Recent USDA Decision Would Raise Milk Prices in Miami, Atlanta and other
Southeastern Cities
Dairy Processors View USDA Action as Politically Motivated
(Washington, D.C. - March 12, 2008) The U.S. Department of Agriculture (USDA)
recently announced an emergency Federal Milk Marketing Order decision that will
unnecessarily increase farm milk prices throughout the Southeastern and
Appalachian states, according to the International Dairy Foods Association (IDFA).
Because the decision is not supported by the facts of the current marketplace,
which show that record-high farm milk prices and abundant milk supplies abound,
IDFA sees the department's recent action as politically motivated.
Federal law directs USDA to issue such an emergency order only when there is an
inadequate supply of milk to meet market demands, and USDA has confirmed that
there is no shortage of milk, according to Connie Tipton, IDFA president and
CEO. The decision on price increases will affect milk markets from Virginia to
Florida and from Missouri to Louisiana.
"Instead of doing everything it can to keep milk available and affordable,
the administration simply made a political decision," said Tipton.
"That's not only a bad deal for the South but also for other parts of the
country."
According to Tipton, USDA already sets the cost of farm milk in Florida and
other states in the Southeast at a much higher level than the upper Midwest and
other parts of the country. Its recent decision to raise these milk prices even
higher will increase this disparity and create dramatic milk-cost misalignments
among the processing facilities in
these Southeastern areas.
The U.S. Bureau of Labor Statistics (BLS) reports that the average price for a
gallon of milk in Southern cities is more than 11% higher than the U.S. city
average in 2007.
These rising costs are making it increasingly difficult for processors and
school districts under USDA's school lunch program to meet program requirements
within budget; they also significantly increase the financial burden of federal
programs such as the Women, Infants and Children (WIC) and senior nutrition
programs.
USDA issued this decision under the authority it was granted in the 1930s, when
the United States was suffering through the Depression and milk supplies were
uncertain. The outmoded and archaic system still remains in effect, although
most consumers do not know that USDA continues to set minimum prices for the
majority of milk that is
bottled.
"Government-regulated milk prices are not helping to increase milk
consumption and are not needed to maintain a healthy dairy industry," said
Tipton. "The Federal government already administers numerous programs to
support dairy farmers. These programs are not only continued but look to receive
increased funding under the Farm Bill currently
being considered by Congress."
Because USDA today faces the difficult task of trying to impose regional pricing
relationships from the 1930s into a 21st-century business environment, IDFA
supports a blue ribbon commission of stakeholders and experts that would review
the system and make policy recommendations to Congress and the administration. A
call for this type of commission has been included in the Farm Bill drafts
approved by the U.S. House of Representatives and the U.S. Senate.
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The International Dairy Foods Association (IDFA), Washington, DC, represents the
nation's dairy manufacturing and marketing industries and their suppliers, with
a membership of 530 companies representing a $90-billion a year industry. IDFA
is composed of three constituent organizations: the Milk Industry Foundation (MIF),
the National Cheese Institute (NCI) and the International Ice Cream Association
(IICA). IDFA's 220 dairy processing members run more than 600 plant operations,
and range from large multi-national organizations to single-plant companies.
Together they represent more than 85% of the milk, cultured products, cheese and
frozen desserts produced and marketed in the United States. IDFA can be found
online at www.idfa.org