The Dairy Price Support Program
Since 1949 the Dairy Price Support Program [1] has set a milk price floor through a standing offer to purchase dairy products. USDA’s Commodity Credit Corporation (CCC) currently has a standing offer to buy butter, cheddar cheese, and nonfat dry milk, (per USDA’s specifications [2]) at prices that correspond to that a minimum manufacturing milk price of $9.90 per hundredweight. Although the minimum milk price of $9.90 is set by law, USDA has considerable flexibility to set the corresponding dairy product prices, especially by adjusting the “tilt” between butter and powder prices.
Since November 2002, the support prices [3] for dairy products have been as follows:
|
Product |
Price/lb.
|
|
Butter
|
$1.0500
|
|
Butter prints
|
$1.0850
|
|
|
|
|
Nonfat dry milk
|
$0.8000
|
|
Nonfat dry milk fortified
|
$0.8100
|
|
Instant 4lbs, and 25.6oz
|
$0.9625
|
|
|
|
|
40-lb block cheddar cheese
|
$1.1314
|
|
500-lb barrel cheddar cheese
|
$1.1014
|
|
5-lb process cheese
|
$1.1889
|
|
2-lb process cheese
|
$1.2289
|
Letter to Under Secretary J.B. Penn [3]
Three years ago, as dairy farmers faced the worst milk prices in 25 years, NMPF requested that USDA address the inadequacy of the purchase prices under the Milk Price Support Program. These prices were too low to keep manufacturing milk prices at or above the statutory support level of $9.90 per hundredweight.
Once again dairy farmers face the prospect of ruinous milk prices, and once again we urge USDA to offer adequate purchase prices for cheese, butter, and nonfat dry milk. Specifically, we request that these purchase prices be raised to account for the unique costs manufacturers face in selling to the Commodity Credit Corporation (CCC). We also ask that potential increases in the manufacturing cost allowances used to calculate Federal order milk prices also be used to calculate corresponding dairy support purchase prices.