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Dairy leader concerned about possible USDA cheese purchase

Reports about a large cheese purchase by the USDA to aid schools and food banks has a dairy leader wondering if there might be a downside.

Laurie Fischer with the American Dairy Coalition tells Brownfield it’s unclear if or when USDA would buy around 47 million pounds of cheese, but she’s paying close attention because her farmer members want to avoid repeating recent history. “Well, we are looking at it very closely. We don’t want to set ourselves up again for having additional deductions on, PPD’s (producer price differentials) on our milk check.”

During the Trump administration, the USDA’s Farmers to Families Food Box Program purchased over 460 million dollars worth of food including cheese, but the demand affected the cheese markets and created negative producer price differentials for many producers, which subtracted a lot of money from farmers’ milk checks.

Fischer says it’s too soon to know what, if any, impact a large cheese purchase will have on farmers. “USDA has not specified when they’re going to acquire this cheese. That will make a difference because if we’re looking at the cheese market right now, the spot cheese pricing, the whey pricing, all of these are looking and driving our Class III cheese price lower.”

The milk price formula uses an average of Class III cheese milk and IV butter and powder milk, and most dairy groups want to return to using the “higher of” Class III and IV in the formula to avoid harm to farmers and discourage processors from de-pooling their milk.