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NMPF Statement on USDA Dairy Announcement

August 19, 2021

From NMPF President and CEO Jim Mulhern:

“NMPF is grateful to Agriculture Secretary Tom Vilsack and his team for working hard to provide needed support to dairy farmers. This includes implementing the congressionally-enacted Dairy Donation Program, which will foster partnerships between dairy organizations and food banks to help combat food insecurity and minimize food waste, as well as the Supplemental Dairy Margin Coverage program to reflect modest increases in farm milk production history. We also appreciate USDA’s work to incorporate the premium-quality alfalfa price into the Dairy Margin Coverage program; this will improve the DMC feed cost formula and enhance the dairy baseline ahead of the next farm bill, to the betterment of all farmers.

“While we will comment more fully on those initiatives once details are available, today’s announcement includes the Pandemic Market Volatility Assistance Program to compensate for some of the damage resulting from the pandemic. NMPF asked the department to reimburse dairy farmers for unanticipated losses created during the COVID-19 pandemic by a change to the Class I fluid milk price mover formula that was exacerbated by the government’s pandemic dairy purchases last year.

“When Congress changed the previous Class I mover, it was never intended to hurt producers. In fact, the new mover was envisioned to be revenue-neutral when it was adopted in the 2018 Farm Bill. However, the government’s COVID-19 response created unprecedented price volatility in milk and dairy-product markets that produced disorderly fluid milk marketing conditions that so far have cost dairy farmers nationwide more than $750 million from what they would have been paid under the previous system.

“NMPF has been working on approaches to right this unintended wrong to dairy farmers by recouping as much of the loss as possible. Today’s announcement is an initial step in this effort that will help many producers, but it unfortunately falls significantly short of meeting the needs of dairy farmers nationwide. The arbitrary low limits on covered milk production volume mean many family dairy farmers will only receive a portion of the losses they incurred on their production last year. These losses were felt deeply by producers of all sizes, in all regions of the country, embodying a disaster in the truest sense of the word. Disaster aid should not include limits that prevent thousands of dairy farmers from being meaningfully compensated for unintended, extraordinary losses.

“Additional work lies ahead to more fully remedy this shortfall for all dairy producers. We very much appreciate USDA’s persistence and efforts to find a way to cover some of these losses using existing authorities, but NMPF represents producers from all regions and of all sizes and believes that losses incurred by producers must be addressed equitably. Consequently, NMPF will work with Congress to seek supplemental funding to close this gap.

“NMPF also is continuing discussions about the current Class I mover to prevent a repeat of this problem. The COVID-19 pandemic may be a once-in-a-lifetime occurrence, but a large spread between Class III and IV milk prices is not, making it necessary to fix the Class I mover and put this problem to rest.

“We appreciate USDA’s attention to this problem as well as those in Congress who have advocated for addressing this unique loss to farmers and ensuring that it does not happen again.”