Direct payments totaling $290 million could soon be in the mail for the nation's dairy producers.

The only obstacle at this point is a temporary hold placed on the Fiscal Year 2010 Ag Appropriations bill by U.S. Sen. Barbara Boxer (D-Calif.). Boxer has expressed concern about the allocation of the $290 million (plus $60 million in cheese purchases). She wants to meet with USDA Secretary Tom Vilsack on the matter. Her office said Tuesday that it expected the meeting to occur before the end of this week  

The hold was still in place on Tuesday, but observers expect it to be lifted soon.

A request for a hold on an appropriations bill is extremely rare and lasts until the Member of Congress releases it. The new USDA fiscal year began Oct. 1. However, a 30-day continuing resolution was passed, giving the USDA some breathing room.  

Western United Dairymen President Ray Souza thanked Boxer for her action. “We are appreciative of her strong action on behalf of California's dairy families,” said Souza. “She, Senator Feinstein and Congressman Dennis Cardoza have worked tirelessly in support of this emergency funding. The objective of this funding is to help as many dairy farmers as much as possible while also helping the record number of people who are relying on food banks.  We believe it is fiscally responsible for Sen. Boxer to ask for more details on how USDA plans to allocate the funds for direct payments.” 

The measure adopted by a House-Senate conference committee specified $290 million for direct payments and $60 million for purchase of surplus cheese and other dairy products.

Souza pointed out historically high inventories of cheese remain as a significant barrier to the swift recovery of milk prices. “We believe such a large purchase will have a beneficial impact on producer income, while simultaneously bringing a tremendous boost to the depleted pantries at food banks across America.  Farmers should not be going broke while hungry Americans go without basic food staples such as dairy products.”   

Virtually every producer group in the country supported a significant cheese purchase.

Source: Western United Dairymen and Dairy Herd Management staff reports

Sen. Boxer has put a hold on the ag appropriations bill, but it’s only temporary. I think the ag appropriations bill could come up for a final vote later this week. There is still controversy over the payment formula. It looks like $290 million in direct payments will be divvied up among the nation’s 60,000 dairy farmers. Will it be a Milk Income Loss Payment-type plan where the payments are capped, which would help the smaller farms? Probably not. Senator Boxer will have her say on behalf of the larger producers in the West. Look for distribution to be proportionate to a farm’s production level; in other words, the larger farms will get more money than the smaller farms. It’s too bad government can’t be more imaginative than that. The National Milk Producers Federation figured that if the USDA used the entire $350 million package ($290 million in direct payments to farmers + $60 million in surplus cheese purchases) to buy dairy products commercially and then donate them to charitable entities, it would have a much greater multiplier effect, ultimately boosting farmer income by $1.3 billion — nearly a four-fold increase. — Tom Quaife, editor