The USDA announced today it will be buying up to $50 million worth of fluid milk in an effort to bring financial relief to the dairy industry, which is suffering from high production and foreign trade tariffs.
USDA says it will use its Section 32 authority under the Agricultural Adjustment Act of 1935 to make the purchases.
Section 32 authority has been expected to play a major role in the trade aid program, but USDA's Agricultural Marketing Service was very specific in the announcement today that the purchases are not to be considered part of a planned $12 billion trade assistance package that the Trump administration announced in July.
The administration claims that aid package will help offset tariffs from countries like China and Mexico that are retaliating against new U.S. import taxes.
“These purchases are part of the normal operations of administering Section 32 and are not related or associated with the authority or administration of possible purchases under Section 5 of the Commodity Credit Corporation related to trade mitigation,” AMS said in the announcement of the plan to buy milk.
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Section 32 allows the USDA take money from customs duties and use it for a wide variety of things like disaster payments and purchasing surplus commodities. AMS used the authority to buy about $736 million worth of commodities in 2017.
There are less restrictions on Section 5 of the CCC Charter Act, which gives the USDA authority to use up to $30 billion per year to “support the prices of agricultural commodities (other than tobacco) through loans, purchases, payments, and other operations.”
The National Milk Producers Federation (NMPF) and International Dairy Foods Association (IDFA) lauded the announcement of USDA’s first-ever use of Section 32 funds to remove fluid milk from the domestic market and donate it to food banks.
“This purchase addresses one of our country’s significant challenges – hunger – and, at the same time, will have a positive impact on the dairy industry at a time of significant market uncertainty,” said IDFA President and CEO Michael Dykes.
But dairy and other agriculture groups are still counting on USDA to come through with the $12 billion trade assistance package that will combine direct payments to farmers, commodity purchases and aid in finding new foreign markets.
“NMPF has been sharing information with USDA about the best way to maximize the value of the farmer assistance program that will be implemented soon, and we are hopeful that the agency moves quickly to get resources in the hands of dairy farmers this fall,” said Jim Mulhern, the group’s president and CEO.
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