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Congress says yes to dairy aid

Congress says yes to dairy aid

Local dairymen will receive payouts of as much as $35,000, following the passage of a new Federal agriculture bill.


POSTED October 9, 2009 10:36 p.m.
The U.S. Congress moved an emergency spending bill through on Tuesday to provide $350 million in aid for the nation’s struggling dairy producers.
The bill, which currently awaits President Barack Obama’s signature before becoming law, includes $290 million in direct payouts to dairies as part of a massive $121 billion agriculture spending bill. An additional $60 million is included in the bill to purchase excess cheese from the marketplace, which would then be donated to food banks.
According to early Western United Dairymen estimates, the $290 million in direct subsides brought about by the new bill would amount to between $32,000 and $35,000 for an average 1,000-cow dairy.
“That’s not enough to cover one month’s feed bill,” said Michael Marsh, chief executive officer of Western United Dairymen.
The outcome could have been much worse for California dairies. The legislation, as initially drafted, would have disproportionately benefited smaller dairies, commonly found in the Midwest.
It was the lobbying of local politicians — including U.S. Senators Barbara Boxer (D-Calif.) and Diane Feinstein (D-Calif.) and U.S. Reps. Dennis Cardoza (D-Merced) and Jim Costa (D-Fresno) — that brought equity to the dairy subsidies. The original plan called for the average California dairy to receive just $4,300 to $13,000, again based on Western United Dairymen estimates.    “We thank Senator Barbara Boxer for working to ensure that the dairy relief is distributed in a way that is fair and equitable to producers throughout California,” said California Dairy Campaign President Joe Augusto. “California producers were hit first and hardest by the dairy crisis and many operations are in jeopardy unless the package provides meaningful relief to producers in our state.”
Marsh agrees that the payments will help local dairy producers, but he believes that $290 million could have been better spent, had politics not gotten in the way.
“It’s probably not going to have quite as positive an impact as if they had just used all that $350 million to buy cheese, but ,unfortunately, some folks from the appropriations committee in the upper Midwest wanted their constituents to have a check in their pockets before they went up for reelection,” Marsh said.
According to Marsh, the single largest cause of the current dairy crisis is a massive inventory of cheese. With such a large supply — offset by limited demand in the current economic crisis — the price has been drastically depressed.
Turlocker Ray Souza, who serves as President of the Western United Dairymen, spoke before the House Agriculture Committee on July 14 to lobby the USDA to purchase 100 million pounds of cheese to clear the glut on the marketplace. In his proposal, the cheese would be immediately donated to food banks upon purchase, helping put food on the bare pantry shelves.
The adopted bill does include $60 million for cheese purchase and donation, which has lifted prices from $1.43 per pound to $1.50 per pound in just one week. Butter, nonfat dry milk, and whey have seen similar week-over-week increases in value, helping to offset the approximate 50 percent drop in the market value of dairy products since last year.
If all $350 million had been used for cheese purchases, it would have generated $1.3 billion in value, Marsh said.
As the pending subsidy payments are unlikely to save California dairy producers in and of themselves, efforts are ongoing to secure additional federal support. Dairy organizations such as the California Dairy Campaign and Western United Dairymen are lobbying for a range of changes to federal law, ranging from tariffs on dairy imports and added export subsidies to antitrust and potential market manipulation investigations and the establishment of a long-term supply management program.
Marsh does believe that the dairy industry is “right on the cusp” of a good recovery, and that just a little more help is needed. Western United Dairymen lobbyists in Washington, D.C. today are fighting for one particular federal move — the USDA purchase and distribution of an additional 60 million pounds of cheese — that Marsh thinks will put an end to this dairy downturn.
“Once we do that, you’re really going to start to see some changes,” Marsh said.
To contact Alex Cantatore, e-mail acantatore@turlockjournal.com or call 634-9141 ext. 2005.

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