Guest Columns

Rising food costs demand more attention

by Connie Tipton

Connie Tipton is president and CEO of the International Dairy Foods Association. She contributes this column exclusively for Cheese Market News®.

You can hardly open a paper these days without reading about the rising cost of food in the United States and around the world. There are a lot of reasons for food inflation — from biofuels to international demand to a weak dollar — and the list keeps growing.

With all this media coverage, high food prices and the policies that contribute to them are starting to get serious attention, especially in our nation’s capital. In some instances, federal policies are a direct cause of the rising cost of food, and nowhere is that relationship illustrated more clearly than in the case of our industry’s dairy pricing system under the federal milk marketing orders.

USDA, in a politically motivated decision, announced this spring that Class I price differentials would increase by as much as 40 percent in the Florida, Southeast and Appalachia marketing order regions. These increases seem to disregard the fact that consumers in those markets already face the highest milk prices in the country, according to the Bureau of Labor Statistics.

The federal milk marketing orders are supposed to be concerned with ensuring adequate supplies of milk, and there is no milk shortage. If farms need income support, that help should come from the taxpayer-funded safety net programs in the Farm Bill, not from forcing milk prices higher and higher.

Stunts like USDA’s decision to increase the cost of milk, on top of all this inflation, don’t occur in a vacuum; they affect our industry, our customers and ultimately consumers.

Current milk and food prices are rising at almost twice the current rate of inflation. That means tougher times are ahead for low- and moderate-income families.

Higher prices can mean significant nutritional trade-offs for families, especially those on tight budgets who are already coping with soaring gas prices and a sluggish economy. Higher prices also hurt food banks and government nutrition programs. Right now, participation rates in these programs are up because food prices are up, and the limited funding available to these programs is being stretched to the breaking point as program staff struggle to buy more expensive staples to help more people.

Consider a program like the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) that serves more than 8 million women and children. More than 40 percent of WIC food costs are reimbursements paid to food retailers for participants who use vouchers to purchase milk and cheese. Cheese prices are up 11 percent; milk prices are up 20 percent. Not surprisingly, the cost of the WIC program has ballooned to more than $6 billion per year.

The USDA child nutrition programs serve more than 30 million students a day, and school foodservice directors across the country are struggling to make nutritious meals because reimbursement rates from USDA have not kept pace with rising milk and food costs. These programs — just like families on a strict budget — are forced to cut corners and, wherever possible, shift to cheaper alternatives to dairy. These alternatives may fill children’s tummies at a lower cost per calorie, but they offer lower nutritional values, too.

In a sluggish economy, the rigid federal milk marketing order system just exacerbates the problem. The current pricing system assigns differentials that increase the cost of milk, create regional disparities and compound the inflationary problems for low-income families and government feeding programs.

Now is the perfect time for USDA and Congress to consider how to reform this ineffective, Depression-era system. The 2008 Farm Bill, if and when it passes, includes a call to establish a federal milk marketing order blue ribbon commission to do just that. The commission would be charged with reviewing the antiquated pricing system and recommending improvements so that the system will work in the best interests of the dairy industry and the American public.

Until then, however, we urge USDA and other policy makers to remember the real relationship that exists between their decisions and the people who are struggling to buy groceries or provide school lunches. If they neglect the consumer perspective, we will all end up paying the price.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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