Agri-Mark calls for wholesale price floor for dairy goods

The Northeast dairy cooperative Agri-Mark is seeking federal assistance to help mitigate the effects of tariffs on dairy prices.

Cooperative officials, who represent 950 member farms throughout the Northeast, sent a letter to U.S. Secretary of Agriculture Sonny Perdue asking him to implement minimum wholesale prices for butter, cheese and nonfat dry milk. According to the letter, the cooperative wants the secretary to set a minimum price of $2.30 per pound for butter, a $1.64 per pound minimum on cheddar cheese and a minimum of 81 cents per pound on dry milk.


The letter also calls on the U.S. Department of Agriculture to purchase any butter, cheese and powder for government programs like school lunches at the cooperative’s requested wholesale price floors as another measure to prevent milk prices for farmers from plummeting.

“If you do that and just announce it, the industry will probably move the prices back up,” itself, said Agri-Mark economist Robert D. Wellington.


Agri-Mark’s requested price floors replicate the wholesale prices dairy commodities earned earlier this month due to market support.

The prices, however, fell after countries like China and Mexico slapped tariffs on U.S. goods earlier this month in retaliation for recent U.S. tariffs on steel and aluminum, Mr. Wellington, senior vice president of economics, communications and legislative affairs with Agri-Mark, said. The wholesale price for cheddar cheese fell to about $1.35 per pound, and the 30-cent drop has cost farmers about $3 per hundredweight in revenue, Mr. Wellington said.

“Now the market is down and the Chicago Mercantile has fallen dramatically, particularly for cheese and nonfat dry milk powder,” he said.

Actions from the government as requested by Agri-Mark would not only help buoy farmers from the possible threat of plummeting prices, but also encourage private consumers to raise their offers to beat out the government for goods, Mr. Wellington said. The government may not necessarily need to buy the product at times, but just declare it would be willing to pay the higher wholesale prices when needed, Mr. Wellington said.

“The guy who wants to buy at $2.25 (per pound) is not going to get the butter unless he’s will to buy it at $2.30” or more, he said.

The letter follows another initiative from the Northeast cooperative to unite cooperatives and other industry stakeholders from across the country to develop a way to raise milk prices and curb the oversupply in the market.