Just as the global economy is not likely to recover soon from the worst recession of our lifetimes, it doesn’t appear the dairy economy is going to quickly bounce back from its painful recession (which itself is a reflection of how bad things are globally). At the beginning of 2009, we had hopes the dairy downturn would be brief; unfortunately, that’s not proving to be the case. Every day that goes by, more equity disappears as farmers lose money on every hundredweight they produce. For some, the end of the road is near at hand.
In my column last month, I talked about one response that NMPF is engaged in to rectify the situation: our new Strategic Planning Task Force. This group of dairy industry leaders held an introductory meeting in June to look at what short-term steps could be taken to ease the dairy recession. But the real purpose of the task force will be to examine the pros and cons of longer-term fixes for our milk pricing woes. Later this month, the Strategic Planning Task Force will meet with leaders of other farm organizations to discuss the nature of the crisis, and vet ideas for addressing those challenges.
But admittedly, the task force process is more of a long-term route. Farmers need help short-term, because for many, longer-term solutions aren’t going to arrive in time. In order to keep the industry apprised of what’s been done by NMPF, and CWT, to date, here’s a quick list of steps taken:
After he was confirmed as the new Secretary of Agriculture, NMPF sent a letter to Tom Vilsack to review the scope of the dairy crisis, and suggested a variety of options for dealing with it. We also met with Vilsack to reiterate the need for USDA to take action;
Not longer after that meeting last winter, the USDA announced it would liquidate 200 million pounds of nonfat dry milk powder, utilizing several disposal methods suggested by NMPF so that the huge quantity of milk protein wouldn’t overhang the market and impede a recovery in prices;
NMPF’s January letter, and subsequent requests, asked that USDA unearth the dormant Dairy Export Incentive Program, which hadn’t been employed for five years. In May – despite the protests of many other countries – the USDA announced allocations for the DEIP, which if fully utilized, could help sell more than 1.5 billion pounds of milk. The new DEIP fiscal year begins July 1, and we have asked USDA to make a similar quantity of product available for DEIP bonuses immediately. Hopefully that announcement will be coming shortly;
Late last month, NMPF asked the USDA to boost the purchase prices for cheese and milk powder under the Dairy Product Price Support Program. The current prices ($1.13/lb. for blocks, $1.10 for barrels, $0.80 for nonfat powder) were written into last year’s Farm Bill, but there’s no reason why USDA couldn’t temporarily raise those thresholds. Such a step would help clear more products, giving commodity markets a tailwind at a time when prices, especially for cheese, remain stuck at the support prices level.
Lastly, our Cooperatives Working Together program is now wrapping up its largest-ever herd retirement program, in which we will remove approximately 100,000 cows and two billion pounds of milk at the start of the summer. CWT has the resources to engage in other cow removals in 2009 and 2010, and we will move as aggressively as we can to utilize those resources.
We’d all like there to be some magic wand that could be waved, or some silver bullet that could be fired, to restore profitability to dairy producers. In the real world, though, progress is going to be incremental and painstaking. The above items are like pellets in a shotgun: together they can have an impact, but each itself remains much smaller than an all-powerful magic bullet.
NMPF remains committed to working with its members, on behalf of dairy farmers, to protect this great industry. We will come through it, but only by working together.
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