The federal government's plan to buy $50 million in U.S. milk and give it to food banks is welcome news for struggling dairy farmers, but it's not viewed as a long-term solution for the nation's oversupply of milk.
USDA to purchase $50 million in milk, give it to food banks
Beleaguered producers don't see USDA's diversion to food banks as a long-term fix.
August 17, 2018 at 2:45AM
"Awesome for food banks, great for hungry people, and very welcomed by the dairy industry, but in the grand scheme of things it's not going to change milk prices overnight," said Lucas Sjostrom, executive director of the Minnesota Milk Producers and a dairy farmer near Brooten.
Sjostrom said the milk bought under the program will represent what's produced by about 5,000 cows over a year — about 0.3 percent of U.S. milk production.
The U.S. Department of Agriculture announced this week that it will buy half-gallons of whole, 2 percent and 1 percent milk "with the purpose to encourage the continued domestic consumption of these products by diverting them from the normal channels of trade and commerce."
The milk purchases will be funded under a program established in 1935 aimed partly at increasing consumption of U.S. farm products by low-income people.
The dairy industry is struggling, and small dairy farmers are leaving the business in droves. Milk prices are about $16.30 per hundredweight, compared to $24 per hundredweight in 2014. A hundredweight is 100 pounds of milk.
The USDA's stockpile of cheese — which can be stored much longer than milk — broke another record this summer, reaching nearly 1.4 billion pounds.
But while milk prices are low, demand for other things that come out of the cows' udders — milk fat and protein — is stronger.
"Do we have an oversupply of milk? Yes," Sjostrom said. "Do we have an oversupply of all the components of milk? Oh, I'm not so sure."
The USDA plans to buy milk for delivery to various locations. Second Harvest is a possible recipient in Minnesota, he said.
This milk purchase is not connected to the announcement of up to $12 billion in aid to farmers to offset the losses they're expected to see as a result of new tariffs in the wake of President Donald Trump's policies.
Corey Lamm, a dairy farmer near Eagle Bend who milks 60 cows, said he's of two minds about the milk purchase announcement.
"I'm glad there's somewhere for the milk to go, but it's the government buying it," Lamm said.
Canada's milk quota system, which keeps the dairy market stable, is an option worth exploring, Lamm said. He's not comfortable with government intervention in his market, but farms are subsidized in the U.S. to keep prices low, he said. He does wish larger dairies, such as Morris-based Riverview LLP, would stop expanding.
"It's a home for the milk, but it's not the answer again, either," Lamm said of the USDA announcement. "We've got to secure the dairy market and the dairy farms to secure the jobs around the country."
Adam Belz • 612-673-4405 Twitter: @adambelz
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