Prior to the global recession, growing demand in developing nations drove up milk prices, and prompted dairy producers to expand their herds. But now, the export market has all but gone dry, and prices paid to producers, in most cases, are well below the cost of production.
In October, Congress approved a $350 million emergency funding bill for dairy producers, and this week, the Agriculture Department announced help is on its way.
Under the Dairy Economic Loss Assistance Payment program, USDA announced this week eligible dairy farmers will receive a one-time direct payment that is based on the amount of milk that was produced and commercially marketed by their operations between February and July 2009. Milk producers that qualify will receive about 32 cents per hundredweight, according to the Agriculture Department, with a limit per dairy operation of 6 million pounds. A producer reaching the maximum limit would receive about $19,000.
Milk prices are forecast to average $12.75 per hundredweight this year, nearly 30 percent below their average in 2008.