Western States Urge USDA Secretary Not to Cap Dairy Tariff Aid by Production
Western States Dairy Producers Association (WSDPA) sent a letter to Secretary of Agriculture Sonny Perdue today and urged him not to cap dairy tariff aid based on production per farm.
“Our members implore that any direct payments to dairy farmers be distributed on all milk produced, without production caps,” writes Jim Boyle, WSDPA president. “Any outcome would disproportionately saddle our member dairies with the consequences of market losses.”
WSDPA, made up dairy associations in Arizona, California, Idaho, New Mexico, Utah, Texas and Washington, estimates that the imposition of retaliatory tariffs on dairy products since May 31 by Mexico and China dropped Class III futures markets 7.5% and Class IV futures markets 7.1%. That comes to about $1.4 billion in losses. (Note: The National Milk Producer Federation has estimated the losses at $1.8 billion.)
“Based on the impacts we have described, our recommendation is that USDA provide direct assistance to all dairy farmers of $1/cwt of milk produced over a six-month period of time from June 2018 through November 2018,” says Boyle. The total cost of such assistance would be about $1 billion.
WSDPA also cautioned the Secretary when making other assistance available, such as removing dairy products from the market to bolster prices. “Threading the needle will be important [in] any direct buy program,” says Boyle. “Injecting too much money in the next few months could cause prices to run up and milk to increase, resulting in a price depression in early 2019.”
WSDPA is also urging USDA to purchase a variety of cheeses, including processed cheese, Mozzarella and cheese shred to remove surplus 640 lb. blocks from the system. USDA purchases should also be spread out and done strategically, such as at the end of the year when seasonal demand typically declines. And it urged care in butter purchases so as not to push prices to extreme highs that would affect demand and consumption later in the year.