The current cheese surplus in the US weighs in at $1.2bn caused by an overreaction on the supply side that can only be remedied by a slowdown of milk production.
The purchase, valued at $20m, will be provided to low-income families across the country through USDA nutrition assistance programs, while assisting the stalled marketplace for dairy producers whose revenues have dropped 35% over the past two years.
Responding to demand
The USDA received requests from Congress, the National Farmers Union, the American Farm Bureau and the National Milk Producers Federation to make an immediate dairy purchase. Section 32 of the Agriculture Act of 1935 authorizes the USDA to utilize fiscal year 2016 funds to purchase surplus food to benefit food banks and families in need through its nutrition assistance programs.
"We understand that the nation's dairy producers are experiencing challenges due to market conditions and that food banks continue to see strong demand for assistance," said agriculture secretary Tom Vilsack.
"This commodity purchase is part of a robust, comprehensive safety net that will help reduce a cheese surplus that is at a 30-year high while, at the same time, moving a high-protein food to the tables of those most in need. USDA will continue to look for ways within its authorities to tackle food insecurity and provide for added stability in the marketplace."
Positive, but cautionary outlook for dairy prices
While the USDA projects dairy prices to increase throughout the rest of the year, many factors including low world market prices, increased milk supplies and inventories, and slower demand have contributed to the sluggish marketplace for dairy producers.
The USDA says it will continue to monitor market conditions in the coming months and evaluate additional actions, if necessary, later this fall.