With Dairy Farmers Across The State On The Brink Of Bankruptcy: Schumer Urges USDA To Use Emergency Powers To Provide Direct, Immediate Relief To Struggling Dairy Farmers; Reveals New Innovative Way To Provide Sufficient Funds Quickly

Press Release

USDA Sec. Has Emergency Powers To Provide Direct Payment - Not Loans - To Farmers Through The Commodity Credit Corporation; Payments Would Close The Gap Between Cost Of Production and Price Paid to Farmers

Measure Can Be Taken Immediately - No Need To Wait For Legislation

Capital Region Farmers Could See Annual Increase of $31 Million; WNY $72M; Rochester-Finger Lakes $43M; CNY $58M; Southern Tier $41M; Hudson Valley $9M; North Country $72M

U.S. Senator Charles E. Schumer today called on the head of the United States Department of Agriculture to use his emergency powers to temporarily provide direct payments to dairy farmers that are on the brink of bankruptcy. Schumer said Secretary Tom Vilsack should use funds from USDA's Commodity Credit Corporation to immediately provide payments to farmers in a way that would have the same effect as raising the reimbursement rate from the MILC program to 95%. Schumer said that such an action is important because, unlike legislation, it can be implemented immediately, while a long term solution is devised. On a conference call today Schumer asserted that it is critical to keep dairy farmers in business, not only because they are the backbone of NY's rural economy and provide jobs to many thousands across the state, but because domestically produced milk is safer than imported products.

“Rarely in history have dairy farmers been saddled with such low prices for such a long period of time,” said Schumer. “But as we've seen in the past, prices will eventually rise again, but until they do, and this crisis passes, we must do everything possible to preserve our dairy industry. Not only are dairy farmers the backbone of New York's rural economy, they provide the entire country a service by supplying wholesome, safe, domestically produced milk. Dairy farmers are as tough as it gets, but the situation is extreme, beyond their control and perhaps unprecedented. To allow an industry that is so important to our state and our country collapse because of temporary and extreme market fluctuations is counterproductive in the long term as it will lead to market concentration, higher prices and potentially lower quality imports, so I am calling on Secretary Vilsack to use his emergency powers to provide direct payments -- not loans -- to dairy farmers to help them get through these difficult times.”

Schumer urged Sec. Vilsack to take immediate action to address this dairy crisis by using funds provided through the Commodity Credit Corporation (CCC) to support dairy producers. Section 5(a) of the Commodity Credit Corporation Charter Act gives the USDA authority, through the CCC, to support the prices of agriculture commodities through direct payments to farmers. This funding can be used to temporarily provide supplement payments alongside those allocated through the Milk Income Loss Contract (MILC) program.

MILC has helped dairy farmers to weather low prices by providing a valuable safety net in this challenging economic environment. Unfortunately, however, the current dairy crisis is so severe that MILC's current reimbursement rate of 45% does not go far enough to aid struggling farmers. According to some industry experts, at least 95% reimbursement is needed to prevent more farms from going out of business. Funding from the CCC can be used to bridge the gap between the 45% and 95% rates. Essentially Schumer is advocating using the formula for the MILC program to distribute the money from the CCC. Farmers will see the same amount of money as they would if the reimbursement rate was 95%.

By doing this, USDA can provide a necessary lifeline to dairy producers while utilizing the infrastructure of the MILC program to more efficiently deliver these payments. Importantly, this would have all the benefits of raising the MILC reimbursement rate to 95%, without having to wait for the required congressional action to change the MILC program. USDA has used this authority in the past to help farmers by supporting exports before export programs were enacted into law. The CCC has a $30 billion credit line and typically has at least $10 billion available.

These increases will mean a big difference for New York's Dairy Farmers. Here is how the increases would break down across the state:

· In the Capital Region, farmers would see an annual increase of $32,827,650

· In Western New York, farmers would see an annual increase of $72,357,000

· In the Rochester Finger Lakes Area, farmers would see an annual increase of $43,400,850

· In Central new York, farmers would see an annual increase of $58,766,700

· In the Southern Tier, farmers would see an annual increase of $41,278,200

· In the Hudson Valley, farmers would see an annual increase of $9,411,750

· In the North Country, farmers would see an annual increase of $72,650,700

Schumer has been a consistent advocate for increased aid to dairy farmers over the last several months. He recently helped provide increased aid to dairy farmers by urging the USDA to increase the prices paid for dairy products through the Dairy Product Support Price Program, a move that will result in millions in additional revenue for Upstate New York's dairy farmers this year. He also helped secure Senate passage of an appropriations bill that will provide $350 million for the USDA to assist dairy farmers. Most recently, he called for a federal investigation into the discrepancy between the price paid to dairy farmers for their milk, and the price of milk in stores.

The Commodity Credit Corporation (CCC) is a Government-owned and operated entity that was created to stabilize, support, and protect farm income and prices. CCC also helps maintain balanced and adequate supplies of agricultural commodities and aids in their orderly distribution.

The MILC Program supports the dairy industry by providing direct counter-cyclical style payments to milk producers on a monthly basis when the price of milk falls below $16.94 a hundredweight. Dairy producers are paid a certain percentage of the difference between the price at which they sell and the benchmark $16.94. Currently that percentage is 45%. Through the CCC, that rate will effectively be raised to 95%, providing much needed relief to our dairy farmers.

Schumer added, “It is imperative that we work to meet the needs of farmers and rural communities in Upstate New York and I will continue to work to ensure that they have the resources they need to make it through these tough times.”

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