US agriculture head on breaking dairy boom and bust

By Guy Montague-Jones

- Last updated on GMT

Related tags: Dairy industry, European union

Restructuring may be needed to break cycles of boom and bust in the dairy industry, said the US agriculture secretary this week, soon after Congress approved a $350m emergency aid package.

Milk prices were running high until the financial crisis struck last year, sending prices into a nosedive that has left many dairy farmers unable to cover costs. Putting an end to such market instability is now becoming a political priority.

During a visit to a farm in South Dakota this week, AP quoted US agriculture secretary Tom Vilsack as saying: “I think really what will be next in line is a longer term discussion about whether or not we need to make structural changes in the way the dairy industry is currently operated so we no longer have these rather stark contrasts between boom and bust.”

Structural changes

Vilsack went on to suggest the sort of changes that may be required to stabilise the dairy market, including improvements to price support and marketing programmes.

“We need to figure out what changes, if any, we need to make to our support programs, to our marketing programs, to who’s included in those programs, to see if there is any way we can create greater stability,”​ said the secretary.

On the other side of the Atlantic, EU agriculture commissioner Mariann Fischer Boel has also turned her attention to the long term structure of the dairy industry.

The commissioner told European agriculture ministers on Monday that a team of experts would start work next week to study whether new arrangements are needed to stabilise farmer incomes, reduce price volatility and enhance market transparency.

“We need to try to reduce market volatility, improve transparency and discuss how farmers can improve their organisation,” ​said​Fischer Boel.

Short term relief

In the meantime, governments on both sides of the Atlantic are working to ease the short term pressures faced by dairy farmers.

Last week Congress approved a $350m aid package for the dairy industry that had been passed by the Senate in August. Under the deal $290m will be distributed to dairy farmers directly and another $60 will go towards purchasing surplus dairy products to help raise prices.

The European Commission has also been working on short term aid measures. In mid-September the Commission announced changes to EU state aid rules that will let member states pay dairy farmers up to €15,000 each in temporary aid.

Related topics: Markets

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