Requests USDA Release $290 Million in Funds, Make $60 Million in Cheese Purchases; Asks Congress to Consider Risk Management Subsidy for Producers

HARRISBURG, Pa., Nov. 24 /PRNewswire-USNewswire/ -- With Pennsylvania's dairy farmers continuing to struggle with low milk prices and rising debt, Governor Edward G. Rendell is calling on the U.S. Department of Agriculture and Pennsylvania's Congressional delegation to act quickly and help ease the crisis.

"Pennsylvania's dairy farmers are struggling with a price crisis the likes of which we have never seen before," said Governor Rendell. "This risks serious damage to our dairy producers, our consumers, and the state's economy. It is my hope that the USDA and Congress will act quickly to release critical dollars that will help our farmers gain a financial foothold."

Governor Rendell is calling on USDA to provide support to Pennsylvania's 8,600 dairy farm families by releasing $290 million in dairy payments this month that is authorized under the 2010 federal agriculture appropriations bill. The funding will enable producers to continue their dairy operations during this very difficult economic time.

In addition, Governor Rendell asked Congress to encourage USDA to immediately make $60 million in cheese purchases to benefit the nation's emergency food programs. This would raise the price of cheese and aid dairy producers, while also helping Pennsylvanians who are food insecure.

To help producers manage unpredictable fluctuations in the prices of dairy products, Governor Rendell also requested consideration of a federal subsidy that would enable dairy producers to enroll in risk management programs like Livestock Gross Margin, or LGM, for Dairy.

LGM for Dairy is an insurance option that helps farmers manage risk and protect their income. The program ensures the margin between the cost of feed and price of milk. Producers who are enrolled in the program can insure their margin and protect themselves from wild swings in the price of milk or feed.

Pennsylvania's dairy industry, as its largest agricultural sector, supports more than 40,000 jobs and contributes more than $4 billion annually to the state's economy.

For more information on Pennsylvania agriculture, visit www.agriculture.state.pa.us.

Media contacts:

Justin Fleming, Agriculture; 717-787-5085

Michael Smith, Governor's Office; 717-783-1116

Editor's Note: The text of Governor Rendell's latest letter to USDA Secretary Vilsack is attached.

November 12, 2009

The Honorable Tom Vilsack

Secretary of Agriculture

U.S. Department of Agriculture

1400 Independence Avenue, SW

Washington, DC 20250

Dear Secretary Vilsack:

On behalf of Pennsylvania's 8,600 dairy farm families, I am writing to you today to thank you for your continued support and leadership to our Commonwealth's dairy industry, and to ask for your assistance in getting the dairy payments included in the 2010 Agriculture Appropriations Bill out to producers in November. It is critical that these funds are delivered to the dairy industry in a timely manner as many dairy producers are out of cash and months behind on payments. I would also ask that you immediately make $60 million of cheese purchases and get that food to our emergency feeding programs as soon as possible. This would result in a direct positive impact to cheese prices, and would also help a growing population of people who do not have the resources to feed their families.

Throughout my travels, I have come upon countless Pennsylvania dairy farm families who are struggling to hold onto their operations. Many dairy farmers worry that if economic conditions do not improve within the dairy industry, they will be forced to sell their cows and look for other occupations in order to make a living. The current economic crisis within our state's dairy industry stretches beyond specific farms or regions and is affecting virtually the entire domestic milk production industry. This price collapse supports the argument my administration has made since 2006 -- we need to re-evaluate the entire federal dairy pricing system, and bring more transparency to milk pricing. Having the right state and federal dairy policies in place will be critical to improving farm income, capturing international markets, and encouraging investments at all levels of the industry -- from the farm to processors. For these reasons, I would ask for your support to encourage dialogue among policymakers and the dairy community. It is our goal, in the final analysis, that the U.S. dairy industry be stronger -- both here at home and around the globe.

I would also ask for your leadership in working with the Risk Management Agency and Federal Crop Insurance Board to provide dairy producers with additional and meaningful voluntary risk management tools like Livestock Gross Margin for dairy insurance and a Dairy Options Program. I would further urge you to consider providing funds to offset premium and producer education costs associated with the LGM product.

For the few producers who chose to purchase the LGM product, it appears it was a decision that may have saved their dairy operation financially in 2009. A federally provided subsidy for the LGM product would directly encourage more dairy producers to utilize risk management in their business plans for their dairy operation.

Finally, I would urge you to work with the United States Trade Office and the International Trade Commission to conduct a comprehensive review of all trade agreements to determine the impact they are having on the US dairy industry. When I speak to dairy farmers, I cannot at this time ensure them that all products are correctly classified, and that trading partners are abiding by agreement terms, and that export opportunities for US dairy producers are being maximized.

The dairy industry, like many others, has a history of responding to crisis. The severity of this crisis, as identified by dairy economists worldwide, requires a response like no other. The response begins with the $350 million appropriated by Congress, but that is only a small and short term step. I remain hopeful that our dairy farmers in Pennsylvania will weather this storm and will exit it with a clearer picture and direction of where federal dairy policy pricing needs to go, and what additional tools they need to navigate through future cyclical patterns in the dairy industry.

Thank you for your commitment to the dairy industry, and please let me know if the Commonwealth of Pennsylvania can be helpful in supporting your agency's efforts at getting the direct dairy payments out to producers in a timely manner.

Sincerely,

Edward G. Rendell, Governor

SOURCE Pennsylvania Office of the Governor

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