Dairy, Cheese, Eggs / Business Strategies / Industry News / Manufacturing Trends / Regulatory Compliance

Dairy Farmers Ask USDA for Help With Cheese Glut

By Lauren R. Hartman, Product Development Editor

Aug 17, 2016

As farmers' milk prices have plunged to their lowest point since October 2009, cheese stockpiles are swelling, which led dairy farmers to seek help from agricultural officials to buy up tens of thousands of tons of cheese to bail them out. On Aug. 12, Jim Mulhern, CEO of the National Milk Producers Federation, Arlington, Va., sent a letter to U.S. Agriculture Secretary Tom Vilsack, requesting that the government buy $150 million worth of cheese to assist the struggling dairy farmers, and provide 90 million lb. of food to needy Americans, the Wall Street Journal reported.

"Dairy producers here in the United States need assistance," wrote Mulhern. A spokesman for the USDA said the regulatory body "shares the concerns for our nation’s dairy farmers, who like many in the farm community are facing tight margins," and that the department would review the letter.

While dairy processors have been able to wrangle low milk costs to higher profitability in recent quarters, milk prices for farmers plunged 13 percent in the past year to around $1.25 a gallon, amid a barnyard-wide glut in agricultural commodities, the WSJ report added. Favorable weather in the U.S. and skyrocketing production globally have kept prices down on staple grains as well as the milk and the meat of animals that feed on them.

The farmers' problems mounted after the USDA forecast record corn and soybean harvests this fall, a bounty that likely would push down prices even further. In addition, stockpiles of cheeses from cheddar to feta have swelled in June to a record 1.25 billion lbs.

Such buyouts have occurred in the past when the USDA purchased other commodities such as peanuts and chicken after an avian influenza outbreak triggered an export ban that decimated U.S. poultry prices. Warehousing millions of pounds of cheese across the country can keep it frozen for years as dairy processors hold out for higher prices. Officials often distribute such surpluses to U.S. school-lunch programs, food banks or develop new products featuring cheese as a component.

"This type of assistance would both help economically strapped farmers, and also help those without ready access to nutritious dairy products," Mulhern's letter stated on behalf of the federation’s members.