ACTIONS TO HELP STABILIZE MILK PRICES
                                                               
                                                               
                                             Release No.0003.97
                                                               
                                    Tom Amontree (202) 720-4623
                                          tom.amontree@usda.gov                     

USDA ANNOUNCES ACTIONS TO HELP STABILIZE MILK PRICES

     NASHVILLE, Jan. 7, 1997--U.S. Agriculture Secretary Dan Glickman today
announced that he is taking several actions to strengthen farm-level milk
prices.  This past year dairy producers have faced record-high feed costs,
reduced forage supplies and abnormally low culled cow and calf prices.  

      "Milk prices have declined sharply in recent months and dairy
producers are very concerned about the future of their industry," Glickman
said.  "Based on my assessment of the dairy market situation and recent
meetings with producer, processor and consumer organizations, I am directing
the Department to take several short-term actions to help stabilize farm
milk prices."

     The actions Glickman announced today include:
                                
    USDA will purchase $5 million worth of cheese for use in domestic food
     assistance programs.  This is in addition to the accelerated school
     lunch purchases already underway. USDA also will explore making
     additional purchases for other food assistance programs.

    USDA will work with private voluntary groups to increase the flow of
     dairy products into our international food assistance programs.

    To stimulate exports, USDA will reactivate the Dairy Export Incentive
     Program (DEIP) for butterfat, which has been idle since mid-1995. 
     USDA also has stepped up DEIP sales activity for non-fat dry milk.  In
     addition, the Department is actively working with private voluntary
     organizations to increase utilization of dairy products in USDA
     international food assistance programs.

    Beginning this month, USDA's National Agricultural Statistics Service
     will begin collecting data for a national survey of cheddar cheese
     prices received by manufacturing plants.  This is in response to
     concerns about the accuracy of reported prices.  USDA also will review
     its use of National Cheese Exchange prices as part of Congress'
     mandate to reform and consolidate federal milk marketing orders by
     1999.
                            
     "These actions will help to strengthen a dairy market that for the
most part appears to have a solid foundation," Glickman said.  Milk
production last month was basically unchanged from one year ago following
year-over-year monthly declines most of the year.  And, despite the recent
slowdown in commercial demand caused by double-digit increases in retail
dairy product prices, demand for dairy products continues to exhibit steady
annual gains.  

     "I understand that some would like to see USDA use the marketing order
program as a price support program," Glickman said.  "There are two
compelling reasons why I cannot.  First, in the Farm Bill, Congress
instructed me to phase out price supports.  Second, placing a rigid floor
under fluid milk prices would have widely different effects in different
regions of the country and would likely raise prices for consumers and
reduce sales -- running counter to our intent."


     The Basic Formula Price (BFP) for milk for November fell to $11.61 per
cwt., a $2.52 per cwt. drop from the previous month and a decline of more
than  $1.25 per cwt., compared with one year ago.  The BFP declined further
in December to $11.34 per cwt., $1.57 below the same month last year.  The
record drop in the BFP during November followed very large declines in
wholesale dairy product prices.  In September, the BFP peaked at a record
$15.37 per cwt. and, for all of 1996, the all-milk price is estimated at a
record $14.70 to $14.80 per cwt., about $2 per cwt. above last year and $1
per cwt. above the previous record.  

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