In an expansion of its pandemic portfolio, the Biden administration said it would pay an estimated $350 million to dairy farmers to offset lower milk prices caused by market abnormalities during the second half of 2020. The payments will benefit farms with smaller herds the most.
Agriculture Secretary Tom Vilsack said the new Pandemic Market Volatility Assistance Program (PMVAP) “is the first step” by the USDA to deliver $2 billion “to help the dairy industry recover from the pandemic and be more resilient to future challenges.”
Yet to be implemented were a $400 million program to donate dairy products to food banks and a $580 million infusion of funds to provide more assistance to small and medium-size milk producers through a dairy subsidy program called Supplemental Dairy Margin Coverage (SDMC).
“The market volatility payments will compensate for some of the damage resulting from the pandemic,” said Jim Mulhern, Chief Executive of the National Milk Producers Federation (NMPF). Dairy farm revenue was $750 million lower than expected due to “disorderly fluid milk marketing conditions” that resulted from Trump-era responses to the coronavirus and a 2018 Farm Bill revision in the dairy support formula.
“This announcement unfortunately falls short of meeting the needs of dairy farmers nationwide by stinting on aid to larger operations,” said Mulhern. “NMPF will work with Congress to seek supplemental funding to close the gap.”
The market volatility payments will cover 80% of the revenue difference per month from July through December of last year, based on annual production of up to 5 million gallons, roughly the milk produced by a 210-cow herd. Payment rates will vary by region, “based on actual losses on pooled milk related to price volatility,” said the USDA. The money will flow through independent handlers and cooperatives to reach farmers.
Nearly six of every 10 gallons of U.S. milk comes from dairy farms with more than 1,000 cows, according to a 2019 Rabobank report. The largest herds are in the West in contrast to the smaller herds in the traditional dairy states of the Midwest and Northeast. California is the top dairy state, far ahead of former leader Wisconsin.
The USDA has committed $6 billion in pandemic assistance to agriculture since March 2021. Some $572 million of it has been paid directly to producers since the USDA reopened the aid application window on April 5.
Dairy farmers have received more than $3 billion, or about $1 of every $8, of the $24.4 billion disbursed to farmers and ranchers since coronavirus payments began in May 2020.
EDITOR’S TAKE:
Although these various assistance programs may not close the “gap” entirely, they will go a long way towards making dairy farmers “whole”. This should be very welcome news to dairy producers across the U.S. The funds will help cover operating costs which resulted from no fault of their own, circumstances completely beyond their control. Ok, that means dairy farmers will have some extra funds available. Perhaps a new truck would be in order. NOW would be a great time to contact them – you are after all a CAD member with great training and interest in Agriculture and you do offer AgPack!
