Source: Welch’s office. 3.29.2010 Representative Peter Welch wrote Secretary of Agriculture Tom Vilsack late last week urging the US Department of Agriculture to increase support prices for cheese and non-fat dried milk products.Welch, founder and co-chairman of the Congressional Dairy Farmers Caucus, rallied 26 other members of Congress to sign the letter, which comes as dairy prices are starting to dip again after a short period of recovery. When the USDA increased the rate it paid for dairy products last year, market prices rose with little cost to the taxpayer.“These continue to be devastating times for Vermont’s dairy farmers. Those who weathered last year’s price crisis simply cannot survive another drop in prices,” Welch said. “The USDA provided critical support last year to Vermont farmers. I hope Sec. Vilsack will act swiftly to address this latest development.”The bipartisan group of co-signers hailing from every region of the country included: Reps. Tim Walz, Joe Courtney, Chris Carney, Brian Higgins, David Obey, Maurice Hinchey, Carol Shea-Porter, Tammy Baldwin, Lynn Woolsey, Scott Murphy, Bill Owens, Paul Hodes, Thomas Petri, Daniel Maffei, Devin Nunes, Roscoe Bartlett, James Oberstar, Joe Sestak, Dennis Cardoza, Chellie Pingree, Mike Michaud, Chris Lee, Rosa DeLauro, Harry Teague, Michael Arcuri and Paul Tonko.The letter is copied below:Dear Secretary Vilsack,We write you in response to the recent financial challenges facing the dairy industry. As you know, during 2009, dairy farms throughout the country experienced one of the worst price crises of the last 40 years. At the end of the year it appeared prices were finally climbing back to meet the cost of production, however, recent declines threaten the industry once again.We appreciate all of the actions taken by the USDA in responding to the 2009 prices crisis. The restoration of DEIP, expedition of DELAP payments to farmers and removal of NFDM from storage were all necessary to aid the industry last year. As a direct response to the recent collapse in cheese prices, we ask that the USDA use the Dairy Product Price Support Program (DPPSP) to increase support prices for cheddar block, barrel cheese and non-fat dried milk (NFDM). Any new drop in prices could deal a death blow to an industry on its way to recovery.When the USDA raised the support price from August 1, 2009 through October 31, 2009, the “market” responded with an increase in prices. During the period of increased support prices the Commodity Credit Corporation was never called upon to purchase cheese at the increased prices. We believe the USDA could take the same action today, without incurring the costs of a purchase, while increasing market prices to aid dairy farms. We appreciate your consideration of this request. An increase in the DPPSP could mean the difference between survival and bankruptcy for farms across the country this year. Sincerely,Peter WelchMember of Congress
Facebook Twitter: @NeosKosmos Instagram The Reserve Bank reduced the official cash rate to 2.5 per cent this week, which is good news for people with a mortgage. However, I’m concerned that this low interest-rate environment has produced a very confusing borrowing market for consumers. With rates coming down and competition heating up, lenders have had to pull out all the stops in order to attract and retain customers. So, one tactic that has become popular amongst marketers is to highlight the ‘discount’ rate in mortgage advertising. Discounting isn’t new. Back in the ’90s, banks used to give their high-income customers preferential treatment by offering them discounts, otherwise known as professional packs, with the hope that they could reel the customer in and sell them on other products over the medium to long term. Now, as interest rates have dropped and margins on each loan are pressured, the discounting strategy is being used as a broader customer acquisition and retention tool, but with one key difference. Back in 2003, the advertising of ‘honeymoon rates’ became very popular, whereby the lender would promote a low introductory rate with no mention of the true long term cost of the loan. So legislation was created to control interest rate advertising by introducing what’s called the ‘comparison rate’. The comparison rate is a formula that includes all the costs and fees, and it factors in any potential short term discounting to give the borrower a clear picture of the loan’s true rate, the rate they’d be paying over the long term. Comparison rate legislation is still in place today. However, advertisers who are looking to get their product out to the market in the simplest and most effective way possible have moved away from advertising the interest rate and the comparison rate in favour of advertising just the discount. So now you’ll see ads spruiking a ‘1.05 per cent p.a.’ discount off for the life of the loan, but the interest rate is nowhere to be seen, leaving the consumer to dig to find the actual rate. This makes things all the more difficult for the borrower, who just wants to know the ‘true rate’ they’ll be paying on their loan. So now that you know how it works, I urge everyone seeking a mortgage to look past the discounts and to focus on the comparison rate, the true rate that you will end up paying over the life of the loan. This won’t always be easy because the discounts are designed to catch your attention and change your thinking. They make you feel like you’re getting a good deal, which may be true for a pair of sneakers or a new sofa. But with interest rates, there is a lot more to the equation than just the ‘per cent off’. So at the very least, find out how much your loan is costing you after the discounts and deals. Go searching for your true rate, and make sure it’s competitive. If it isn’t, go get a better one. * Mark Bouris is the Executive Chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting & tax and insurance. Email Markonmark.firstname.lastname@example.org with any queries you may have or check www.ybr.com.au for your nearest branch.