October 25,
2000
Faced with persistent and historically low milk prices, Agriculture Secretary
Dan Glickman told America's dairy farmers that significant new assistance is on
the way. Glickman said the agriculture appropriations bill that President
Clinton is expected to sign provides an estimated $667 million to help dairy
farmers cope with the low milk prices, which have declined for three consecutive
years, and are now at their lowest level since 1991. About 80,000 dairy farmers across the country will receive an average of
$8,300 each. The maximum payment per farmer will be capped at $25,000. Overall,
USDA expects to distribute more than twice as much dairy market loss assistance
this year as it has in the last two years combined. "Many of America's small-
and medium-size dairy farms need this help to survive," said Glickman. Estimates indicate that Wisconsin dairy farmers will receive about $137
million. New York farmers will receive an estimated $60 million. Minnesota is
expected to receive about $56 million. USDA will distribute an estimated $51
million in California and $48.5 million in Pennsylvania. In addition, Glickman announced a major expansion of USDA's Dairy Options
Pilot Program. This cost-share program helps dairy farmers put a "floor" under
the price they receive for milk using the futures and options markets. USDA
subsidizes both premiums and brokerage fees for participating dairy farmers.
USDA will spend about $24 million over the next two years expanding this
program, but the innovative approach used will allow dairy farmers to leverage
significantly more protection against price drops. The program, currently
operating in 61 counties, will expand to 300 counties in 39 states. A full list
of participating counties is available on the web at http://www.usda.gov/news/releases/2000/10/0372a.pdf.
The market loss assistance payments will be made to dairy farmers who received payments in the last two years as well as new producers. In an effort to speed payments and eliminate the need for a sign-up, payments to previous participants will be automatically calculated based on 1997 or 1998 production levels, whichever are higher.
In order to better target small to medium-sized producers, payment calculations for all participants will be limited to the first 39,000 cwt. of production. All dairy farmers will receive the same payment rate. Further details are expected to be announced next month. Payments are expected to go out within the next few months.