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USDA to give dairy farmers special subsidy payment

By Christopher Doering | Reuters

WASHINGTON (Reuters) - Struggling U.S. dairy farmers, who have seen milk prices plunge 30 percent since 2008, will receive a one-time subsidy payment, the U.S. Agriculture Department said on Thursday.

Milk producers that qualify will receive about 32 cents per hundredweight (100 lbs), according to USDA, with a limit per dairy operation of 6 million lbs, or roughly 300 cows. A producer reaching the maximum output would get $19,200.

Burdened by recession and an abrupt slump in exports, dairy prices collapsed early this year, and have only recently shown signs of improving on worldwide demand. Still, milk prices are forecast to average $12.75 per cwt this year, well below the $18.29 averaged during 2008.

"Everyone understands that this does not make these farmers whole for the losses they have taken because of the historically low prices this year," said Wisconsin Representative Dave Obey, chairman of the House Appropriations Committee. "But it might be the difference between getting by or going out of business."

Eligible producers will receive the payment based on the amount of milk both produced and commercially marketed by their operation between February and July 2009. The production information will be used to estimate a full year's output to calculate the payments.

The funding for the special payment comes from the 2010 Agricultural Appropriations Bill, which authorized $290 million for loss assistance payments to eligible dairy producers.

House Agriculture Committee Chairman Collin Peterson called the payment "an essential stop-gap measure" to help farmers remain in business, but he said the current dairy supports are clearly not doing enough to help.

"We need to look at ways we can reform dairy policy to ensure that it provides adequate support for the long-term success of the industry," said Peterson, who vowed to consider making changes during the next farm bill.

The national price for milk was $16.80 per cwt in the fourth quarter of 2008, but fell 27 percent to $12.23 per cwt in the first quarter of 2009.

In many cases, the price dairy farmers received for milk was less than what it cost them to produce it.

National Farmers Union President Roger Johnson said the extra payment will help, but added that "there is no easy answer or simple fix to the extraordinary challenges facing America's dairy producers."

USDA said dairy producers who have production records with its Farm Service Agency because they participate in another dairy program will be enrolled automatically. More than 95 percent of eligible producers will receive benefits without having to fill out a new application, USDA said.

The remaining producers have until January 19, 2010, to apply.

(Editing by Christian Wiessner)

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