Dairy farmers are eligible for direct support through USDA’s Coronavirus Food Assistance Program (CFAP). CFAP provides direct financial assistance to agricultural producers, providing them the ability to weather the economic uncertainty caused by COVID-19. USDA is accepting CFAP applications through September 11. Call and set up an appointment with your local USDA Farm Service Agency (FSA) office to determine your eligibility and to apply for assistance.

 

Am I eligible for assistance under CFAP?

CFAP payments are eligible to all dairy operations with milk production in January, February, and/or March 2020, including any dumped milk production during that period. All farmers who produced milk between January and March 2020, including those who went out of business or otherwise stopped producing milk during this period or after, are eligible. Production enrolled in risk management programs, including Livestock Gross Margin, Dairy Revenue Protection, Dairy Margin Coverage or forward contracts, also qualifies for CFAP payments.

 

What is the payment level for milk production?

For dairy, a single payment will be made derived from two funding formulas intended to calculate losses caused by the coronavirus. The first and larger component is calculated from a producer’s certification of milk production for the first quarter of calendar year 2020 multiplied by $4.71 per hundredweight. The second component of the payment is based on a 1.014% increase in that first quarter production, multiplied by $1.47 per hundredweight. Overall, the payment amounts to $6.20/cwt. for a farm’s production in January through March of this year.

 

What other CFAP categories am I eligible for?

Besides milk production, dairy farmers may be eligible for payments under the following categories. Click here for the full list of eligible commodities.

Livestock: Cull cows, Steers, Bull calves, Mature bulls, Cull heifers

Non-Specialty Crops: Corn (including high moisture corn), Sorghum, Soybeans

 

How does the livestock payment affect my dairy operation?

Livestock that are no longer used for dairy production and have entered the beef cattle market, if all other eligibility requirements are met, may be eligible for CFAP and would be categorized accordingly. USDA has provided guidance to assist dairy producers in determining eligibility. The payment rates listed below are all per head.

A single payment for livestock will be calculated using the sum of the producer’s number of livestock sold between Jan. 15 and April 15, 2020, multiplied by the payment rates per head, and the highest inventory number of livestock between April 16 and May 14, 2020, multiplied by the payment rate per head. For more information, visit USDA’s CFAP webpage for livestock.

 

How do payment limits work under CFAP?

CFAP payments are subject to a per-person and legal entity payment limitation of $250,000. This limitation applies to the total amount of CFAP payments made with respect to all eligible commodities. Unlike other FSA programs, special payment limitation rules are applied to participants that are corporations, limited liability companies, and limited partnerships (corporate entities). These corporate entities may receive up to $750,000 based upon the number of shareholders (not to exceed three shareholders) who are contributing at least 400 hours of active personal management or personal active labor.

For a corporate entity:

• With one such shareholder, the payment limit for the entity is $250,000;
• With two such shareholders, the payment limit for the entity is $500,000 if at least two members contribute at least 400 hours of active personal labor or active personal management, or combination thereof, with respect to the operation of the corporate entity; and
• With three such shareholders, the limit is $750,000 if at least three members contribute at least 400 hours of active personal labor or active personal management, or combination thereof, with respect to the operation of the corporate entity.

 

Does money I’ve received this year through the Small Business Administration’s Paycheck Protection Program (PPP) and/or the Economic Injury Disaster Loan (EIDL) program count against the payment limits in the CFAP program?

No. Small Business Administration’s loan programs, including the PPP and EIDL program, are separate from USDA’s coronavirus payments. Farmers can apply for financial assistance through both agencies, and assistance received from one agency should not affect assistance received from the other.

 

Are there special provisions for seasonal producers or organic producers?

There are no special provisions for seasonal dairy producers or organic dairy producers under the current program.

 

How do I apply?

A CFAP Payment Calculator is available to assist with applications. This Excel workbook allows you to enter information specific to your operation to determine estimated payments and populate the application form. Producers interested in filling out the application manually can also download the application form, AD-3114.

Producers self-certify when they apply for CFAP, and documentation is not submitted with the application. But you may be asked for additional documentation to support your certification of eligible commodities, so you should retain the documentation used to complete your application.

FSA staff at local USDA Service Centers will work with farmers to file applications. Applications may be submitted via mail, fax, hand delivery, or via electronic means. Please call your office prior to sending applications electronically. Visit www.farmers.gov/cfap for more information. Applications will be accepted through September 11, 2020.

 

When should I expect to receive my payment?

To ensure the availability of funding throughout the application period, producers will receive 80 percent of their maximum total payment, up to the payment limit, upon approval of the application. The remaining portion will be paid at a later date as funds remain available.

 

Should I expect any additional aid in the coming months?

Congress is considering additional legislation to respond to the significant impacts of the COVID-19 pandemic. The House-passed HEROES Act includes a number of beneficial provisions for dairy farmers, including additional direct payments, and we anticipate that the Senate will begin work on a bill in the coming weeks. NMPF will keep dairy farmers updated about any subsequent aid made available.

Dairy farmers and their allies are encouraged to spend a few minutes customizing our call-to-action letter urging Congress to prioritize dairy assistance in its next coronavirus assistance package.

 

Visit www.farmers.gov/cfap for additional information about CFAP and www.nmpf.org/coronavirus for a full listing of coronavirus resources for dairy farmers and co-ops. Please email info@nmpf.org with questions or comments about CFAP and how it is being administered in your local office.

The 40 contracts CWT member cooperatives secured in May added 5.1 million pounds of American-type cheeses, 1.4 million pounds of butter, 456,357 pounds of cream cheese, and 1 million pounds of whole milk powder to total CWT-assisted sales in 2020 This brings the total milk equivalent for the year to 532 million pounds on a milkfat basis. These products will go customers in Asia, Europe, and the Middle East, and will be shipped May through September.

CWT-assisted 2020 dairy product sales contracts total 20.8 million pounds of cheese, 6.2 million pounds of butter, 2 million pounds of anhydrous milkfat (AMF), 2.9 million pounds of cream cheese and 16.8 million pounds of whole milk powder. All this product is scheduled to ship in the first nine month of 2020.

Exporting dairy products is critical during these challenging times to the viability of dairy farmers and their cooperatives across the country.  Whether or not a cooperative is actively engaged in exporting cheese, butter, anhydrous milkfat, cream cheese, pasteurized process cheese, or whole milk powder, the moving products into world markets is essential. CWT provides a means to move domestic dairy products to overseas markets by helping to overcome U.S. dairy’s trade disadvantages.

The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT will pay export assistance to the bidders only when export and delivery of the product is verified by the submission of the required documentation.

All cooperatives and dairy farmers are encouraged to add their support to this important program. Membership forms are available at http://www.cwt.coop/membership.

The Fourth annual FARM Evaluator Conference will go virtual this year, unfolding in two sessions on July 21^st and 22^nd.

The FARM team is excited to provide this opportunity, which will allow more evaluators to participate from across the country. Focused over the years on professional development and networking, this year’s conference will include NMPF Communications Team members, Alan Bjerga and Theresa Sweeney-Murphy, to lead the group in media training.

Additionally, a panel featuring the veterinarian community, extension and beef industries will share their success in broad producer and stakeholder engagement related to the FARM Program.  Other topics will include creating a positive on-farm culture, updates on the dairy industry’s sustainability initiatives and key areas that continue to give evaluators valuable expertise to share with their producers.

Cooperative management and staff that are not FARM evaluators who are interested in attending can email dairyfarm@nmpf.org to register for the event.

The National Milk Producers Federation’s virtual home, nmpf.org, continued to evolve to meet the member challenges of the coronavirus crisis, as web traffic sustained gains that began in March and added new features.

Traffic from mid-March through mid-May was nearly triple that of the previous year, as the site’s dedicated coronavirus resource page gained nearly as many page views as the NMPF home page, according to Google analytics data. Also, the site saw its three most-visited pages of the year during that period, with a May 4 release giving details on how dairy farmers could sign up for a federal small-business loan program the most-viewed NMPF news release ever.

NMPF continued to keep members updated on the latest federal policy developments through its coronavirus toolbox releases. And on June 1, World Milk Day, nmpf.org unveiled a new website section devoted to original content sharing dairy’s story, featuring an expanded Farmer Focus section to spotlight members, a relaunched Dairy Defined series of essays and podcasts, and NMPF President and CEO Jim Mulhern’s CEO’s Corner column.

With reliable access to food jeopardized in much of the world due to COVID-19, NMPF is working to ensure dairy products with key nutrients necessary for child development and adult health are provided to those who need it most.

The presidents and CEOs of the nation’s leading dairy organizations – NMPF, the U.S. Dairy Export Council and the International Dairy Foods Association – sent a letter May 18 urging Agriculture Secretary Sonny Perdue to use all tools at his disposal to “ensure high-quality, nutritious U.S. dairy products are made available to our international neighbors in need.”

Dairy farmers are facing some of the steepest losses of all major U.S. agricultural producers, with losses potentially reaching $8.2 billion, based on a comparison of current USDA projections with pre-crisis estimates. U.S. dairy distribution as international food aid would provide dairy products to those who badly need it while providing an outlet for domestic farm goods that have been displaced in the marketplace by the COVID-19 crisis.

NMPF joined with the U.S. Dairy Export Council (USDEC) in May to spearhead a joint message from farmer organizations and dairy processors throughout the Americas warning the European Union against prolonging already challenging market conditions by repeating the inventory-building and extended market-price suppression it engaged in just a few short years ago.

These market-distorting practices in the past have caused significant harm to the U.S. dairy industry as well as the broader global dairy market.

EU interventions in 2016-17 led to it holding as much as the equivalent of 16 percent of the global skim milk powder (SMP) market in government storage. It then released the product on the world market over the next two years, unfairly harming the global dairy industry by undercutting prices.

This time, with the EU poised to begin government-financed intervention purchases of SMP and butter, dairy organizations from Argentina, Belize, Brazil, Chile, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Uruguay and the United States issued a press release urging the EU to immediately change course and “act now to put a long-term plan into place regarding how to handle its government-incentivized stockpiling given that the EU has a demonstrated history of dumping intervention purchases in a way that disrupts the world dairy market.”

Exporting large quantities of government-purchased SMP and butter at below-market rates onto the world market would artificially distort prices for an extended period and displace commercial competition. NMPF and the dairy coalition instead are urging the EU to adopt measures that further spur consumption within the EU and encourage its producers to implement appropriate production practices to survive during this difficult time.

“Farmers and dairy processors in our countries and many others around the globe are already in the fight of their lives, working hard every day to help keep the world well-nourished through this crisis,” the dairy organizations said. Without an EU commitment to avoid distorting global markets, “the more farmers and processors outside the EU could be forced to close their doors.”

The Dairy Margin Coverage (DMC) program margin for April was $6.03 per cwt., a drop of $3.13 per cwt. from March. A $3.60 per cwt. lower milk price, coupled with a $0.47 per cwt. lower feed cost calculation, mostly due to lower corn and soybean meal prices, produced the drop. The April margin will generate a payment for that month to all producers currently enrolled in the program for margin coverage levels from $6.50 per cwt. up through $9.50 per cwt.

The steep drop in the April margin has been long anticipated by the dairy futures, which currently indicate another drop to around $5 per cwt. in May. However, as bad as this year’s second quarter will be for the nation’s struggling dairy farmers, the recent futures are continuing to show a considerably brighter light at the end of the current very dark pandemic tunnel. As recently as the beginning of May, the outlook was for a very slow and painful recovery for margins throughout the remainder of 2020, with June being as bad as May and the margins remaining below $9.50 per cwt. through the end of the year. But just a month later, the outlook now shows the June margin recovering to around $8.50 per cwt. and the margins from July through December reasonably likely to remain above $9.50 per cwt. The May 28-based forecast by USDA’s DMC Decision Tool is shown in the chart below.

The DMC information page on NMPF’s website offers a variety of educational resources to help farmers make better use of the program. NMPF also posted a new video explaining how farmers can benefit from the DMC.

President Donald Trump and Agriculture Secretary Sonny Perdue announced May 19^th the details of the Coronavirus Food Assistance Program, which will provide $16 billion in direct payments to producers including dairy farmers. NMPF voiced its appreciation for dairy assistance.

“We welcome this federal dairy assistance, which is critically needed as the nation’s dairy farmers face an unprecedented market collapse,” said Jim Mulhern, president and CEO of NMPF, the largest U.S. dairy-farmer organization. “USDA’s plan will provide relief to many farmers, and we appreciate the department’s adjustments to payment limits, an issue which we raised prior to the department finalizing this package.”

Still, even with this badly needed support, additional aid will be essential to reflect the full losses that dairy farmers – who with projected losses topping $8 billion are among the hardest-hit — and other agricultural sectors have faced from the coronavirus crisis. NMPF will continue to work with administration officials and members of Congress to achieve adequate aid for all dairy producers.

Details on the assistance for dairy:

CFAP will calculate a single payment derived from two funding formulas intended to calculate losses caused by the coronavirus in 2020. The first, and larger, component of the assistance is calculated from a producer’s certification of milk production for the first quarter of calendar year 2020 multiplied by $4.71 per hundredweight. The second component is based on a 1.014% increase in that first quarter production, multiplied by $1.47 per hundredweight. These two payment components are equivalent to a single payment equal to first quarter production multiplied by $6.20 per hundredweight.

USDA will make an initial payment of 80 percent of an eligible participant’s total benefit. The remaining portion of a farmer’s payment will be paid later as funds remain available.

CFAP payments are subject to a per-person and legal entity payment limitation of $250,000, a significant improvement over an earlier $125,000 limit that NMPF fought hard to change. This limitation applies to the total amount of CFAP payments made with respect to all eligible commodities. However, some entities may be eligible to receive up to $750,000 in payments depending on their incorporation and number of shareholders that contribute substantial labor or management to the operation of the entity.

 

Food Box Boosts Dairy

The direct assistance to farmers follows USDA’s acceptance of an initial round of contracts to buy $317 million in dairy products as part of its Farmers to Families Food Box Program, which is bolstering both milk prices and dairy supply chains.

Mulhern applauded USDA’s planned purchases of milk and dairy products for distribution through food banks and other non-profit organizations. “All that USDA can do to buy and quickly distribute dairy products to those in need will immediately help lift depressed markets,” he said.

In addition to the White House and USDA, NMPF thanked the many members of Congress who have urged USDA to provide robust assistance to dairy and will be essential to achieving additional assistance. “A strong bipartisan, bicameral, nationwide push from members of Congress will be necessary to enact the significant dairy aid package needed for farmers to survive,” Mulhern said. “We thank our champions in Congress for their tireless advocacy and hope more will join as we work together to preserve dairy farms and support the U.S. economy.”

 

The Next Round

Work is already beginning in Congress on the next round of relief legislation. The HEROES Act, passed by the House of Representatives last week, includes important provisions to provide relief to dairy producers, and the Senate is slated to begin work on a measure in the coming weeks.

The HEROES Act includes multiple provisions to provide additional direct relief to dairy farmers based on the losses they face this year. The bill also includes NMPF-advocated provisions to strengthen opportunities for milk and dairy product donations to help farmers and consumers. Finally, the package provides important nutrition assistance to the millions of American families and households who are facing food insecurity during this difficult time.

NMPF looks forward to continuing to work with Congress and the Trump Administration to provide important relief to all dairy farmers as this process continues.

Ready or not, here we come.

States across the U.S., in varying degrees of caution, are reopening for business after weeks of severe restrictions caused by the worldwide COVID-19 outbreak. Each phase of each reopening is a milestone of sorts – but of what, we can’t yet be certain.

Will the return to business also bring a resurgence of infections and deaths, leading to another round of lockdowns? Might better summer weather, a greater understanding of effective social distancing, and new therapies make the disease more manageable? Might Americans simply adjust to heightened levels of risk to get back to “business as usual”? Or will “normal” return very slowly with extensive precautions against group gatherings, shopping, dining out and the like?

These are all unknowns. But they will be crucial to the outlook for this nation – and our corner of it, the dairy industry – in coming months.

Economically, the revival of business is obviously good news, especially for milk producers and processors. The sudden loss of foodservice demand that tore a gaping hole in dairy supply chains is slowly being restored. Widespread adoption of base plans by dairy cooperatives has blunted increases in dairy herds and production, helping better align supplies with demand. Large federal purchases of dairy products for much-needed food assistance are now underway.

All of this is helping prices. After crashing to a $1.00 a pound floor in mid-April, cash cheese markets have risen substantially. The futures-based milk price outlook for 2020, meanwhile, has improved by about $1.50 per hundredweight in the past month. Dairy farmers unfortunately still have a few tough months to endure of milk prices that are lower than what they expected before the pandemic struck. But the light at the end of the tunnel appears real, encouraging the resilience that will be necessary to survive this crisis and thrive afterward.

These brighter spots in the dairy economy have been accompanied by meaningful and appreciated relief from the federal government thanks to legislation enacted by Congress and implemented by USDA. At NMPF we have led the producer community’s efforts to achieve this support, and the more than $4 billion infusion of federal assistance we’ve worked to secure will provide helpful relief into our industry. Such support is a credit both to dairy’s importance and the tireless efforts of dairy’s advocates.

USDA purchase announcements have contributed significantly to product-price rallies in recent weeks. The dairy producer direct payments in the Coronavirus Food Assistance Program (CFAP), made possible by the CARES Act, will provide valuable relief. The potential for up to $6.20/cwt. payments on a producer’s Q1 milk production will greatly improve many balance sheets. So will a substantial easing of payment limitations, the cap for which was increased from the initially proposed $125,000 to potentially $750,000 after we and others raised significant concerns.

It’s also important to remember that, although this crisis wasn’t foreseen when the current farm bill was approved in 2018, the new Dairy Margin Coverage program is proving to be a substantial source of relief to many farmers, showing that an initiative created to manage unusual circumstances has done exactly that.

Current projections indicate that the DMC program will pay producers who signed up for maximum coverage of $9.50/cwt. at least through June, after which margins may recover enough to rise above that level. This will provide an additional safety net to those producers in addition to the CFAP assistance they, and all other dairy farmers, will be eligible to receive.

These dairy policy tools we’ve worked to create have been one of several silver linings we’ve witnessed among the clouds hanging over us. Increased retail demand for milk and dairy products that, tellingly, outpace gains in overall grocery-store purchases, show that consumers support our industry’s hard work and nutritious products, despite years of propaganda from our opponents saying otherwise.

Most importantly, the dairy community, despite extreme duress, has not lost its ability to serve the public. Every farmer, every processor, and every dairy employee should be thanked for the essential work provided during these difficult times.

More needs to be done, of course. As spring gives way to summer and economies evolve in response to the pandemic in our midst, we at NMPF will continue to serve our members in any way we can, from advocating for producers on Capitol Hill and in federal agencies to serving as the go-to informational medium for our community.

As the Twitter hashtag reminds us, #dairyneverstops. We’re proud to be part of that, and we know that dairy farmers and the entire industry will remain resilient as America follows its complex path to reopening – wherever that path may lead us.

While no one can say with certainty that the slow re-openings across the U.S. mark the beginning of the end of the COVID-19 crisis, it’s clear these attempts to return to a more normal existence mark the end of the beginning. The world is an experiment, both of science and of societies. Outcomes will remain uncertain for months.

But data can help draw a few conclusions. One from the consumer sector is that, in times of uncertainty, people turn to the bedrock items that they know will nourish themselves and their families. And dairy is an important choice.

Retail-sales as reported by consumer market researcher IRI over the past three months show that consumers have reacted to the coronavirus crisis first by stocking up on dairy, then by continuing to buy milk and other products at disproportionately high levels.

From March 8 to March 22, as stay-at-home orders and business closures proliferated nationwide, dairy products flew from store shelves. Milk sales were 43 percent higher than during the same period a year earlier. Yogurt rose 31 percent. Ice cream sales gained 40 percent and cheese 76 percent. Butter sales more than doubled during the same period.

Gains have continued into the “new normal,” and in fact take up more of a consumer’s retail dollar than they did during the panic peak. Retail dairy sales from late March through May 17 remain 25 percent higher than a year ago, while overall grocery sales during that same period are only up 14 percent — meaning that at a time when people are relying more on grocers to fill their needs, they’re relying on dairy significantly more than they are on other products.

That vote of consumer trust shows every sign of continuing for the foreseeable future – and that shouldn’t be a surprise, really. When milk is already in 94 percent of U.S. households, it follows that it would be especially important as families choose how to weather a storm. This real-world, real-time affirmation of dairy’s value can’t help but inspire the entire dairy community to keep working and maintain resilience through whatever comes next. Dairy owes a deep debt of gratitude to consumers whose support has helped carry farmers through this crisis.

Of course, consumer faith has been only one part of dairy’s story in the past few months. Pre-coronavirus, about half of all dairy sales came from outside the home. Even as retail consumers increased dairy buying, sales to restaurants, schools and cafeterias plunged. That turbulence prompted sharp declines in the USDA’s forecast for milk prices for 2020. That’s been a big reason why federal assistance for dairy farms has been so important.

But even that story is brightening. A recent price rally is changing the outlook from mortifying to merely difficult – still cold comfort for many producers, but more manageable in a way many wouldn’t have dared to wish for even one month ago. Restaurant sales are slowly returning, and federal aid has provided a meaningful boost to bottom lines, even as signs of stress will still need to be monitored and additional aid will be necessary.

The past few months have been difficult for dairy, as it has for everyone. The next few will be as well. But dairy is resilient. Its value to consumers is beyond dispute, and early signs of recovery give reasons for hope. Today is World Milk Day. there remains much to overcome, there is also much to celebrate. Raise a glass.

Far-reaching dairy sustainability goals, including a pledge for net-zero emissions by 2050, go hand-in-hand with economic opportunity for dairy farmers, said Krysta Harden, executive vice president, global environmental strategy, for Dairy Management Inc. and Innovation Center for U.S. Dairy, in an NMPF podcast released today.

“The very first rule of sustainability is, the farmers are sustainable,” said Harden, a former Deputy Secretary of Agriculture. “There’s no one-size-fits-all, there’s no plan that fits all. And every farmer is going to make that business decision. I do believe over time we’re going to develop new markets, high-value markets.”

Harden also discussed how DMI has responded to the coronavirus crisis and how immediate needs are being balanced with the long-term interests of dairy. To listen to the full discussion, click here. You can also find this and other NMPFs podcasts on Apple Podcasts, Spotify,  SoundCloud and Google Play. Broadcast outlets may use the MP3 file. Please attribute information to NMPF.