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Dairy farmers get price support help

Dairy farmers slogging through their worse price depression in decades soon will get price support help from Washington.

U.S. Agriculture Secretary Tom Vilsack announced Friday an immediate boost to the dairy price support program that will add $243 million to the safety net for dairy farmers.

The temporary increase will last through October, Vilsack said, for milk and cheddar products.

"The Obama administration is committed to pursuing all options to help dairy producers," said Vilsack. "The price increase ... will provide immediate relief to dairy farmers around the country and keep many on the farm while they weather one of the worst dairy crises in decades."

The increase will raise the price paid for non-fat dry milk from 80 cents per pound to 92 cents per pound. The price paid for cheddar blocks would rise 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.

The increase in the support price will have an immediate effect upon dairy farmers' bottom line, Vilsack said. Temporarily raising the price of the dairy products increases the price that that dairy farmers receive for their milk.

The U.S. Department of Agriculture estimates that higher price support is expected to increase all milk prices received by dairy producers. The increase will result in the government purchase of an additional 150 million pounds of non-fat dry milk and an additional 75 million pounds of cheese.

The dairy crisis has been a top concern for the U.S. House Agriculture Committee this year, said its chairman, U.S. Rep. Collin Peterson, DFL-7th District. The committee has held three hearings on the economic conditions facing the dairy industry, and many committee members have signed letters to Vilsack asking him to use his authority to take steps that will provide relief to struggling dairy farmers.

"We got a clear message at our hearings from dairy farmers nationwide that the industry needed help during this difficult time, and I am pleased that USDA has recognized this crisis and responded quickly," Peterson said. "Increasing the prices they receive will bring greatly needed relief to dairy farmers who need it desperately right now."

Peterson was joined in the request to Vilsack by U.S. Sen. Amy Klobuchar, DFL-Minn., a member of the Senate Agriculture Committee.

"Across Minnesota, dairy farmers have been stung by rising production costs and falling product prices," said Klobuchar. "(Friday's) announcement of immediate relief for dairy farmers will help them during this crisis by providing targeted support to help stabilize prices. Along with Agriculture Chairman Collin Peterson I will continue to advocate for Minnesota's dairy farmers during these difficult times."

Two days ago, Klobuchar and other dairy state senators met with Vilsack to push for the change. Earlier in July, she and Sens. Pat Leahy, D-Vt., and Herb Kohl, D-Wis., also wrote to Vilsack calling for the temporary boost to the federal price support program.

Prior to Friday's announcement, USDA has taken several steps to provide support for dairy farmers:

In March, USDA transferred some 200 million pounds of non-fat 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 purchases of dairy products in the Dairy Product Price Support Program and payments to producers through the Milk Income Loss Contract.

On March 22, USDA reactivated USDA's Dairy Export Incentive Program to help U.S. dairy exporters meet prevailing world prices in addition to encouraging the development of international export markets in areas where U.S. dairy products are not competitive due to subsidized dairy products from other countries.

Since March 22, USDA has encouraged the export of 20,000 tons of non-fat dry milk, it said.

From July 2008 through June 30, DEIP has announced allocations of 68,201 metric tons of non-fat 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 and 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.

- 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.