September 4, 2009


Schumer seeks $600M for dairy farmers

Cortland County farmers would receive $6.7 million in federal payments for low milk prices

Staff Reporter

U.S. Sen. Charles Schumer has introduced a proposal to provide emergency relief to dairy farmers nationwide, including about $6.7 million over as long as six months to farmers in Cortland County.
The proposal would provide $600 million in temporary, direct payments to dairy farmers to help close the gap between the cost of producing milk and the price paid to farmers, Schumer (D-N.Y.) said Thursday.
“We need immediate relief, and frankly, if our farms don’t get it they’re going to go under,” Schumer said during a phone conference.
Dairy farmers are losing money because it costs farmers about $23 to produce 100 pounds of milk, and the price farmers are paid, set by the Chicago Mercantile Exchange, is only $11.60, Schumer said.
Schumer asked Tom Vilsak, secretary of the U.S. Department of Agriculture, to use his emergency powers to borrow $600 million from the USDA’s Commodity Credit Corp.
“He is going to take a serious look at it,” Schumer said of Vilsak.
Max Young, spokesman for Schumer, said the emergency aid could be cut short if milk prices go up or if legislation to deal with the long-term problem is passed in less than six months.
Fred Forbes, Homer’s town supervisor and the co-owner of Forbes Farm, was not familiar with Schumer’s proposal Thursday afternoon, but said he thinks the federal government should focus its efforts and funding on decreasing supply in the market.
Farmers are supplying too much milk, and lowering production would raise the market price, Forbes said. He said he would rather see the government spend money buying cows from farmers to lower the supply than providing temporary payments to farmers.
“That’s long term. Anything else is just a Band-Aid,” Forbes said.
Forbes is a member of Cooperatives Working Together, a national program developed by the National Milk Producers Federation to strengthen and stabilize milk prices by balancing supply with demand.
The group reduces milk production by removing retiring dairy farmers’ cows from the national dairy herd and using them for food production, according to organization’s Web site.
Forbes said he is on pace for a loss this year, but that he is not in a dire situation because his brother, co-owner Jim Forbes, and he are among the few dairy farmers who have no debt.
Stuart Young, president of the Cortland Bulk Milk Association, said he appreciates Schumer’s efforts, but that predictions in the market show milk prices are expected to rise in each of the next few months, and government payments to dairy farmers could end by this winter.
“It would have been a lot more meaningful if he awarded it six months ago, he said.
Schumer said the payments would be made using the template of the federal Milk Income Loss Contract program, or MILC, which reimburses dairy farmers 45 percent of the difference between the market price and the $16.94 price floor per hundredweight, or 100 pounds.
The emergency funding would have the same effect as raising the reimbursement rate through the MILC program from 45 percent to 95 percent, and using the template of the MILC program would allow the plan to be implemented immediately, Schumer said.
Dairy farmers in the Central New York region would receive an extra $59 million, according Schumer’s report. Payments to farmers in Cortland County would increase from $35.3 million to $42.1 million over the six-month period, according to the report.
The figures in the report were gathered from the USDA’s data on how much farmers in each county receive from MILC payments and increasing the payments to 95 percent, said Max Young.
Sen. Kirsten Gillibrand recently proposed increasing the rate of the MILC program to 90 percent. But increasing MILC payments would require a change in legislation, which could take too long, Schumer said. Schumer’s proposal would offer grants, which do not have to be paid back.
The Commodity Credit Corp. is a government-owned and operated entity that was created to stabilize, support and protect farm income and prices, according to a news release from Schumer. It was created in the 1930s and it has a $30 billion credit line.


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