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Congress Asks USDA To Bail Out Dairy Industry

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Concerned members of Congress afraid of a major collapse in the dairy industry are calling on the U.S. Department of Agriculture to assist farmers during record low milk prices.

Vermont Democratic Sen. Patrick Leahy and 61 other senators and congressman urged  USDA secretary Tom Vilsack to authorize additional federal subsidies, grants and loans for dairy farmers.

The USDA should “take action to protect all of our nation’s dairy farmers from further crisis and to aid in the expansion and maintenance of domestic markets” in a letter sent to Vilsack Thursday.

The problem is that prices on dairy products are dropping, but milk production in the U.S. isn’t slowing down. Milk prices dropped 40 percent since 2014, the letter says, and “the nation’s cheese stocks were recorded at their highest level since the data was first recorded in 1917,” the letter says. The national cheese stockpile reached 1.19 billion pounds in May.

Signed by 44 Democrats, 15 Republicans and two Independents (including Vermont Sen. Bernie Sanders), the letter calls for the case for an “immediate market injection and offer financial assistance that will directly support U.S. dairy farmers equally.”

“The dairy market will continue to struggle with depressed prices,” putting at risk jobs and farms across the country, the senators and representatives argue.

Milk production in Maine, Leahy’s home state, is up 8.2 percent this year, even though the uncharacteristically warm summer brought that number down a bit. “There is a need to help our dairy farmers,” Alicyn Smart, executive director of the Maine Farm Bureau Association and doctor of plant medicine, told The Daily Caller News Foundation.

The letter does not call for specific action, but asks the USDA to “use its secretarial authority” to help milk producers. The USDA is authorized under the Agricultural Adjustment Act of 1935 to aid farmers “through loans, purchases, payments, and other operations.”

The USDA did not return The Daily Caller News Foundation’s request for comment, and it is unclear what form of action subsidy or assistance they might offer to farmers.

The last time the USDA assisted dairy farmers outside the standard subsidy programs was in Dec., 2009, at the beginning of Vilsack’s tenure as agriculture secretary. That action came in the form of a 2010 Agricultural Appropriations Bill, which made $290 million available to dairy farmers as direct payments to offset losses.

Direct dairy subsidies were highest in 2009, when the federal government paid nearly $1.15 billion. But the total amount of subsidies paid to dairy farms varies drastically from year to year. In 2014, for instance,

The 2014 Farm Bill eliminated direct subsidies for the milk, and started a form of crop insurance. The dairy industry is still adjusting to the Margin Protection Program for Dairy, enacted by the 2014 Farm Bill, which replaced subsidies. Marginal dairy insurance “provides financial assistance to participating dairy producers when the margin – the difference between the price of milk and feed costs – falls below the coverage level selected by the producer,” according to the USDA.

“It’s a new program, its different from the previous safety net program. It’s our second year in, and 80 percent of milk is enrolled in the program.” John Newton, director of market intelligence at the American Farm Bureau told The Daily Caller News Foundation.

Even though the supply and demand gap is high this year, many of the farms covered may not receive assistance because on their level of insurance. “The majority of the farms are enrolled are under catastrophic level,” Newton said.

Newton added that looking at the global markets provides perspective on the state of the industry. “Milk prices have come down from record highs, but the markets have shown signs of coming around,” Newton said.

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