A group of US senators and the country’s International Dairy Foods Association (IDFA) has urged the US Department of Agriculture (USDA) to refrain from setting a milk price floor of $13.50 per hundredweight, sought by some dairy farmers.
The two sides squared off at a USDA hearing on the the government’s proposal to overhaul the country’s Depression-era milk price formulas (see DII 63(2)6).
The temporary price floor price under scrutiny, which is slightly higher than the January average base price of $13.25, has been proposed by a co-operative of small southern farmers for Class I and II products such as milk, yogurt and ice cream.
But the IDFA has criticised a price floor, contending that it would add about ten cents a gallon (4.5 litres) to the price of milk, or about $553 million to the retail costs of the various dairy products.
But southern farmers are asking the USDA to set a price floor to help them manage their risk until milk subsidies are completely halted by law in 2000. At the hearing, farmers from Texas and Louisiana said the dairy industry is in crisis, with many of their contem-poraries rapidly going bankrupt.
However, the issue is complicated by the fact that farmers in the upper midwest, who produce mostly Class III milk for cheesemaking, are opposed to a price floor.
They claim it would encourage southern farmers to increase production and divert Class I and II supplies to Class III uses.