Dairy producers to get $2 billion aid package
August 19, 2021
USDA announces first installment of $350 million in pandemic assistance for dairy farmers impacted by COVID shutdowns.
While visiting Vermont dairy farms Thursday, Secretary of Agriculture Tom Vilsack announced through the Pandemic Market Volatility Assistance Program, USDA will provide about $350 million in pandemic assistance payments to dairy farmers who received a lower value for their products due to market abnormalities caused by the pandemic. The assistance is part of a larger $2 billion package including permanent improvements to the Dairy Margin Coverage safety net program.
“Family dairy farmers have been battered by the pandemic, trade issues and unpredictable weather and are the life-blood of many rural communities throughout Vermont, the Northeast and many other regions,” Vilsack says while also meeting with farmers and touring dairy farms with Sen. Patrick Leahy, D-Vt. “This targeted assistance is the first step in USDA’s comprehensive approach that will total over $2 billion to help the dairy industry recover from the pandemic and be more resilient to future challenges for generations to come.”
The Farmers to Families Food Box program, most notably purchases of cheese, created unprecedented price volatility in milk and dairy-product markets that produced disorderly fluid milk marketing conditions that so far have cost dairy farmers nationwide more than $750 million from what they would have been paid under the previous system, explains Jim Mulhern, National Milk Producers Federation president and CEO.
NMPF asked the department to reimburse dairy farmers for unanticipated losses created during the COVID-19 pandemic by a change to the Class I fluid milk price mover formula that was exacerbated by the government’s pandemic dairy purchases last year. “When Congress changed the previous Class I mover, it was never intended to hurt producers. In fact, the new mover was envisioned to be revenue-neutral when it was adopted in the 2018 Farm Bill,” Mulhern explains.
Under the Pandemic Market Volatility Assistance Program, payments will reimburse qualified dairy farmers for 80% of the revenue difference per month based on an annual production of up to 5 million pounds of milk marketed and on fluid milk sales from July through December 2020. The payment rate will vary by region based on the actual losses on pooled milk related to price volatility.
USDA will make payments through agreements with independent handlers and cooperatives. Handlers and cooperatives will distribute the monies on the same basis July - December 2020 payments were made to their dairy farmer suppliers and a formula set by USDA. The agency says USDA will reimburse handlers and cooperatives for allowed administrative costs.
USDA will contact eligible handlers and cooperatives to notify them of the opportunity to participate in the Program. USDA will distribute payments to participating handlers within 60 days of entering into an agreement. Once funding is provided, a handler will have 30 days to distribute monies to qualifying dairy farmers. As part of the program, handlers also will provide virtual or in-person education to dairy farmers on a variety of dairy topics available from USDA or other sources. A handler will have until March 1, 2022 to directly provide educational opportunities to dairy farmers.
NMPF says it has been working on approaches to right this unintended wrong to dairy farmers by recouping as much of the loss as possible. The announcement is an initial step in this effort that will help many producers, but it unfortunately falls significantly short of meeting the needs of dairy farmers nationwide, Mulhern says.
“The arbitrary low limits on covered milk production volume mean many family dairy farmers will only receive a portion of the losses they incurred on their production last year. These losses were felt deeply by producers of all sizes, in all regions of the country, embodying a disaster in the truest sense of the word. Disaster aid should not include limits that prevent thousands of dairy farmers from being meaningfully compensated for unintended, extraordinary losses,” he says.
“Additional work lies ahead to more fully remedy this shortfall for all dairy producers. We very much appreciate USDA’s persistence and efforts to find a way to cover some of these losses using existing authorities, but NMPF represents producers from all regions and of all sizes and believes that losses incurred by producers must be addressed equitably. Consequently, NMPF will work with Congress to seek supplemental funding to close this gap,” Mulhern adds.
NMPF also is continuing discussions about the current Class I mover to prevent a repeat of this problem. “The COVID-19 pandemic may be a once-in-a-lifetime occurrence, but a large spread between Class III and IV milk prices is not, making it necessary to fix the Class I mover and put this problem to rest,” Mulhern says. “We appreciate USDA’s attention to this problem as well as those in Congress who have advocated for addressing this unique loss to farmers and ensuring that it does not happen again.”
In June, Vilsack committed to providing additional pandemic assistance for dairy farmers in an exchange at a hearing with Senate Appropriations Committee Chairman Leahy. Leahy thanked Vilsack for following through on his word.
“This will help to make up for losses suffered by these family farms due to the pandemic and together with the positive adjustments to the Dairy Margin Coverage Program will be good news for farmers go into the fall,” Leahy says.