Agriculture Secretary Vilsack announced that the Obama administration is taking immediate action to support struggling dairy farmers by increasing the amount paid for dairy products through the Dairy Product Price Support Program (DPPSP).
USDA estimates show that these increases, which will be in place from August 2009 through October 2009, will increase dairy farmers' revenue by $243 million.
The new increase will raise the price paid for nonfat dry milk from $0.80 per pound to $0.92 per pound, the price paid for cheddar blocks from $1.13 per pound to $1.31 per pound, and the price of cheddar barrels from $1.10 per pound to $1.28 per pound.
This increase in the support price will have an immediate effect upon dairy farmers' bottom line.
Temporarily raising the price of these dairy products increases the price that dairy farmers receive for their milk.
Prior to the announcement, USDA had taken several steps to provide support for dairy farmers, including the following:
In March, USDA transferred approximately 200 million pounds of nonfat dry milk to the Food and Nutrition Service, which will remove inventory from the market.
USDA expects to spend more than $1 billion in fiscal year 2009 on purchases of dairy products (Dairy Product Price Support Program) and payments to producers (Milk Income Loss Contract: MILC).
On March 22, 2009, USDA reactivated USDA's Dairy Export Incentive Program (DEIP), to help U.S. dairy exporters meet prevailing world prices in addition to encouraging the development of international export markets in areas where U.S. dairy products are not competitive due to subsidized dairy products from other countries.
USDA is currently reviewing federal dairy policy to determine what changes are needed to reduce price volatility and enhance dairy farmer profitability.