BANGOR, Maine — The U.S. Department of Agriculture on Friday announced a dairy price support program aimed at helping the country’s struggling dairy farmers.
The USDA stated it will raise the price paid for powdered milk, bulk cheddar cheese and cheese barrels, a move that could boost farmers’ revenues nationwide by $243 million.
Although Maine dairy experts indicated Friday afternoon that the program could raise the price the state’s farmers get for each hundredweight of milk by about $1.40, it still won’t make up for the unprecedented low prices farmers are experiencing.
The increase announced Friday will raise the price paid for nonfat dry milk from 80 cents a pound to 92 cents a pound, the price paid for cheddar blocks from $1.13 a pound to $1.31 a pound, and the price of cheddar barrels from $1.10 a pound to $1.28 a pound.
Julie Marie Bickford of the Maine Dairy Industry Association said this is both good and bad news.
“It is good news because the USDA is finally reacting to this crisis,” she said. “We’ve been raising the alarm a long time, and this is the first time we’ve seen a direct response.”
Bickford said correcting the support price level “only indirectly provides help to our farmers. Because they are focusing on cheese and powder, that is more beneficial to the West and Midwest.”
But even with a $1.40 per hundred weight, or cwt, increase, Maine farmers still are being paid $7 to $10 below their cost of production, Bickford said. “This gets us closer but we definitely haven’t solved the problem.”
Maine’s dairy farmers blame the price collapse on a failed federal pricing system.
“When the USDA talks about buying surplus, it is helping cooperatives and processors find stabilization, but it’s our dairy farmers we’re losing,” Bickford said. “If they are going to survive, they need the money now.”
Maine Deputy Agriculture Commissioner Ned Porter agreed.
“It is great that the Obama administration recognized the need to help the dairy industry and took steps,” he said. “That being said, the impact will provide a measure of relief but will still leave the farmers in the hole.”
Maine’s farmers are paid about $11 per cwt for milk that costs $21 per cwt to produce.
“The other problem,” Porter said, “is we have no corn, no hay. We have the best milk support price program in the country, but it is like putting a filling on a rotten tooth.”
Roger Johnson, president of the National Farmers Union who was in Maine this week, said the dairy industry is in bad shape.
“The dairy industry is in the toughest position it’s been in in my lifetime,” Johnson said Friday afternoon. “There is such rapid loss.”
Johnson agreed that the federal market order — a formula for milk pricing that is based on the price of cheese at the Chicago Mercantile — needs to be revamped.
“We are working on the state and federal level to address that,” Porter said.
But Bickford said change couldn’t come fast enough.
“We need to address the core issue and we’re still dancing around it,” she said. “The federal order does not take into account the real cost of production. We need to also make sure the farmer gets an adequate share of the retail product.”
Farmers get 91 cents for each gallon of milk sold on the retail market, according to 2009 USDA figures.
The price paid by dairy processors to farmers is set by the USDA based on commodity markets that rise and fall with global demand. Nationally, dairies increased production when demand for U.S. milk exports soared last year, but once the global recession accelerated last fall, demand dropped and farmers were left with too much milk and too many cows. Wholesale prices crashed.
The USDA has otherwise tried to buoy wholesale prices recently by releasing 200 million pounds of excess powdered milk to schools, food banks and needy countries to reduce U.S. supply and by accelerating payments to farmers.
Agriculture Secretary Tom Vilsack has said the department is reviewing dairy policy to determine what changes are needed to reduce price volatility and enhance farmer profits.
The Associated Press contributed to this report.