Editor’s note: Thirty-five U.S. senators representing 20 states sent the following letter to U.S. Secretary of Agriculture Tom Vilsack on January 30, 2009. Some of their individual responses in regards to the dairy industry’s current situation can be found online at www.progressivedairy.com.

“The global economic crisis is now being fully felt in America's Dairyland through low dairy prices that threaten the well-being of not only the American dairy industry, but also the rural communities that depend on it,” Feingold said.  “By taking advantage of and strengthening existing programs, the federal government can help stabilize this critical industry in rural America, ensure U.S. dairy producers remain competitive in global markets and increase access to nutritious dairy products for low-income people.  Senators from coast to coast and from both parties are supporting this effort and I look forward to working with them and the Obama Administration in meeting the needs of dairy farmers not only in Wisconsin but across this country. ”

Russ Feingold (D-WI)

“Dairy farmers in Wisconsin and the country are not immune to the effects of the struggling global economy,” Kohl said. “It is essential that the federal government take steps to ensure the health of this vital sector of the American economy so our dairy farmers can thrive and compete. I join my colleagues in asking the Obama Administration to strongly consider using the tools and initiatives available to help the dairy industry and our rural communities as a whole.”

Herb Kohl (D-WI)

“Community building is a vital aspect of drawing residents to Iowa and keeping them there – one of the many reasons rural development funding is so important to our state,” said Harkin. “Improving Southwest Iowa Families, Inc. will continue their community building services and educational services that are essential to families in southwest Iowa.”

Tom Harkin (D-IA)

“The USDA’s current plan could artificially saturate the butter market hurting American dairy farmers,” said Leahy, a senior member of the Senate Agriculture, Nutrition and Forestry Committee, which has jurisdiction over the USDA. “But, if the USDA donated the butter, it would create a win-win situation. Those in need would have dairy products made available to them, and our dairy farmers who are already suffering from drastically low farm milk prices might be able to watch the price of milk stabilize.”

Patrick Leahy (D-VT)

"These Rural Development funds will provide crucial support for economic and public service projects in Bethel and Madison," said Senators Snowe and Collins. "By investing in local businesses and non-profits, the USDA Rural Development program boosts economic development, saves jobs, and improves the quality of life for the people of rural Maine."

Olympia Snowe (R-ME)

"The USDA funding will help boost economic growth in rural communities throughout the state," Senators Snowe and Collins said in a joint statement. "The improvements made in Nobleboro, Alfred, and Dover-Foxcroft will establish a better quality of life while helping to create and save jobs."

Olympia Snowe (R-ME)

Dear Secretary Vilsack:

Since last summer our domestic dairy industry has been grappling with a serious imbalance which threatens the stability and future of American dairy farmers. Falling domestic prices combined with relatively high input costs have put an extraordinary strain on the entire dairy sector. The global economic crisis has further exacerbated these challenges by reducing international demand which, in turn, diminishes the price our dairy farmers receive for their milk. Cheese at the Chicago Mercantile Exchange (CME), which had been relatively stable in November and early December at just under $1.80 per pound, sank 40 percent in late December to slightly less than $1.10 per pound.

Though some input costs have more recently stabilized from record highs, this modest relief is not enough to offset the persistent low prices confronting dairy producers. Across the nation, dairy farmers face the prospect of losing money every time they milk a cow. Continued low prices could devastate not just dairy farmers and the dairy industry, but thousands of rural communities where agriculture and dairy are primary economic engines.

While the USDA’s Dairy Product Price Support Program (DPPSP) provides a floor for dairy product prices, we believe it could be more effectively implemented to restore stability and clear oversupplies in the market. For example, packaging standards for cheese committed under the DPPSP are somewhat different than industry norms utilized for cheese which trades through the CME. We encourage you to examine whether some harmonization can be accomplished without adversely impacting the quality of the product purchased by USDA. We also encourage you to direct adequate resources toward timely and efficient inspection of dairy commodities purchased through the DPPSP. Anecdotal evidence suggests that inspection delays are creating problems.

We also urge you to consider additional dairy purchases for distribution through the USDA commodity-based nutrition programs. Demand for these nutritious products by low-income individuals, food banks and schools will undoubtedly continue to increase and dairy products like cheese are often among the most popular products available.

Feeding programs can be better served by the price support program if USDA plans for it. To that end, we are troubled by the previous administration’s decision to stop purchasing value-added dairy products at a slight price premium through the DPPSP. According to a [USDA Price Support Purchase Prices] document, since at least FY1996, the DPPSP has purchased fortified nonfat dry milk, packaged instant milk, butter prints and 2 or 5 pound blocks of processed cheese at prices which account for the cost of packaging. If a portion of DPPSP commodities are ultimately distributed through USDA nutrition programs, it seems logical to purchase products in forms that are more conducive to these uses.

Finally, with global dairy markets influencing the price of U.S. dairy products, we recommend that the Department examine ways to more fully utilize the Dairy Export Incentive Program (DEIP). As you know, DEIP provides incentives to exporters of dairy products to help them compete with subsidized products from other nations. With the recent announcement by the European Union that it will increase export subsidies, DEIP is an important tool to help keep U.S. dairy products competitive.

We look forward to working with you to meet the needs of farmers, rural communities and the food industry during these challenging times.  PD