WASHINGTON — Sen. Charles E. Schumer, D-N.Y., called on the U.S. Department of Agriculture to use an obscure provision of federal law to pay dairy farmers hundreds of millions of dollars — a measure he said could help New York farmers outlast this year's steep milk price declines.
Mr. Schumer cited a provision that allows the secretary of agriculture to order direct payment to farmers through the federal Commodity Credit Corp. in emergency situations.
Mr. Schumer called for payments roughly doubling the amount farmers already are receiving through the federal Milk Income Loss Contract program, which pays farmers when prices fall below a federal target. That would cost about $600 million nationwide and provide $72 million to north country farmers, his office estimated.
"No farmers are going to get rich on this, but at least it will allow them to survive," Mr. Schumer said in a conference call with reporters.
He said that he raised the issue with Agriculture Secretary Tom Vilsack in a telephone call Thursday and that Mr. Vilsack said he would consider it. A spokesman for Mr. Vilsack did not immediately return a message for comment Thursday afternoon.
The idea of paying farmers through Commodity Credit Corp. funds appeared perhaps to be unfamiliar to Mr. Vilsack, Mr. Schumer said, though he added that the secretary seems genuinely concerned about farmers' plight and is open to suggestions to help.
The CCC, which operates as part of the USDA, is more widely known in the dairy industry for buying and selling surplus cheese and other dairy products through the price support program. The USDA has increased such purchases in response to the dairy crisis.
But the Commodity Credit Corporation Charter Act is broader, allowing the CCC to support farm commodity prices through "loans, purchases, payments and other operations."
Mr. Schumer made the proposal after spending much of the summer congressional recess visiting rural areas around the state, including a stop in Lewis County. He came away convinced that dairy farmers have not faced such a threat to their livelihoods in many years and that hundreds of farmers in New York will go out of business in the next three or four months unless the government steps up assistance.
"I have never seen our dairy farmers in more distress," Mr. Schumer said. "It was devastating."
Economists say milk prices are beginning to recover slowly, especially on futures markets that reflect where investors believe prices are headed many months in advance. Even so, experts say, because prices fell so low, dairy farmers face many more months of prices below production costs.
Politically, using the CCC to pay farmers works around any need for legislation. To boost the MILC program, Congress would have to pass legislation increasing the rate farmers are paid, a move that could agitate the program's critics in Congress and delay or derail passage.
Mr. Schumer said he also is open to the idea of using economic stimulus money to help farmers but is unsure whether that program would allow direct payments. Vermont has used stimulus money for loans to farmers, but many advocates say farmers already are in as much debt as they can handle, if not more.