Letter to The Honorable Tom Vilsack, Secretary of the U.S. Department of Agriculture

Letter

Letter to The Honorable Tom Vilsack, Secretary of the U.S. Department of Agriculture

Rep. Courtney Joins Bipartisan Group in Standing up for Local Dairy Farmers, Improve Federal Pricing System

Members seek to include cost of production into federal pricing system

Representatives Joe Courtney (D-CT), John McHugh, (R-NY), Mike Arcuri (D-NY), and Peter Welch (D-VT) are spearheading an effort to protect the interests of their dairy farmers who have seen prices fall significantly in recent months.

The four Members, all who represent a significant number of dairy farmers, penned a letter to U.S. Department of Agriculture Secretary Tom Vilsack requesting that he "re-evaluate and amend the federal milk order pricing system to take into account the cost [of] production when setting milk prices."

"Dairy farmers in Connecticut have been getting hosed by a faulty pricing system that doesn't even allow them to recoup production costs, especially in high cost areas such as Connecticut," stated Courtney. "This unfair system threatens the future of eastern Connecticut's dairy farmers, and its rich dairy heritage. We are hoping to begin to stem that tide by asking the federal government to offer a fair pricing system."

In recent months Congressman Courtney has helped lead the fight in Congress to provide additional support and assistance for dairy farmers. Earlier this year, Courtney joined House Agriculture Committee Chairman Collin Peterson and other members in a letter urging Secretary Vilsack to use his authority to make bulk purchases of dairy products for federal nutrition programs. In response to this request, the Department of Agriculture purchased more than 200 million pounds of dairy products which will help ease the burden that dairy farmers have recently experienced.

Twenty-two Members, including Connecticut Congresswoman Rosa DeLauro and House Ways and Means Committee Chairman Charlie Rangel, signed the letter because of their concern that the May 2009 blend price is a scant $10.97 per hundredweight (cwt). The signers feel that "this rate is not sufficient for our milk producers to even recoup their costs of production."

In the last six years in the Northeast, there have only been nine months where the price of production was actually covered by the final sale price.

Below is the text of the letter:

The Honorable Tom Vilsack, Secretary
U.S. Department of Agriculture
1400 Independence Ave., S.W.
Washington, DC 20250

Dear Secretary Vilsack,

As Members of Congress representing this nation's farmers, we write to you in deep concern over this country's dairy market. As you know, the May 2009 blend price is $10.97 per hundredweight (cwt). This rate is not sufficient for our milk producers to even recoup their costs of production, and therefore we respectfully request that you re-evaluate and amend the federal milk order pricing system to take into account the cost of production when setting milk prices.

Virtually all sectors of our economy have struggled in recent months to move forward and experience earnings that would, at the very least, keep businesses afloat and jobs from being cut. The dairy business is not exempt from this effort. However, this industry has its unique challenges and characteristics which make it extremely prone to changes in supply and demand, the slightest of which contribute to wide fluctuations in price. Prices fell nearly $5 per cwt in one month alone at the start of the year due to an oversupply of milk on the market, and have maintained their low levels ever since. Yet figures indicate that there roughly remains only an excess of 3% of product on the market. These patterns are not specific to the past six months, but rather mirror price increases and decreases from recent years.

While cost of production calculations may not have an immediate or direct impact on curbing dairy's supply and demand volatility, controlling for these expenses from the outset would reduce the government's obligation to support dairy later on as prices suddenly tumble and farmers are thrown into the red. We commend your leadership in resuming timely payments to producers under the MILC program to help the neediest farmers. However, we ask that you assess methods for setting milk prices accounting for regional costs of production to mitigate the need for government intervention and widespread subsidies, and lessen the impact of future market declines.

Thank you for your consideration of our request. We look forward to working with you to address these issues in our nation's agriculture and improve conditions for our dairy industry.

Source