USDA to Purchase $20 Million of Cheese Surplus

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Washington, D.C.—The U.S. Department of Agriculture (USDA) will purchase $20 million worth of cheese and donate it to food banks in an effort to modestly reduce the cheese surplus that is at a 30-year high.

According to a report by NPR, the surplus resulted when dairy farmers, responding to record high prices two years ago, decided to expand production only to experience a sudden drop in sales. This is a global phenomenon in which milk prices are 20% lower than last year and 40% lower than the highs two years ago as a result of a drop in sales to China and Russia.

China, which was buying up a great deal of milk powder, drove prices to all-time highs until the economy slowed and Chinese purchases halted. Russia, after being punished with sanctions in 2014, banned Western cheese in retaliation. And, when the European Union abolished a quota system that regulated how much milk its dairy farmers could produce, farmers raced to produce more milk only exacerbating the surplus.

Currently, there is 1.3 billion pounds of U.S. cheese in storage this year, of which cheddar and mozzarella account for a majority of the stockpile. USDA’s purchase would amount to less than 1% of the stockpile, having little impact on the price of milk. However, with 12.1 billion pounds of cheese consumed and exported last year, they are selling plenty and as dairy farmers cut back on production, milk prices are rebounding on their own.

Published in WholeFoods Magazine, October 2016