November 16, 2000

Seven major dairy and farm organizations have asked USDA not to adjust the dairy price support program in a way that would negatively impact income for dairy farmers, who are suffering from the lowest prices in a generation. The letter was cosigned by the National Milk Producers Federation, the Alliance of Western Milk Producers, the American Farm Bureau Federation, the National Council of Farmer Cooperatives, the National Farmers Organization, the National Farmers Union, and the National Grange.

In the letter sent Tuesday to Agriculture Secretary Dan Glickman, the farm groups expressed their "serious concern" about recent discussions within USDA concerning the possibility of an adjustment in the USDA's purchase prices for skim dry milk powder and butter. Under the price support program, the government agrees to purchase those products - along with cheese - at a set minimum price.

That minimum pricing formula is intended to provide a price floor for dairy farmers during periods of low market prices - such as this year. Farm-level milk prices have been in a sustained slump, and are lower than at any point since the late 1970s.

But USDA reportedly has been considering "tilting," or adjusting the purchase price for milk powder and butter, in a manner that would raise the purchase price for butter and lower it for skim milk powder. The farm groups said that reducing the USDA purchase price for skim milk would reduce average milk prices for U.S. dairy farmers by $0.52/cwt., which amounts of $72 million per month or more than $850 million annually.

"Such an adjustment would have severe negative consequences on dairy producer pay prices, and total dairy farmer income," the organizations wrote in the letter. "In fact, [such] an adjustment would easily wipe out the value of recently-approved market loss payments and put dairy farmers into an even deeper hole." The letter also made reference to recent public comments by Glickman that he opposes reducing the current government loan rates for other agricultural commodities, such as corn, soybeans, wheat, rice and cotton. "We hope you use that same philosophy in resisting any adjustment to the butter-powder 'tilt,'" the groups wrote.