Guest Editorial
Improving demand for dairy products in tough times

Connie Tipton

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

I’m not usually one to look to government for solutions, but these are unusual times.

The current economic climate has devastated the global demand for dairy products, and milk prices have plummeted. Predictably, some in the industry are calling for enhancing our traditional supply-driven policies, but I disagree. Wouldn’t it really be better to find ways to increase demand instead? After all, it was the rapid growth in world demand for dairy products that gave us the high milk prices we experienced over the last five years.

Now the federal government, which has several programs it can use to support dairy farmers, is buying surplus products under the Dairy Price Support Program. Historically, most of the products purchased by the government go into storage until they can only be used for animal feed, or they come back on the market to compete with other commercial products, which are then in a disadvantaged position. This cycle can put a damper on the dairy market, instead of helping the industry to recover. (Does anyone remember all the cheese purchases and giveaways in the early 1980s?)

Think about our economy, which is in the tank, and then think about the growing number of unemployed people who are putting pressure on food assistance programs. Suddenly the light bulb goes on!

Let’s see how we can stimulate more dairy purchases (seems like a legitimate “stimulus package” item to me) and find ways to include more items in the list of dairy products purchased by USDA under various feeding programs. Certainly this would be preferable to letting the commodities overhang the market, go bad or compete with other commercial sales.

The reality is that commodities purchased under the price support program often are not popular consumer-ready products. Why not look to new and innovative products, like yogurts and lowfat cheeses, that are gaining ground in American markets? If we offer new and improved products in federal feeding programs, we can expand demand today by encouraging children to incorporate healthy, nutritious dairy products into their daily diet; this demand may well continue to grow throughout their lives.

As I write this, President Barack Obama has just signed HR 1, the much-touted “stimulus” bill that contains a significant amount of new funding for federal nutrition programs: $20 billion for food stamps, where 12 percent is spent on dairy products; $500 million for the Women, Infants and Children (WIC) program, which has a strong dairy product component; and $100 million for school milk coolers, so that kids who enjoy ice cold milk will continue to make it their beverage of choice in schools.

IDFA recently asked Secretary of Agriculture Tom Vilsack to take a careful look at what USDA can do to leverage these stimulus investments and other strategies to bolster demand and help with the current crisis in dairy markets.
One suggestion is to fund the conversion of government commodity purchases to consumer-oriented dairy products that can be donated directly to needy consumers without displacing existing sales. Cutting out the step of taking possession of the commodity product would save on transportation and storage costs that could be used to offset processing and conversion costs.

Another option might be to allow commodities already in inventory to be used to make products that are more in demand by food banks and other community and faith-based organizations. Food companies could bid to accept the government-owned bulk dairy products like nonfat dry milk to convert to products such as yogurt, reduced fat and lowfat cheeses, and a variety of fluid milk products.

You get the idea. Instead of having the government buy a bunch of commodity products and store them, let’s figure out ways to move that surplus into products and get them to people who need basic, nutritious foods — and, unfortunately, that number seems to be growing. If we can create a better safety net for farm prices and also get more products moving to consumers, that’s truly a win-win situation.

Unusual measures, perhaps, but no one can dispute that these are unusual times!

CMN

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