Analyst says USDA’s larger food box purchases are impacting markets
A dairy market analyst is concerned about the math behind the USDA’s new food relief program and how it will impact markets.
Matt Gould with Vault Dairy tells Brownfield the Farmers to Families Food Box Program announced last Friday has much larger purchases than expected. “Originally, USDA said that they were going to spend three billion dollars in total, and they were going to start by spending a total of 300-million dollars to buy of products in the second half of May and June, but what they actually delivered was not a 300-million dollar purchase but a 1.2-billion-dollar purchase.”
Gould says the larger than expected purchases are supporting the markets. “The price movement, you’re talking about bigger volumes sooner. It’s lifting prices, and we’ve seen cheese and butter prices actually react pretty dramatically as a result of the government intervention.”
And, Gould says cheese prices are a good example. “For example, cheese was down at a dollar just a couple of weeks ago and it’s risen more than 30% since then.”
Gould says as restaurants and food service starts to reopen, the government purchases will continue to support food prices, making restaurant food more expensive.
Gould also says the cap on direct payments to farmers with more than 311 cows will also reduce the amount of direct payment aid to dairy producers and fall far short of the 2.9-billion-dollar assistance goal.