IS FEDERAL DAIRY BUY-OUT AN OPTION?

AFR Participates in Call to Ag Chief; Supports Dairy Farmers

OKLAHOMA CITY – American Farmers & Ranchers (AFR), an Oklahoma based general farm organization and insurance company, announced the organization favors increased price supports for struggling dairy farmers announced by the U.S. Department of Agriculture (USDA) but does not agree with any future government sponsored dairy herd reduction program.

AFR President Terry Detrick took part in a summer conference call with Agriculture Secretary Tom Vilsack and other agriculture groups.  Detrick sought assurances that the Administration would not pursue a federal government program to reduce herd numbers to reduce the milk supply.

“I was assured by Secretary Vilsack that nothing more was in the making.  Dairy farmers really have been hurting and the price change announcement by the USDA is definitely a positive step in the right direction to help producers immediately in addition to other measures already taken this year both by the government and by the producers themselves,” said AFR President Terry Detrick.

The USDA announced the latest move to help producers which would raise the price paid for non-fat 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.

Earlier this year the farmer-owned private sector group Cooperatives Working Together (CWT) voluntarily completed a plan to remove 101,040 cows for almost two billion pounds of milk to help stop the slide in milk prices.  Four Oklahoma producers participated in the reduction out of 63 farms with retirements.  The Southwest, which included Oklahoma, led the way with the reduction of over 43,000 cows.  In early July CWT announced a second herd retirement for this year.  CWT is farmer-funded and helps balance supply with demand.

“While we want to see dairy producers helped, we believe the CWT approach is the right approach and not a federal government herd retirement program. We do not support a federal Whole Herd Dairy Program similar to what occurred in 1986.  This dumping of cows flooded the market putting 1.4 million additional cull cows on the market at the same time that Oklahomans were sending wheat pasture cattle to market.  It caused a 25% decline in the price paid to beef producers and sent cattle prices to their lowest level in 30 years costing beef producers $1 billion,” Detrick explained.

Earlier this year there was discussion to include a buyout in the Economic Stimulus Package.  The provision was not included as the legislation progressed.

“We trust that Congress or the Administration would never pursue a federal buyout program given the devastating results of the past.  However, a statement released by the Administration indicated it is committed to pursing all options to help dairy producers and there was no mention of excluding this provision,” concluded Detrick.

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