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Federal Dairy Relief Welcome, But More Will Be Needed

May 1, 2020

As Americans – and American dairy producers – begin the third month of strain caused by the outbreak of COVID-19 in the U.S., everyone has been forced to adapt to a seemingly endless uncertainty.

But, just as lockdown orders across the nation will inevitably ease, we are also beginning to understand some of the details of our present circumstances, and what our future may look like. Outlines are becoming clearer. That doesn’t mean they look pleasant; but it does make problems more manageable, and in some instances, at least, provides some hope.

In the second half of April federal officials and lawmakers outlined two major pieces of the policy puzzle that will impact dairy’s future: USDA’s plan for agricultural stimulus, and a reaffirmation of agriculture’s eligibility for small-business loans under a crucial program meant to keeps businesses afloat.

First, the good news on the USDA plan: The department allocated needed funds to several of the commodities that have been hardest hit by the pandemic. Up to $2.9 billion in payments have been promised to dairy producers. This is an important start on helping address the destruction of demand from foodservices business loss. USDA has also pledged $1 billion in dairy-product purchases for food-distribution programs – an important mechanism that could help buoy dairy markets while helping consumers in need.

USDA’s efforts are important and will provide help to thousands of dairy farms. But this assistance alone won’t meet the challenge before us. Specific concerns we have on the proposals that have been announced to date include:

  • USDA’s front-loading its damages calculations toward the early months of 2020, before dairy farmers felt their deepest losses;
  • Payment caps that would severely limit the program’s aid for dairies that produce more than half the nation’s milk;
  • Loss calculations that don’t reflect the full damage dairy will feel going forward, which USDA’s own calculations in its April WASDE report peg at roughly $8.5 billion;
  • A product-purchase program that may not purchase enough dairy to help bolster markets or meet unprecedented food-bank demands.

We continue to engage with USDA and allies in Congress to address these, and other, problems as we seek relief adequate to the scale of damage, and we are confident that many of these concerns can be addressed.

The replenishment of small-business loans, and agriculture’s specific inclusion in them, was another April achievement. The Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loans (EIDLs) included in the $2 trillion response package Congress passed in early April had been both a hope and a frustration for dairy producers, who because of administrative issues didn’t have equitable access to the programs. Working with allied stakeholders, members of Congress from both parties, and administration officials, NMPF staff helped make certain that PPP and EIDLs are properly administered, improving dairy-farm access to these programs. The second round of signups, opened in late April, were more successful for dairy, and we will work for their continued effectiveness.

As is always the case, government programs alone are not a solution. But recent initiatives are far from the final word in aiding dairy during this time of need. NMPF will continue its efforts to help the dairy producer community in this challenging environment.

It is a certainly – perhaps the only certainty – to say the future will be challenging. Economic forecasts call for darker days before lighter ones, and every day that we’re further from the old normal, the clearer it appears that the new normal won’t look exactly like the past. Social distancing will continue even after cities and states re-open. Many restaurants won’t reopen at all, and the foodservices business could take months to recover.

But dairy never stops. And like the farmers and cooperatives we serve, we continue to forge ahead, to advance creative solutions, to work to make the best of the policy process, and to keep improving upon it tomorrow. Policy progress has occurred. NMPF will continue to do all we can to further it.