Got Milk?

I was browsing through my journals and found this from 2004.
I thought it was still interesting…

"Since October 1, 2001, over 400 million pounds of surplus nonfat have
been acquired by USDA.
" It takes 11 pounds of milk to produce one pound of non-fat dry milk.
The 400 million pounds of surplus milk powder represents
4.4 billion pounds of liquid milk that had to be dried and stored in
a warehouse at the expense
of taxpayers, for there is no market for that surplus."

Feds stuck with $1 billion in surplus milk powder

By PHILIP BRASHER,
AP Farm Writer
WASHINGTON - Want milk? The government is trying to figure out what to do with $1 billion worth of nonfat milk powder that it bought over the past three years to prop up the prices paid to dairy farmers.

That is the equivalent of about 1.3 billion gallons of skim milk, enough to supply the nation's entire consumption for 16 months. It would take 635,000 cows an entire year to make all that milk.

The bags of powder are kept in a series of privately owned, manmade caves near Kansas City, Mo., and other warehouses around the country. An additional 20 million to 25 million pounds arrive every week.

"They keep making it and we keep buying it," said Steve Gill, an Agriculture Department official.

Under a Depression-era system, the department is required to control supplies of butter, cheese and nonfat dry milk powder to keep milk prices above a certain level and support dairy farmers' revenue.

The 1996 Freedom to Farm law, which was supposed to wean farmers from government support, ended the milk program in 1999. But Congress extended it temporarily, and then made it permanent again in the farm bill that President Bush signed into law in May.

Nonfat dry milk is what is left over after food makers remove the fat from milk to make butter, ice cream and products for which demand has been booming.

Milk processors do not have to sell the milk powder to the government. They could break it down into protein products, such as casein, that food manufacturers need for a variety of products from energy bars to infant formulas.

Processors sell to the government for one simple reason: The government pays more for nonfat dry milk, about 90 cents a pound, than food makers pay for milk protein.

"The dairy producers, if they ever get something money-wise from the government, they don't want to let it go. It has kept our industry from producing products and ingredients that the market demands," said Connie Tipton, a vice president of the International Dairy Foods Association.

Art Jaeger, assistant director of the Consumer Federation of America, said the "milk support price is high and it's bringing out this excess production. That suggests to me that consumers are paying too much for milk or more than they should."

The Agriculture Department is trying to get rid of the powder. Storage costs are approaching $20 million a year, and the powder keeps coming; about 386 million pounds has been purchased since October.

Some of the powder is donated to domestic programs and overseas. Powder that is getting old -- the government has been storing some of this milk for up to three years -- is sold for use in animal feed.