In this column, Progressive Dairy summarizes issues in the news and attempts to describe how they might affect dairy farmers. Look for more extensive background and details at Progressive Dairy.
Items in this column are compiled from Progressive Dairy staff news sources. Send news items to Dave Natzke.
FMMO REFORM
What happened?
Meeting March 8-9, the National Milk Producers Federation (NMPF) board of directors has approved a “deliberate” approach toward federal dairy policy reform, attempting to build consensus among all dairy herd sizes and regions. NMPF’s Economic Policy Committee has been conducting analysis and engaging with farmers regarding the Federal Milk Marketing Order (FMMO) system since last fall.
What’s ahead?
“We may take the rest of this year to get this all done and get it right,” said Jim Mulhern, NMPF president and CEO.
Bottom line
Any movement toward reforming the FMMO system isn’t likely to happen soon.
“If we can keep a spirit of collaboration going throughout the process, we’re going to end up in a very good place,” Mulhern said. “I’m confident we’ll have a national federal order hearing proposal that reflects the consensus of our membership and reflects the needs of dairy producers across the country.”
PMVAP PAYMENTS
What happened?
The wait for Pandemic Market Volatility Assistance Program (PMVAP) payments should be over.
What’s ahead?
As of Progressive Dairy’s deadline, about 60% of the PMVAP agreements were processed and paid in January and February, said Jenny Lester Moffitt, USDA undersecretary for marketing and regulatory programs. The remainder was scheduled to be paid in March.
Under the PMVAP, payments will reimburse qualified dairy farmers on an annual production of up to 5 million pounds of milk, for 80% of revenue losses for fluid milk sales from July 2020 through December 2020. The payment rate will vary by region based on the actual losses on pooled milk related to price volatility.
Bottom line
Last August, the USDA announced details of the PMVAP, designed to reimburse dairy producers with up to $350 million for unanticipated financial losses created during the COVID-19 pandemic, when the change to the Class I mover price formula and federal food box purchases weighted heavily toward cheese combined to create significant losses for some producers.
The USDA payments are made to participating dairy cooperatives and milk handlers, which then had 30 days to distribute the money to producer milk suppliers. Under the original timeline, payments were scheduled to be distributed in December.
Throughout the fall and winter, handlers have been working with the USDA to gather and submit data needed to calculate and distribute PMVAP monies to eligible dairy farmers.
In January, Dana Coale, deputy administrator of the USDA’s Agricultural Marketing Service Dairy Program, said payments were expected to be distributed by the end of February. She said the process was slowed by complexities of the program, as well as producer payment eligibility due to milk production caps and federal farm program payment limitations.
DAIRY DONATION PROGRAM
What happened?
The USDA has begun disbursing payments under the Dairy Donation Program (DDP). The $400 million program was created to facilitate dairy product donations and reduce food waste.
What’s ahead?
The program accepts applications on a rolling basis and processes claims on a quarterly basis. Quarterly reporting on program participation and funds disbursed will begin in April 2022.
Bottom line
Last August, the USDA provided details covering the DDP, allowing eligible dairy organizations to partner with nonprofit feeding organizations that distribute food to individuals and families in need. Those partnerships may apply for and receive reimbursements to cover some expenses related to eligible dairy product donations.
Dairy farmers, cooperatives or processors that purchase fresh milk or bulk dairy products to process into retail-packaged dairy products and meet other requirements are eligible to participate. Costs reimbursed through the program include the cost of milk used to make the donated eligible dairy product and some of the manufacturing and transportation costs.
If an eligible dairy organization made dairy product donations to nonprofit organizations between Jan. 1 and Dec. 27, 2020, those donations may be eligible to receive retroactive reimbursements. The deadline for submitting claims for retroactive reimbursement was March 1, 2022. The total funding amount allotted for retroactive reimbursements was limited to $50 million.
Entities previously enrolled with the Milk Donation Reimbursement Program (MDRP) are eligible to receive a supplemental payment on donations made since Jan. 1, 2020, that equals the difference between the DDP and MDRP payment rates. Supplemental payments to qualifying handlers have already been made.
An overview of the program, a short webinar, forms and frequently asked questions are also available on the DDP website (Dairy Donation Program).
U.S.-CANADA USMCA DISPUTE
What happened?
In early March, Global Affairs Canada released proposed allocation and administration policy changes to Canadian dairy tariff-rate quotas (TRQ) allocations under the U.S.-Mexico-Canada Agreement (USMCA). U.S. dairy organizations immediately rejected the proposals.
What’s ahead?
At Progressive Dairy’s deadline, the U.S. government was in the process of deciding whether the proposal brings Canada into compliance and had not indicated when there will be a decision on next steps.
The U.S. dairy organizations also view the U.S.-Canada dairy TRQ issue as a test case for whether or not the USMCA dispute settlement process can provide effective enforcement and deliver genuine compliance with the agreement.
Bottom line
Under the USMCA, U.S. dairy producers were granted increased market access to Canada by way of preferential tariff rates for in-quota quantities of certain products. However, in January, the United States Trade Representative’s (USTR) office announced a USMCA dispute settlement panel had ruled Canada’s dairy TRQ allocation process violated the trade agreement. The ruling said Canada’s implementation of the TRQs restricted access of U.S. dairy products by setting aside quotas specifically for Canadian processors.
The NMPF, the U.S. Dairy Export Council (USDEC) and other U.S. dairy organizations quickly rejected the proposal, charging the changes continued efforts to undermine established trade commitments to favor Canadian dairy farmers.
