B&Co stock price rises after Fed cuts $1.8bn in subsidies
The Israel-based supermarket chain B&&, which had announced in September that it would be cutting its $1 billion in subsidies, has climbed after the Fed cut its subsidy.
The Israeli supermarket chain, which was the biggest seller of dairy products in the US, said on Thursday it was cutting its US subsidy for US-based retailers to $1,828 a year from $1 in 2018.
It said the cut will make its US market smaller and it will reduce the price of its products to the US market by $2.60 per kilogram.
The $1bn cut in subsidy is the largest ever for US dairy producers, according to the International Dairy Products Association, which represents US dairy companies.
It is the biggest cut in the subsidies that US dairy farmers receive under the US Farm Bill.
B& had already cut its US subsidies by $1billion last year and had announced the reduction in May, but the Fed’s move on Thursday makes it the largest US dairy producer to cut subsidies.
The company said it will also reduce the prices of its US products to $2 per kilo from $2 in 2018, making its US product cheaper.
A& has seen sales fall from a $8.5bn surplus in 2017 to $3.5 billion this year.
The US dairy industry has been suffering from a drop in demand for dairy products and a decline in sales due to the effects of climate change.
The dairy industry in the United States has been hit hard by the global food crisis and drought caused by global warming.
Earlier this month, US President Donald Trump signed an executive order that will increase the minimum wage for workers who work at the US dairy farms by 5.5 percent, which would be the highest in the world.
The president said that increased wage would help keep the US economy moving forward.
Trump also signed an order to increase US agricultural exports, which are expected to hit $15 billion by 2021.
On Wednesday, the US Department of Agriculture said that it will end its subsidies for dairy farmers, which were last cut by $400 million, for 2018.
In an interview with CNNMoney, US Senator Heidi Heitkamp, a Democrat from North Dakota, said the move was a positive step in ensuring dairy farmers have more support from the US government.
“We want to ensure that we are not losing the jobs of dairy farmers and our country needs more jobs for dairy producers,” Heitkop said.
