Minnesota Milk Producers Propose $9/cwt COVID Payment
April 9, 2020
The Minnesota Milk Producers Association (MMPA) is proposing a $9/cwt payment to dairy producers based on 100% of their March 2020 milk production to compensate farmers for COVID-19 market disruptions.
“Minnesota Milk concurs with many of the points of the National Milk Producers Federation-International Dairy Foods proposal…. Specifically, we support direct aid to dairy farmers in this time of need, and Minnesota Milk believes [our] Dairy CORE (COronavirus REcovery) Program eliminates many potential pitfalls,” says Lucas Sjostrom, MMPA Executive Director.
“We support a $9/cwt payment based on March milk production to provide an immediate infusion to every dairy farmer in the United States without distorting the market,” he says.
The proposal is to issue a lump sum payment in April. The payment would be based on 100% of March production, but represents a $3/cwt payment for April, May and June. Example: If a dairy farmer shipped 1 million pounds of milk in March, he would receive a payment of 3 X $3/cwt X 10,000 cwt = $90,000. In June, the situation could be reassessed to determine if another round of payments is required for the third quarter.
“If creameries are assured that their producers have received a large, one-off direct payment, they will be more empowered to implement situation-adjusted, effective marginal incentives to right-size their milk supply,” says Sjostrom. “As COVID-19 situation improves in May or June, milk buyers can immediately adjust their milk supply management programs to ensure no supply chain bottlenecks are artificially created by new government programs.”
Sjostrom says Rep. Collin Peterson (D., Minn.), chairman of the U.S. House Agriculture Committee, is supportive the CORE Program. The American Dairy Coalition has also endorsed the program.