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U.S. Government plans to spend $20 million on surplus cheese to help farmers and the hungry

DONAHUE, Iowa — The U.S. Department of Agriculture plans to purchase approximately 11 million pounds of cheese from private inventories in an effort to help farmers through a lagging dairy market and contribute to nationwide food banks.

"We understand the nation's dairy producers are experiencing challenges due to market conditions and that food banks continue to see strong demand for assistance," said Agriculture Secretary Tom Vilsack.

Currently, there is a 30-year-high cheese surplus in the United States according to the USDA.

"There is a cheese surplus because there is a milk surplus," said John Maxwell, who along with his wife, owns of Cinnamon Ridge Farms. The dairy cow operation milks 240 head of jersey cows, producing 2,500 gallons of milk every day.

In the last year and a half, Maxwell says revenues from his dairy cows have decreased by 50%, and he isn't alone. The USDA reports dairy farmers across the country have seen a 35% drop in income within the last two years.

"When you make more than the demand, you're going to have a surplus that grows and grows and grows and the price consequently goes down," said Maxwell, a fifth generation dairy farmer. "It's the law of supply and demand," he said.

His operation stands to lose $100,000 dollars in 2016 on the dairy side of his business. Overall, he says his business is doing alright.

Maxwell doesn't focus his farm operation solely on dairy cows. He's diversified in farming 4,000 acres of corn and soybeans, raising cattle for beef, giving tours to some 6,000 people each year, as well as raising hogs and chickens.

"For some dairy farmers it can be a real challenge, because they've concentrated on just dairy, and so if that's your only source of a check, it can be pretty tough," said Maxwell.

Maxwell says it will probably take months for the government's cheese purchase to have a trickle down impact on his business, but he says it will come eventually.

"The wheels of time turn very slowly before we'll see it, but never the less, there is hope on the horizon," he said.

As for the government's plan for the 11 million pounds of cheese, the USDA says it will be provided to families in need across the country through USDA nutrition assistance programs.

"This is a win-win situation for all of us, and hopefully we'll see some of those increased prices down the line," said Maxwell.

The Agriculture Act of 1935 authorizes USDA to use fiscal year 2016 funds to purchase surplus food to benefit food banks and families in need through its nutrition assistance programs.