US dairy industry needs restructuring

The struggling US dairy industry must be restructured to avoid cycles of booms and bust, according to Agriculture Secretary Tom Vilsack on Monday (Oct 5).

In recent years, dairy farmers had benefitted from higher milk prices and growing demand from countries such as China. But wholesale milk prices went crashing down once demand dropped with the economic downturn, while feed and other costs remained high.

As a result, milk prices paid to farmers were unable to even match with production costs.

A longer-term discussion is required on whether there is a need or not to make structural changes in the way the dairy industry is currently operating, so there will no longer be such stark contrasts between a booming period and a low period, said Vilsack.

He said he would like farmers to receive federal aid as soon as possible. Under the deal announced last week, the USDA will distribute US$290 million in direct support for dairy farmers, while another US$60 million will cover purchases of dairy products to help raise prices.

Vilsack also expects the USDA to look at its price support and marketing programmes to see if changes can be made to help stabilise prices.