- WASHINGTON -- Got milk? Uncle
Sam sure does.
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- In caves and giant warehouses, the U.S. government is
storing mountains of powdered milk that taxpayers were required to buy,
even though nobody is sure what to do with it all.
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- The dry-milk stockpile has hit a record 1.28 billion
pounds, and it's still growing - a side effect of U.S. dairy policies that
critics say encourage overproduction of milk, increase taxpayer costs and
force a reluctant U.S. Department of Agriculture to buy powdered milk to
bolster dairy prices.
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- "We don't want it," said Bill March, a USDA
official involved in the program. "We try very hard to minimize the
intake of surplus commodities. That's our mission."
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- But as powdered milk piles up, the USDA is scrambling
to reduce the surplus. The department has offered it to school lunch programs
and food banks, for foreign aid programs and for feeding postwar Iraq.
It even shipped more than 200 million pounds out west, for drought-stricken
ranchers to feed to cattle.
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- And yet, "It's like a treadmill - they can only
keep up with where they are, but they're not really cutting into the storage,"
said Don Ault, a dairy specialist at Sparks Companies in Minnesota. "With
a billion pounds, that's a huge amount of powdered milk stocks, and it's
extremely difficult to get rid of" without also destroying the powdered
milk businesses in America.
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- For dairy farmers in the Upper Midwest, the situation
is a double frustration. First, because it underscores how low milk prices
have fallen. But also, the milk surplus is occurring mostly on the West
Coast, not in the Midwest, although dairy farmers nationwide feel the effect.
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- "In the Midwest, we're not overproducing. In fact
we're short of milk here," said Sue Beitlich, a dairy farmer south
of LaCrosse, Wis. She added, "For two years, we have been experiencing
1978 prices, and we have 2003 expenses. Can you imagine if your paycheck
reflected what you earned in 1978, but you were living in today's economy?"
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- Minnesota's dairy industry contributes $8 billion to
the state's economy, and ranks sixth nationally in milk production. Wisconsin,
dubbed America's Dairyland, stands at No. 2 in milk production, thanks
to 1.2 million cows.
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- Officials from both states have stressed the importance
of keeping milk production robust in the Upper Midwest if the region's
dairy processors are to thrive.
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- Nationally, however, the swelling size of the milk stockpile
is an embarrassment to U.S. agriculture boosters, including some members
of Congress. That's partly because of the cost: Every pound of nonfat dry
milk in storage cost taxpayers 80 cents, so it's a $1 billion mountain.
And that doesn't count storage costs, from renting space in caves around
Kansas City to leasing warehouses around the nation.
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- A mountain of government-surplus food provides a juicy
target for critics. During the Reagan administration, a glut of surplus
government cheese became a national punch line - a surplus produced by
the very program that has produced today's powdered milk mountain.
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- "Same program - nothing's changed," said the
USDA's March, branch chief in the domestic procurement and donation division.
"This program has been around since 1949."
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- March explains how the program functions: "It is
congressional statute that we have a dairy price support program, and the
intention is to support milk prices at the current rate of $9.90 a hundredweight.
When milk falls (below that price) to a certain level, we have to buy what
is offered by industry."
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- Lately, prices are low enough to send USDA buying, at
least on the West Coast. A week ago it bought $7.6 million of powdered
milk, bringing its 10-month shopping list to $575 million.
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- That intervention has kept milk prices from falling below
$9.90 per hundred pounds. But to the critics of government farm subsidies,
it's yet another example of Washington policymakers sending crossed and
conflicting signals.
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- "This is true across all of the agricultural commodities
that are supported by subsidy programs," said Ken Cook, head of the
Environmental Working Group, a Washington policy group. "It sends
a signal to produce without regard to the market. So one way or another,
Uncle Sam ends up owning it, or trying to dispose of it in one way or another,
even as we try to stimulate demand."
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- Cook added, "It puts farmers and taxpayers in a
real difficult situation. Farmers resent it, and so do taxpayers. It comes
from producing more than what the market can bear. You have a feedback
loop that only encourages us to dig a deeper hole - which we're now filling
with nonfat milk, I guess."
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- Complicating the powdered milk picture is something called
milk protein concentrate, a type of dry protein extracted from milk that's
produced by European and other foreign competitors, but not by U.S. manufacturers.
Farm groups have denounced MPCs for coming into this country under questionable
pretenses, and for reducing the market for U.S. powdered milk.
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- "They're imported for industrial use (thereby enjoying
low tariff rates), but they get into the food system," said Beitlich,
with the Wisconsin Farmers Union. "That's a dried protein that's coming
in, and it's displacing the dried powder (milk) that we're producing."
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- Ault, the Sparks vice president, said some food companies
prefer using MPCs to powdered milk because of their greater flexibility.
But it's subsidies that often drive production. In Europe, subsidies encourage
production of milk protein concentrates. In the United States, processors
are subsidized to make nonfat dry milk, whether the food industry wants
it or not.
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- "If they (processors) can get a fixed price for
the nonfat dry milk under the support program, it doesn't make any sense
to produce other proteins that will yield you a lower return, such as the
MPCs," Ault said.
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- In the meanwhile, "We just continue to produce far
more nonfat dry milk than the market needs, and because of that, we've
got a billion pounds, and there's very little market for it."
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- On this, USDA agrees.
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- "We've moved a lot of milk, and we've bought a lot
of milk, and I don't see an end," said March. "Not until the
next farm bill, when they make some changes."
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- - Tom Webb can be reached at twebb@krwashington.com or
1-202-383-6049. © 2003 Pioneer Press and wire service sources. All
Rights Reserved.
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- http://www.twincities.com/mld/twincities/news/local/6557034.htm
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