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USDA Raises Dairy Support Prices

The government announced a three-month increase in U. S. dairy support prices on July 31 that would put an additional $243 million into farmers’ pockets and offset the lowest milk prices in 30 years.

Burdened by economic recession and an abrupt slump in exports, dairy prices collapsed last fall. They are two-thirds of last year’s level and below operating costs for many farmers.

“The price increase announced today will provide immediate relief to dairy farmers around the country and keep many on the farm while they weather one of the worst dairy crises in decades,” said Agriculture Secretary Tom Vilsack.

For August through October, the Agriculture Department said it will pay 15 per cent more for non-fat dry milk and 16 per cent more for cheddar cheese in blocks or barrels. The dairy support price puts a floor on milk prices, so higher support prices will bring an estimated $243-million increase in farm revenue.

Farm groups and lawmakers applauded the increase but said it was a stop-gap move.

Milk is forecast to sell for an average $12 per 100 lbs. at the farm gate this year. Prices are expected to rebound to $15.15 in 2010 due to improving economy and smaller milk output.

USDA estimated it would buy an additional 150 million lbs. of non-fat dry milk and an additional 75 million lbs. of cheese.

Earlier this year, USDA donated 200 million lbs. of surplus non-fat dry milk to public feeding programs and offered to subsidize more than 92,000 tonnes of dairy exports.

It was the first time in five years the USDA paid dairy export subsidies.

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