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More Work Begins When New Dairy Programs Take Effect

October 4, 2021

Achieving policies that benefit the nation’s dairy farmers is one of the most gratifying parts of working on their behalf. Since the COVID pandemic began in 2020, there has been no shortage of federal acronyms – CFAP, PPP, EIDL, etc. – for programs to help family farms through difficult times. But these initiatives are also complex and imperfect, which is why once a program takes effect, the work has often only begun.

In dairy, USDA is currently implementing two important new initiatives – the Dairy Donation Program or DDP and the Pandemic Market Volatility Assistance Program or PMVAP – while another major program, Dairy Margin Coverage, prepares for 2022 signup. Even as we’re still working to improve them, it’s crucial over the next few months that the dairy community understand and benefit from these programs. As always, we at NMPF will do our best to both lead and assist as these important initiatives roll out.

The Dairy Donation Program, enacted by Congress late last year, represents a very important advance for the industry. We’ve been proud to shepherd it through the legislative and regulatory process, from proposing the initial idea to encouraging its use for all forms of dairy products, a change from the previous Milk Donation Reimbursement Program, which provides limited reimbursements for certain fluid milk product donations. We’re now actively working to help implement DDP, both through our partnership with Feeding America and by informing our members about the program on everything from how to set up relationships between dairy cooperatives and vendors to the ins and outs of how some processing costs will be covered.

It’s important to remember that donations can be reimbursed retroactive to Jan. 1, 2020, and that for now, only the first $400 million of donations will be compensated, making it smart to begin relationships with food banks and other charities that can receive and donate dairy foods. Although USDA expectations are that the full amount of funding will be used over several years, the sooner we demonstrate the benefits of DDP by exceeding USDA’s expectations, the earlier will be able to work to pursue additional resources.

Strengthening ties between dairy community farmers and the cooperatives they own with those helping families who will benefit by receiving dairy products is a great win-win, as it supports the resilience of our communities and ensures that everyone benefits from nutritious dairy products.

The Pandemic Market Volatility Assistance Program (PMVAP) is an important – if still incomplete — gain for dairy. We worked closely with USDA to demonstrate that last year’s price volatility harmed farmers and required a remedy, and PMVAP is an important first step toward recouping the $750 million farmers lost because of the 2018 Farm Bill’s change to the Class I mover that needs to be followed by an eventual fix to the mover itself. It wouldn’t have happened without months of careful consultation between NMPF and USDA that led to the program, which restores $350 million of those losses.

That amount, to be sure, doesn’t fully address the past losses, nor does it prevent future shortfalls. Nor does the program’s approach to allocating funds adequately account for differing farm sizes or regional impacts. But for all its faults, it’s important that farmers and cooperatives maximize PMVAP’s benefits, even as we work with advocates in Congress to obtain additional assistance. Milk handlers who will distribute the funds are already in discussion with USDA on how to do it, and farmers should receive payment during this year’s fourth quarter. Meanwhile, we are working with our members to secure the necessary improvements, and our Economic Policy Committee is discussing a more fundamental fix to various FMMO issues, including the Class I problem itself.

Finally, farmers should be on the lookout over the next few weeks for information on 2022 signup for the Dairy Margin Coverage program, the main federal safety net for dairy farmers that arose from efforts we and the dairy community made to improve assistance in the 2018 farm bill. DMC has something for every producer – inexpensive catastrophic-level coverage for larger producers and cost-effective margin insurance for everyone’s first five million pounds of milk annually. For this year’s signup, USDA improvements to the feed-cost formula and the use of updated production data – both of which fulfill longstanding NMPF goals – make the already compelling case for DMC even stronger, with payments that this year so far are averaging out to 7 percent more than they otherwise would have been just from the alfalfa-price adjustment alone.

Working to strengthen dairy farmers is why we’re here, and we’re proud of these gains. But the puzzle pieces are many, and the picture isn’t complete until they’re properly put together. We’re excited to help our members and the dairy community with assembly over the next several months, and beyond.