In this column, Progressive Dairy summarizes issues in the news and attempts to describe how they might affect dairy farmers.
Items in this column are compiled from Progressive Dairy staff news sources. Send news items to Dave Natzke.
PANDEMIC ASSISTANCE INITIATIVE
What happened?
U.S. Agriculture Secretary Tom Vilsack announced a new $12 billion initiative – the USDA’s Pandemic Assistance for Producers. The USDA initiative is designed to reach a broader set of producers than in previous COVID-19 aid programs and makes additional payments for some cattle and crop producers.
What’s next?
Among the provisions of the initiative, the Coronavirus Food Assistance Program (CFAP) will be reopened to provide additional payments for eligible cattle and some crop producers. While the application period opens April 5, eligible producers will not need to reapply or submit a new application if they submitted a previous CFAP application. FSA will automatically issue payments based on cattle inventories enrolled under CFAP 1 and the eligible crop acres included in their CFAP 2 applications.
Bottom line
There were no additional direct payments outlined for dairy producers. However, without providing details, the USDA announcement said additional support for dairy farmers would come “through the Dairy Donation Program or other means.”
The $400 million Dairy Donation Program is designed to provide dairy products to food-insecure households while adding support to dairy prices by removing excess products from the market. This program creates a mechanism for eligible dairy processors to partner with nonprofit organizations to distribute food to low-income individuals. Those partnerships may apply for and receive reimbursements to cover milk-related expenses for the dairy product donations. Retroactive reimbursement may be eligible for donations made in 2020. The National Milk Producers Federation (NMPF) said it would work with the USDA to activate that program.
Producers of 2020 price trigger crops and flat-rate crops are eligible to receive a payment of $20 per eligible acre of the crop. “Price-trigger” crops under CFAP 2 include alfalfa, corn, soybeans and about 40 others. However, most hay and forage crops remain ineligible for payments.
Payment rates for cattle are based on the number of cattle in inventory between April 16 and May 14, 2020. Also, contract producers left out of previous CFAP programs are now eligible for payments.
One payment area remaining to be addressed covers livestock euthanized due to market disruptions. Last December’s COVID-19 relief bill directed the USDA to make payments to producers for those losses. However, this announcement did not outline reimbursement measures, which will be released at a later date.
A large component of the USDA Pandemic Assistance for Producers initiative is to reach small and socially disadvantaged producers who previously did not receive financial assistance. The USDA will cooperate with grassroots organizations with strong connections to socially disadvantaged communities to ensure they are informed and aware of the application process.
FARM WORKFORCE MODERNIZATION ACT
What happened?
A bill seen as a step to address dairy farm labor shortages was approved in the House of Representatives on March 18, then referred to the Senate Judiciary Committee on March 22.
What’s next?
Among major provisions for dairy, the bill would provide a path to legalization for current immigrant farm workers (and their spouses and minor children) and expands the H-2A foreign guest worker program to accommodate the year-round needs of livestock farmers. This bill would also establish a mandatory, nationwide E-Verify system for all agricultural employment. The Senate is on recess until the week of April 12.
Bottom line
Proponents of the bill include major dairy and other agricultural organizations. Approved in the House on a 247-174 vote, the bill is expected to face more opposition in the Senate.
RFID EARTAG REQUIREMENT
What happened?
The USDA’s Animal and Plant Health Inspection Service (APHIS) announced it won’t implement a rule requiring radio frequency identification (RFID) as the official eartag for use in interstate movement of cattle by 2023. However, the agency said it is keeping the rule-making process open.
What’s next?
All current APHIS-approved methods of cattle identification may be used as official identification until further notice. The APHIS release said the agency “continues to believe that RFID tags will provide the cattle industry with the best protection against the rapid spread of animal diseases and will therefore continue to encourage the use of RFID tags while rule-making is pending.”
Bottom line
In April 2019, APHIS originally proposed a timeline to transition to RFID eartags, including a requirement that all cattle previously tagged with metal eartags had to be retagged by Jan. 1, 2023.
Then, under a new proposal published in July 2020, RFID tags would have still been required by Jan. 1, 2023, but cattle previously tagged with metal eartags would be grandfathered in, and the metal tags would be allowed for the remainder of their lifespan, with no retagging requirement. Public comments on that proposal closed in October 2020.
RETAIL DAIRY SALES
What happened?
Consumers made fewer trips to grocery stores in February but filled their carts a little higher. Those fuller carts included more dairy, according to a monthly update from the International Dairy Deli Bakery Association (IDDBA).
What’s next?
February 2020 was the last month of “normal” consumer retail grocery store behavior prior to the onset of the COVID-19 pandemic. Looking ahead, March 2021 sales comparisons will go up against the two biggest weeks in the history of grocery retailing and will likely turn negative versus year-ago levels. However, based on the pattern of the last few months, sales are likely still going to track ahead of the baseline of 2019. An early Easter (April 4) should also help boost end-of-month March retail sales.
Food service dairy sales are also increasing as coronavirus-related restrictions begin to ease.
Bottom line
Compared to that baseline, February 2021 retail dairy sales were up nearly 11% on a value basis and about 5% on a unit basis, with sales volume up in nearly all product categories. In many cases, volume increases outpaced unit sales increases, an indication that shoppers are buying larger packages of dairy products.
Based on Information Resources Inc. (IRI) U.S. grocery store year-over-year sales data, February 2021 sales of natural cheese sales were up 16.8% and 14.9% on a value and volume basis, respectively. Sales of fluid milk were up 6.2% and 3.1%; sales of butter rose 10.9% and 8.5%.
USDA DAIRY PURCHASES
What happened?
The USDA held a comment period to gather opinions and information regarding the Farmers to Families Food Box program. The NMPF urged the USDA to maintain dairy product purchases as part of future federal nutrition assistance programs, while also recommending more balance in those purchases to minimize farm-level milk price distortions.
What’s next?
The comment period closed March 31. It’s likely the USDA will use the feedback to overhaul or restructure the program or craft any future food assistance programs.
Bottom line
Progressive Dairy has covered the impact of the Farmers to Families Food Box program on dairy markets. With emphasis on cheese purchases, the program created extreme volatility in Federal Milk Marketing Order (FMMO) milk class process, leading to depooling and negative producer price differentials.
Jaime Castaneda, NMPF senior vice president for policy strategy and international trade, highlighted the nutritional and economic value delivered by dairy products in federal food assistance programs. He noted, however, that disparity in product purchases “caused tremendous market volatility and unusual pricing challenges throughout the country, including extreme price differentials between neighboring farms.”
