary Will Boost Prices Paid Through Dairy Product Price Support Program

WASHINGTON - U.S. Senator Tom Udall and U.S. Representative Harry Teague today praised the U.S. Department of Agriculture's (USDA) decision to take action to address America's dairy crisis. The decision by the USDA follows letters from Udall and Teague requesting action. It also follows a meeting between Secretary of Agriculture Tom Vilsack, Udall, and other senators. The USDA will increase the amount paid for dairy products through the Dairy Product Price Support Program (DPPSP). USDA estimates show that these increases, which will be in place from August 2009 through October 2009, will increase dairy farmers' revenue by $243 million.

"I am pleased that the USDA will be doing more to help New Mexico dairy farmers weather today's incredibly tough conditions," said Udall. "I am also pleased that they chose to do this in the way that I requested, not by relying on programs that do not do enough to help New Mexico farmers. I want to thank Secretary Vilsack for taking the time to meet with me and my colleagues, and for agreeing to our request for additional assistance. I will continue to work with the Obama Administration and my colleagues to keep New Mexico's dairy industry strong."

"Today's announcement is a critical step in addressing the needs of New Mexico's dairy farmers so they can continue to employ workers across the state, provide healthy and nutritious food for our families, and contribute to the economic recovery of our nation," said Teague, Vice-Chair of the Congressional Dairy Farmers Caucus. "I will continue to work every day to find ways to help those farmers that are in need and remind our colleagues that there is an entire industry out there that's hurting right now."

In his letter to the USDA and his meeting with Secretary Vilsack, Udall stressed the need to increase the dairy products price floor by boosting the price paid through the DPPSP, rather than relying on the Milk Income Loss Contract (MILC) program, which is less beneficial for New Mexico producers. The increase announced today will have an immediate effect on dairy farmers' bottom line. Temporarily raising the price of these dairy products increases the price that dairy farmers receive for their milk.

Teague has also taken steps to help New Mexico's struggling dairy industry. After holding meetings with local dairy farmers in southern New Mexico, he led over 40 of his colleagues in submitting letters to Secretary Vilsack and the Director of the Office of Management and Budget, Peter Orszag, urging them to take immediate action to stabilize dairy prices through methods like the Dairy Export Incentive Programs and the DPPSP. In addition, he reorganized the bipartisan Congressional Dairy Farmer's Caucus and serves as vice chair. The caucus aims to bring attention to the plight of dairy producers.

Dairy products are New Mexico's number one agricultural product in terms of value. The Dairy Farmers of New Mexico estimate that dairies in the state employ approximately 4,221 people. The New Mexico State University Cooperative Extension Service estimates that the direct economic impact of the dairy industry state-wide is more than $1 billion, with a total impact of approximately $2.6 billion. New Mexico dairies are one of the largest purchasers of agricultural products (feed crops) in the state.

Prior to today's announcement, USDA had taken several steps to provide support for dairy farmers, including the following:

  • In March, USDA transferred approximately 200 million pounds of nonfat dry milk to USDA's Food and Nutrition Service, which will not only remove inventory from the market, but also support low-income families struggling to put nutritious food on their tables.
  • USDA expects to spend more than $1 billion in fiscal year 2009 on programs that support dairy farmers.
  • On March 22, 2009, USDA reactivated the Dairy Export Incentive Program (DEIP), to help U.S. dairy exporters compete in the global market.
    • Since March 22, USDA has encouraged the export of 20,000 tons of nonfat dry milk.
    • From July 2008 through June 30, 2009, DEIP has announced allocations of 68,201 metric tons of nonfat dry milk; 21,097 metric tons of butterfat; 3,030 metric tons of various cheeses and 34 metric tons of other dairy products.
  • USDA is working with the Department of State to identify foreign assistance programs such as U.S. Agency for International Development (USAID) and the McGovern-Dole International Food for Education and Child Nutrition Program to make the following available:
    • At least 1 million pounds on a competitive basis, for the production of casein;
    • About 500,000 pounds for use in the McGovern-Dole International Food for Education and Child Nutrition Program; and
    • About 1 million pounds for use by the U.S. Agency for International Development, based on anticipated requests from the State Department.
  • USDA is currently reviewing federal dairy policy to determine what changes are needed to reduce price volatility and enhance farmer profitability.
  • Secretary Vilsack is working with federal and private banks to encourage leniency when working with dairy farmers who have outstanding loans.