Milk Surpluses

May 2, 1962

Report Outline
Federal Government and Milk Surplus
Proposals for Control of Production
Structure of American Dairy Industry
Dairy Products and Health Questions

Federal Government and Milk Surplus

Reduction of Government Price Supports

Producers of milk and milk products, already suffering from over-production, under-consumption and import competition, received a new blow on April 1 when government price supports on milk and butterfat were cut from 83 to 75 per cent of parity. Secretary of Agriculture Orville L. Freeman told a news conference, two days before the cut went into effect, that under the Agricultural Act of 1949 price supports could be held at a level above the minimum only if the higher rate was needed to “insure an adequate supply.”

No one contends that domestic milk supplies are less than adequate to meet current demand. Despite lowering of price supports, the federal government expects to pay out $523 million to remove milk surpluses from the market in the marketing year that began April 1. Dairy farm income may drop during the year by as much as $275 million as a result of the reduction in price supports. Nearly a million American farmers produce milk, and about 400,000 of them receive more than one-half of their income from dairying. Cash farm income from milk, running at a rate of $4.7 billion annually prior to the change in support prices, was second only to income from cattle and calves.

Hopes for effective stabilization of the supply and demand situation in the dairy industry through new legislation appear dim. Congress and the industry have been unable so far to get together on either emergency or longrange plans. Dairymen vehemently oppose administration proposals for mandatory production controls on milk that would carry stiff penalties for producers exceeding their allotted quotas. A compromise plan to make payments to farmers who reduce milk production voluntarily, and to penalize those who exceed 1961 production, also has failed of acceptance.

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