FACT SHEET

UNITED STATES DEPARTMENT OF AGRICULTURE

FARM SERVICE AGENCY

Page 1

August 2011

Dairy Product Price Support Program (DPPSP)

Formerly the Milk Price Support Program (MPSP)

Overview

The Dairy Product Price Support Program (DPPSP) began as 

the Milk Price Support Program 

(MPSP) and is legislatively mandated. The Secretary of Agriculture is authorized to carry out this 

program under the Commodity 

Credit Corporation (CCC) borrowing authority. MPSP was 

established on Oct. 1, 1949, by 

the Agricultural Act of 1949 to 

provide farmers a parity level of 

income. The program has been 

modified over the years but continues to support prices for dairy 

farmers. Provisions for inventory 

control and other programs have 

been added.

The MPSP has never paid farmers 

directly, but purchases dairy products from processors and vendors 

to allow farmers to be paid the 

mandated support price for their 

milk.

Background 

Provisions of the Agricultural Act 

of 1949, as amended, required that 

the price of milk paid to producers 

be supported at a level between 75 

and 90 percent parity to assure an 

adequate supply of milk, reflect 

changes in the cost of production 

and assure a level of farm income 

to maintain productive capacity 

sufficient to meet future needs; 

however, since Oct. 21, 1981, the 

support price has been established 

by Congress either at specific 

price levels or by formula related 

to expected surplus, rather than 

parity levels.

The 1996 Federal Agriculture 

Improvement and Reform Act 

authorized the MPSP through Dec. 

31, 1999. Due to low prices and 

concerns from the dairy industry, 

Congress extended the MPSP into 

2000, 2001 and until May 31, 

2002, through the Agriculture, Rural Development, Food and Drug 

Administration, and Related Agencies Appropriations Acts of 2000 

and 2001. After June 1, 2002, the 

Farm Security and Rural Investment Act of 2002 (2002 Farm 

Bill) was passed authorizing the 

program through Dec. 31, 2007. 

The 2002 Farm Bill authorized the 

Secretary of Agriculture to support 

the price of milk produced in the 

48 contiguous states through the 

purchase of cheese, butter and 

nonfat dry milk (NDM) produced 

from the milk. The milk was supported at a rate of $9.90 per hundredweight (cwt) for 3.67 percent 

butterfat (milkfat) milk.

Current Legislative Authority

The Food, Conservation, and Energy Act of 2008, (2008 Farm Bill) 

reauthorized MPSP as DPPSP 

beginning Jan. 1, 2008, and ending Dec. 31, 2012. Under the 

2008 Farm Bill, the Secretary of 

Agriculture supports the price of 

cheddar cheese, butter and nonfat 

dry milk by providing a standing 

offer to purchase such products 

made from cows’ milk produced in 

the United States. The 2008 Farm 

Bill establishes the support prices 

as follows:

• For cheddar cheese in blocks, 

not less than $1.13 per pound;

• For cheddar cheese in barrels, 

not less than $1.10 per pound;

• For butter, not less than $1.05 

per pound and;

• For nonfat dry milk, not less 

than $0.80 per pound.

When purchases exceed certain 

statutory levels, the Secretary is 

required to make temporary price 

adjustments to avoid the accumulation of excess inventories.

CCC Purchases and Dispositions

DPPSP purchases are just one 

part of overall CCC purchases 

for the Farm Service Agency 

(FSA). Under the CCC’s umbrella, FSA purchases and delivers processed commodities under 

various domestic food distribution 

programs, such as the National 

School Lunch Program and the 

Commodity Supplemental Food 

Program. Purchases and deliveries of commodities also are made 

to foreign countries under Titles 

II and III of Public Law 480; the 

Food for Progress Program; the 

McGovern–Dole International 

Food for Education and Child 

Nutrition Program; and Section 

416(b) of the Agricultural Act of 

1949. These programs are carried 

out through private voluntary 

agencies, the World Food Program 

and government-to-government 

transfers.

Purchases in Special Forms or 

Consumer-Size Packages

In addition to purchases of bulk 

products at announced prices, 

CCC has historically purchased 

butter, cheese and NDM in further 

processed forms or in consumersize packages to support the price 

of milk. The prices for these 
FACT SHEET

Dairy Product Price Support Program (DPPSP) August 2011

products include Make Allowances fees for additional processing 

and packaging costs. Purchasing 

products in consumer-size packages enables CCC to utilize dairy 

products under donation programs 

more efficiently.

Processing and Repackaging

Under DPPSP, in order to facilitate 

use in food assistance programs, 

products purchased in bulk are 

repackaged in forms suitable for 

sale and donation. These services, 

which are contracted through 

competitive bids, include repackaging bulk butter into 1-lb prints; 

processing butter into butteroil; 

processing block or barrel cheese 

into 5-lb and 2-lb loaves; and instantizing and/or fortifying NDM 

with vitamins A & D and repackaging into 25.6 oz, or 4-lb bags.

Other Dairy Programs

In addition to DPPSP, USDA 

administers the Milk Income Loss 

Contract Program (MILC), the 

Dairy Promotion and Research 

Program (DPRP), and the Dairy 

Export Incentive Program (DEIP). 

MILC

FSA administers MILC. Payments 

are made directly to dairy producers when milk prices fall below a 

specified level. All producers that 

produce and market milk in the 

United States are eligible for the 

program. 

DPRP

This national producer program 

for dairy product promotion, 

research and nutrition education strives to increase human 

consumption of milk and dairy 

products and reduce milk surpluses. This self-help program is 

funded by a mandatory 15-centper-hundredweight assessment 

on all milk produced in the 48 

contiguous states and marketed 

commercially by dairy farmers. 

It is administered by the National 

Dairy Promotion and Research 

Board (Dairy Board).

DEIP

USDA’s Foreign Agricultural 

Service administers DEIP. U.S. 

dairy commercial exporters can 

apply for cash subsidies through 

DEIP to offset the difference 

between world and U.S. prices. 

This can lower the amount of 

DPPSP purchases or increase 

U.S. government market removals. CCC funds DEIP subsidies, 

but does not actually purchase the 

exported commodities. DEIP is a 

separate program from DPPSP but 

is still considered a CCC market 

removal.

Historical Dairy Price Support 

Data

For information on Dairy Price 

Support, see 

http://www.fsa.usda.gov/Internet/FSA_File/dppsp_fact_sht_

hist_data.pdf. 

The U.S. Department of Agriculture (USDA) 

prohibits discrimination in all of its programs 

and activities on the basis of race, color, 

national origin, age, disability, and where applicable, sex, marital status, familial status, 

parental status, religion, sexual orientation, 

political beliefs, genetic information, reprisal, or because all of part of an individual’s 

income is derived from any public assistance program. (Not all bases apply to all 

programs.) Persons with disabilities who 

require alternative means for communication of program information (Braille, large 

print, audiotape, etc.) should contact USDA’s 

TARGET Center at (202) 720-2600 (voice 

and TDD). 

To file a complaint of discrimination, write to 

USDA, Assistant Secretary for Civil Rights, 

Office of the Assistant Secretary for Civil 

Rights, 1400 Independence Avenue, S.W., 

Stop 9410, Washington, DC 20250-9410, or 

call toll-free at (866) 632-9992 (English) or 

(800) 877-8339 (TDD) or (866) 377-8642 

(English Federal-relay) or (800) 845-6136 

(Spanish Federal-relay). USDA is an equal 

opportunity provider and employer.

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