The dairy industry throughout the country has been experiencing financial problems as the average cost of production exceeds the prices received. Sue Kirchhoff was recently quoted in USA Today saying that:
There are several reasons for the implosion: oversupply, falling export demand
and continued high prices for supplies such as feed. The news article also noted that, 'Pennsylvania producers received about $11.50 per hundred pounds of milk in February, while production costs ranged from $15.50 to $18.50, says the state’s Center for Dairy Excellence. The USDA is providing special payments to dairy farmers, but the program fills only a part of the gap. Payments are capped, making them of less benefit to larger farms.'
Dairy farms across the country have taken enormous hits as the number of dairy cows being sold to other dairies and those sent to slaughter has increased by almost 20% over the numbers from last year. The average cost of production in some areas is exceeding the price received by almost 25%. The USDA is responding to the growing problems in the dairy industry as Agricultural Secretary Vilsack has stated that that the Commodity Credit Corporation is going to begin to transfer out the 200 million pounds nonfat dry milk that the USDA currently owns. An article in the Brownfield network quoted that:
The goal is two-fold, provide food for low-income families and prop up farm milk prices. The nonfat dry milk has been purchased over the past few months under the federal price support program. Currently USDA owns approximately owns more than 200 million pounds of nonfat dry milk and 4.6 million pounds of butter. Vilsack says, “The department is currently estimating that we will purchase 10 million pounds of butter and 415 million pounds of nonfat dry milk in calendar year 2009.'
