Five weeks after the National Milk Producers Federation asked for additional economic assistance for struggling dairy farmers, the U.S. Department of Agriculture has agreed to expand the Dairy Product Price Support Program in a way that should boost farm-level income.

In a decision announced Friday by Agriculture Secretary Tom Vilsack, the USDA said it will temporarily increase purchase prices for cheese and nonfat dry milk. The prices will rise from $1.13 per pound for block cheese to $1.31; barrel cheese, from $1.10/lb. to $1.28; nonfat dry milk powder, from $0.80/lb. to $0.92.

“Once again, Agriculture Secretary Vilsack has used the tools at his disposal to help dairy farmers cope with the extreme drop in farm-level prices, and we appreciate his hard work on our members’ behalf,” said Jerry Kozak, President and CEO of NMPF.

The new levels, which will be imposed as of Aug. 1^st and expire after Oct. 31^st, are higher than those requested by NMPF on June 26^th. NMPF had asked that the USDA raise purchase prices for block and barrel cheese by six cents a pound, and for nonfat dry milk by four cents a pound. Higher product prices will translate into higher farm-level prices, according to NMPF. The USDA estimates this will raise farmer income by $243 million.

“This step by USDA to raise farm-level milk prices comes at a critical time, and is yet another important effort the agency has made to help dairy farmers survive the worst recession in their lifetimes,” said Kozak.

Under the Dairy Product Price Support Program, the USDA serves as a buyer of last resort to help clear commodity dairy markets during periods of exceptionally low farm-level prices. NMPF had worked during passage of last year’s Farm Bill to revise the price support program to allow the agency to boost individual dairy product price levels, such as the cheese and powder prices raised today.

In addition to thanking the USDA, Kozak also cited the efforts of many members of the Senate and House, who had also called on the USDA recently to ask for a boost in price support levels.

“Elected officials understand that an important part of their constituency, and often a forgotten part, is truly suffering right now because of the recession,” he said. “We appreciate the attention this issue has gotten in Washington at USDA and in Congress.”

Kozak said that USDA has already taken several other important steps to help farmers in 2009, including liquidating 200 million pounds of surplus milk powder, reauthorizing the Dairy Export Incentive Program, and expediting the payments under the Milk Income Loss Contract program.

“Secretary Vilsack and his staff have been extremely response to the crisis on dairy farms, and will look forward to continue working with the USDA to help address the pain that producers are feeling,” Kozak said.

U.S. Agriculture Secretary Tom Vilsack met with dairy state lawmakers late this week and is apparently willing to temporarily raise prices the government pays for dairy products under the Price Support program in an effort to support farmer milk prices.

Dairy Profit Weekly editor Dave Natzke reported Friday that details are sketchy but USDA is negotiating a final purchase price increase with the Office of Management and Budget and hopes to have a decision before an August Congressional recess begins.

Meanwhile; New York Democratic Senator Charles Schumer introduced a bill this week to close a loophole that will affect imports of milk-protein concentrate, entitled the “Quality Cheese Act.” The legislation would prohibit food products that contain dry ultra-filtered milk products, milk protein concentrate, or casein from being labeled as domestic natural cheese. See our website for details.

In other dairy news, Natzke also reported that a U.S. Court of Appeals ruled against some dairy producers seeking to block higher Class III and Class IV manufacturing or “make” allowances in federal milk pricing formulas.

Make allowances are the amount of money dairy processors can deduct from the milk price they pay to farmers to help cover manufacturing costs. USDA raised make allowances for cheese, butter, whey and nonfat dry milk last fall, but a lawsuit filed on behalf of nine dairy producer groups charged USDA failed to consider 2008 Farm Bill requirements when raising the deductions.

The District of Columbia Appeals Court affirmed a previous court decision, apparently closing the book on a debate that has been going on for more than two years. And, as far as the ruling and the impact on dairy farmers, it probably won’t, Natzke concluded, because USDA implemented the changes last October.

“Congress gets it,” said National Milk’s Chris Galen in his Thursday report. Galen reacted to Wednesday’s Congressional Dairy Caucus press conference were Rep. Tom Perriello (D-VA) made a telling statement; “Everyone in America profits from agriculture, except farmers.” Another representative pointed out that every dairy farmer in America is losing money, not just a few.

Galen said Congress understands there is a crisis on farms and that’s the reason for this “very broad bipartisan group of representatives coming together to look for policy solutions that the House and Senate can engage in to help farmers.”

National Milk was happy to be a part of this, Galen said, and provided input to the caucus members and is recruiting others. There are at least 50 House members on board, according to Galen, from Vermont to California, even members who may not represent rural areas because “They realize a lot of people have a stake in dairy farming, not just farmers but ultimately consumers who want to have affordable and locally-produced foods. They have a stake in dairy policy as well.”

The $64,000 question is what can be done. Lawmakers can weigh in with USDA to boost the price support program levels, which NMPF has called for Galen said, and make full use of the Dairy Export Incentive Program, which NMPF has also asked for, but Galen pointed out that this is not just about pricing.

There are other issues that Congress has control over that affects dairy production, Galen said, such as immigration reform, food safety, the environment, climate change. “Those are all big picture issues that have an impact or will have an impact on farming that need to have members of Congress be aware of, of the stake for dairy farmers.”

The beef check off benefits dairy producers by defending the veal industry, according to Michigan dairy and veal producer Dan Javor.

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Javor began Wednesday’s “Beef Board Update” by pointing out that the check off does many things so it’s hard to just list a couple but, “For the small investment made, when issues arise, there’s a ready source of people to correct any misinformation that’s put out, whether beef’s nutrition value is questioned or production practices are.”

The check off also funds research to improve the safety of the beef and veal that consumers purchase, according to Javor, and promotes beef in print and radio advertising to increase beef demand so farmers end up with better prices.

The veal industry has been hit by criticism by animal rightists and those with a vegetarian agenda but the check off works to defend veal despite having a very small budget. Veal issues are monitored and farmers are kept informed, Javor said. The check off also promotes the positive story of the veal quality assurance program and the producer education and certification programs to “defend veal in the minds of consumers as being safe and nutritious and good tasting.”

If there was no check off program, there would be no one to defend the industry, he said, and “all we would hear would be from the activists groups.” “This is dairy producers getting the word out about the safety of veal.”

He adds that, pooling money together gives us the chance to partner with other organizations such as with packers to promote veal in retail stores, which is done primarily in the East Coast where veal is commonly served. The check off also partners with restaurants and individual products like olive oil or wine to “get veal served with them” and “stretch our dollars out.”

In this week’s Success Strategies Podcast, John Ellsworth discusses the presence of paralysis – the inability to make a decision.

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The final week of July started as a sleeper in the cash cheese market. Prices held at Friday’s levels and only one carload of barrel was sold. Butter was also unchanged, holding at $1.26, but 11 cars traded hands and three bids went unfilled.

Dr. Robert Cropp, Emeritus Professor at the University of Wisconsin at Madison, said in Tuesday’s DairyLine that prices are not great but are improved and above support. Cow numbers are going down, he said, and milk production is inching lower so things may be a little tighter but there’s a lot of cheese in storage, according to the last week’s Cold Storage report.

Cheese stocks are up 7 percent from a year ago, he said, and there’s a lot to move yet. Buyers are looking at these prices and may be buying ahead a little, according to Cropp, particularly on butter which can be stored a little longer.

Cream supplies are slipping as more goes into the cone instead of the churn. You need to have butter for fall sales, he said, so some advance purchases are likely being made as “It’s a safe bet that butter will be higher than $1.26 by fall.”

July Federal order milk prices are announced Friday morning by USDA and Cropp looks for a Class III price of $9.95-$9.96 per hundredweight, considering that cheese prices were at or below support. That would be a 1 to 2 cent drop from June but would be $8.29 below a year ago.

He expects the Class IV price to come in around $10.15, as nonfat dry milk prices had strengthened some but that’s 7 cents below the June price and $6.45 below a year ago.

When asked what he would advise Agriculture Secretary Tom Vilsack to do to turn things around for dairy farmers, Cropp said, we have to get milk production down below year ago levels by 2 or 3 percent from a year ago “But, what the Secretary can do, I’m not sure.”

Short term Cropp suggests the government buy more product through the price support program, buying ahead for school lunch and feeding programs and using the Dairy Export Incentive program helps a little, he concluded, “We have to get production down.”

This week’s Pfizer Vet Visit, Dr. Doug Braun wraps up his series on vaccines.

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Dairy Profit Weekly editor, Dave Natzke, reported Friday on this week’s second annual summit of the American Farmers for the Advancement and Conservation of Technology (AFACT) in Minneapolis. AFACT was born two years ago by dairy farmers concerned over the potential loss of rbST as a tool for improved milk production efficiency, Natzke reported, but since then, other related issues have surfaced such as California’s Proposition 2 and similar initiatives in other states that restrict farm animal management practices, as well as a general media and marketing blitz surrounding such things as “green,” “sustainable” and “local,” that generally portray modern agriculture in a negative light and frequently confuse consumers.

The theme for this year’s Summit was Working Together to Create Solutions, Natzke said, as AFACT seeks to reach beyond dairy into other aspects of agriculture. For example, California egg producer Ryan Armstrong and dairy farmer Ray Prock Jr.  shared their experiences with California’s Proposition 2;  Gary Thome, a Minnesota swine farmer, shared his farm’s experience with PETA; and Len Corzine, Illinois crop farmer, discussed restrictions on technologies used in crop production.

Alex Avery, Director of Research and Education at the Hudson Institute, discussed movements that restrict new technologies in food production, and the implications for future global population growth and food needs; and Washington State University scientist Jude Capper shared her research showing that U.S. dairy cow numbers have dropped from 25 million in 1944 to about 9 million today, indicating dairy’s “carbon footprint” has declined sharply in the past six decades.

The main action items coming out of the conference, according to Natzke, were that farmers must address the emotion of food-buying purchases by directly reaching out to consumers; that farmers must put a “face” back on their product, reminding consumers where food comes from; and farmers must become more active using social networks, such as Facebook and Twitter, to reach consumers.

Discussions continue on what to do to relieve financially struggling dairy farmers. National Milk met with several dairy groups this week, according to Chris Galen in Thursday’s broadcast. Galen said the immediate focus was to review a supply management plan endorsed by the Holstein Association and California’s Milk Producer’s Council and Dairy Farmers Working Together.

The discussion centered on how the plan would work, how it would be implemented legislatively, and how it would help reduce volatility and improve milk prices, according to Galen.

National Milk’s Task Force will conduct a more detail examination of the plan, he said, and meet again in August to review it and other ideas to reform the U.S. milk pricing system.

The meet this week also heard from the National Farmers Union, the American Farm Bureau, the National Farmers Organization, and Western United Dairymen.

Information is being gathered, Galen said, to deal with the longer term structural challenges facing dairy farmers.

Friday is the deadline for CWT members to submit bids on the current herd removal program. This is a short term immediate focus, Galen said, and National Milk continues to call on USDA to improve the dairy price support program by raising some of its purchase prices and maximize usage of the Dairy Export Incentive Program. “These things can and should be done immediately, in tandem with our long term efforts,” Galen concluded. “That’s the best one, two punch for dealing with the dairy economic crisis.”

Colorado dairy producer and Beef Board member, Andy Wick, discussed public relations in Wednesday’s DairyLine broadcast. Wick serves on the board’s public relations Committee which, he said, “works behind the scenes doing very important and necessary PR for our industry.”

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One example is the “Safety Reputation Management” team which Wick said, reaches out to consumers about the “Safe and Savory at 160” campaign and responds to beef safety issues in the media.

Another example of PR is in the Nutrition Public Relations area. “They tell our story of beef protein’s benefits,” Wick said. “They have nutrition spokespeople who work with the Nutrient Rich Foods Coalition.”

One more example would be with the Media Relations team which faces challenges with consumer media outlets trying to dispel some of the myths about modern beef production.

Wick;s final example was the “Food Communication” team which re-launched the “Beef, It’s What’s for Dinner” website, THE place for consumers to go for beef and recipe information, according to Wick.

The PR teams also use social media outlets like Twitter and Facebook to reach consumers, Wick said, “The ones buying our product and telling their friends to buy our product.” “Public Relations is a hard program to explain,” Wick concluded, “But beef producers, take my word on it, our check-off investment is helping us to get our message out in places where it needs to be heard, but where WE can’t always be.”