10.26.06

Schumer Measure To Penalize USDA For Mismanagement Of Price Support Payments Passes Congress

Although federal law requires USDA to keep the farm price of milk used for butter and cheese at no less than $9.90 per hundredweight, USDA allowed prices to drop below 5 times in 2003Schumer plan will suspend salaries of DC bureaucrats whenever their mismanagement of the program allows farm price of milk to fall below the mandated support price

Because of USDA mismanagement, dairy farmers in Capital Region lost $2.7 million since 2001; Central NY $3.5m; Hudson Valley $1m; North Country $6.4m; Rochester/Finger Lakes $2.9m; Southern Tier $4.5m; Western NY $4.1m

US Senator Charles E. Schumer today announced that his effort to penalize the U.S. Department of Agriculture (USDA) whenever it mismanages a price support program for New York's dairy farmers passed the Senate today. Last month, Schumer revealed that the USDA has shortchanged New York's dairy farmers by over $3,300 per farmer since 2001 by failing to keep the farm price of Class III and IV milk used for cheese and butter at the legally mandated support price of $9.90 per hundredweight. The measure Schumer cosponsored will withhold funds from USDA whenever it fails to meet the mandated support price.

"It boggles the mind that USDA could just decide to disregard the law, and let milk prices plummet," Schumer said. "If they can't get their act together and administer this program adequately, we'll make it worth their while to straighten things out. If USDA is mismanaging this program, dairy farmers shouldn't suffer USDA should. And that's just what this plan does."

To enable dairy farmers to endure seasonal imbalances and uncontrollable price declines, the USDA is required by the Agricultural Act of 1949 and extended in the 2002 Farm Bill to make sure that farmers always receive a certain minimum price for their Class III and IV milk (used for cheese and butter), known as the support price. USDA achieves this by offering to purchase surplus nonfat dry milk, cheese, and butter from dairy processors at a high enough volume and price to ensure that demand for the milk is strong and that farmers will receive the support price for it (now set at $9.90/hundredweight). However, the Class IV price for milk used to make butter and nonfat dry milk has dropped below the support price five times this year alone. This program differs from the MILC (Milk Income Loss Contract) program which deals with Class I milk used for fluid consumption; that program provides payments to dairy farmers when the price of Class I milk falls below the trigger price of $16.94 per hundredweight.

Schumer revealed that USDA's mismanagement has cost New York dairy farmers approximately $25.36 million since 2001 or about $3,373 in lost income for each individual dairy farmer. As a result of USDA's failure to properly administer the price support program:
" Dairy farmers in the Capital Region lost $2.7 million since 2001;
" Dairy farmers in Central New York $3.5 million since 2001;
" Dairy farmers in the Hudson Valley $1 million since 2001;
" Dairy farmers in the North Country $6.4 million since 2001;
" Dairy farmers in Rochester/Finger Lakes $2.9 million since 2001;
" Dairy farmers in the Southern Tier $4.5 million since 2001;
" Dairy farmers in Western New York $4.1 million since 2001.

To spur USDA to shape up and ensure that the price support program is better managed, Schumer cosponsored an amendment introduced by Senator Arlen Specter that will withhold funds from the USDA staff members who mismanage the program. Whenever the farm price for Class III and IV milk dips below the legally required support price, the USDA employees responsible for the program will have their salaries and other expenses withheld until the support price is met.

Schumer said that he is also fighting to get payments for the losses incurred over the last two years. "Our dairy farmers aren't looking for special treatment. All they want is a decent farm price on their milk so that they can stay in business," Schumer said. "When it comes to helping our farmers, there are factors that we sometimes can't control, like the weather. But this is a program that is run by federal employees, and there's just no excuse for it to be so poorly run. Our farmers deserve compensation and they deserve it now."

Schumer's plan to withhold the funds from USDA employees if the support price is not met, was included in the agricultural component of the omnibus bill that passed today by Congress. It now awaits the President's signature.



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