U.S. agricultural officials agreed to purchase $20 million of cheese products from struggling dairy farmers who pleaded for a bailout earlier this month.
Around 11 million pounds of food will be donated to families throughout the country through government nutrition assistance programs, the U.S. Department of Agriculture said in a statement Tuesday.
“We understand that the nation’s dairy producers are experiencing challenges due to market conditions and that food banks continue to see strong demand for assistance,” said Agriculture Secretary Tom Vilsack.
The National Milk Producers Federation, a group of roughly 30,000 farmers, on Aug. 12 asked the agency to purchase as much as $150 million of cheese, as a glut of dairy products and other food commodities has sent prices for many farmers to the lowest levels in years.
Milk prices for farmers have plunged 13% in the past year to $14.80 per hundred pounds, hovering near the lowest levels in five years, amid a glut in agricultural commodities from corn to cattle. Favorable weather at home and skyrocketing production globally have pushed down prices on staple grains as well as the milk and the meat of animals that feed on them.
“We appreciate the prompt action taken” by USDA, said Jim Mulhern, president of the Arlington, Va.-based federation. “This cheese purchase will provide some assistance to America’s dairy farmers through increased demand for their milk, while also serving the needs of Americans who patronize food banks” and other organizations.
The surplus of dairy and meat commodities, which reflects a dramatic turnaround from 2014 when prices were high and export markets were hot, is continuing to stack up in U.S. cold storage facilities.
On Monday, USDA reported that stocks of cheese in commercial freezers, where producers have socked away extra supplies in hopes of higher prices ahead, rose to a record-high of 1.3 billion pounds at the end of July.
The data also showed that 599.9 million pounds of pork and 456.5 million pounds of beef were in storage warehouses, up 2% and 3% from the previous month, respectively.
That was viewed as particularly troublesome for the hog market, as retailers have added to freezer inventories during the month of July only once in the past 10 years.
Normally, grocery stores and restaurants draw down pork stocks that month due to strong demand for bacon on BLT sandwiches and barbecue staples.
Hog futures on Tuesday declined 0.625 cent, or 1%, to 60.525 cents a pound. August cattle futures slipped 0.175 cent to $1.1325 a pound, the lowest closing price in four weeks.
Source: WSJ
Link: http://www.wsj.com/articles/government-cheese-usda-makes-20-million-purchase-to-aid-dairy-farmers-1471985894?mod=e2tw