Scuse Sees Dairy Crisis as an Opportunity

Chris Torres
Staff Writer

HARRISBURG, Pa. — “This crisis is in fact an opportunity. An opportunity to make a long term positive influence within the dairy sector.”

That’s USDA Deputy Undersecretary of Farm and Foreign Agricultural Services Michael Scuse’s take on the current troubles in the dairy industry during his appearance at Tuesday’s Dairy Profitability Forum at the Pennsylvania Farm Show.

This was the fourth year for the forum, which was also held Wednesday at a different location in the state.

About 180 people, many of them farmers, registered for Tuesday’s meeting.

There were numerous speakers covering topics such as farm financing, the impact of imports and exports on the dairy industry, and where the price of milk goes from here.

Scuse spoke on the USDA’s perspective on the industry’s troubles and was optimistic that the industry would pull itself out of the doldrums.

“Ag has always joined forces to find a path forward. I’m confident that working together we can make a difference,” he said.

The former Delaware Secretary of Agriculture said he can relate to dairy farmers and their troubles. His family, which farms 1,600 acres of grain in Delaware, once had a herd of dairy cattle but had to get out of it in the 1960s because of declining milk prices and lost revenue.

Much of his talk centered on things the department is currently working on to help struggling dairy farmers throughout the country. There was no talk of any major overhaul of the current milk pricing system, which some farm groups have called for to address the current dairy price crisis.

The department recently made news by announcing that it would disperse $290 million in direct payments to farmers as part of a $350 million dairy aid bill, with the rest of the money going to government cheese purchases.

Scuse said the bill is currently going through a rulemaking process, but he couldn’t give a timeline of when payments would be made to farmers or how it would be done.

“We have staff working as hard as they can to get that product out the door,” he said. On the cheese purchases he added, “We are looking at how to do these purchases so there isn’t any long-term negative effects on the market.”

More than 270 million pounds of non-fat dry milk has been purchased by the government to help get product off the market and raise milk prices. To date, the impact on dairy prices has been minimal, but Scuse defended the program by stating it has been beneficial to help low income families get dairy products.

About $772 million has been paid out from the Milk Income Loss Contract (MILC) program, with $62 million being paid out to Pennsylvania farmers.

MILC was reauthorized in the 2008 Farm Bill. The program, which is administered by the USDA’s Farm Service Agency (FSA), is a counter-cyclical style payment program where payments go to milk producers once the Boston Federal Milk Marketing Order Class I price falls below $16.94 per hundredweight.

The 2008 Farm Bill changed the program to a variable trigger that may be adjusted for variations in feed costs above $7.35 per hundredweight of a 16 percent protein feed ration.

Trade, Scuse said, has had a negative impact on the industry, especially since the economy began its downward turn.

To address this and other issues, Scuse said the department has started the process of organizing a dairy advisory committee made up of farmers, processors, milk handlers, retailers, and others.

More than 300 nominations have been sent in to the department with 36 coming from Pennsylvania.

The key, he said, is getting regions to agree on a single vision for the industry, something he said will be a challenge considering the different goals between farmers from places like California compared to farmers in the Northeast.

“We need to look at long term solutions for your industry. Solutions that the different geographic areas of this industry can agree on,” he said.