Farmers wonder what happened? June PPDs ugly, pool volume down 36%

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By Sherry Bunting, Farmshine, July 17, 2020

BROWNSTOWN, Pa. — The negative PPDs are turning out to be whoppers as expected for June, and experts say the situation will repeat in July. In fact, by the looks of the milk futures markets, the wide spread between Class III and IV is projected to remain above the magic number of $1.48/cwt. through at least September and quite possibly through the end of the year.

That’s the big news. This divergence is messing with PPDs more than normal and changing the ‘basis’ for producers in a way that defies most risk management tools. While the Upper Midwest milk checks reflected some of the marketplace rally, other regions fell quite flat. The range in uniform prices among FMMO’s is $4 from the $13s in in California, the Southwest and Mideast (Ohio, western PA, Indiana, Michigan) to $15s in Northeast, Southeast, Appalachia to $16s in Florida and the highest uniform price in the $17s for the Upper Midwest.

In fact, depending what Federal Milk Marketing Order (FMMO) you are in, and depending upon how much of that higher Class III “marketplace” value makes it into payments by plants to co-ops and producers, this could alter how “real” the Dairy Margin Coverage margin is, as well as the workings of Dairy Revenue Protection (DRP) program insurance and other risk management options that play off Class III but settle out on an “All Milk” price USDA will calculate for June at the end of July.

Producers who purchased DRP policies and based them on components to stabilize their risk in markets that utilize a blend of classes, are realizing an indemnity they expected to receive as protein doubled from May to June is now deflated to a smaller number due to negative ‘basis’.

Experts admit —  There’s no good way to manage PPD risk (or as it’s referred to in the skim/fat Orders of the South “revenues available to pay”). Interestingly, Dairy Farmers of America (DFA), at its member risk management website, is touting it has “strategies” for members to “mitigate future negative PPD risk”.

(Read to the end to learn how to participate in the Farmshine Milk Market Moos milk check survey on this issue.)

So, what changed? Other than a pandemic disrupting things.

A big change is the new way USDA calculates the Class I Mover. This was implemented in May 2019 and is currently adding on to the largeness of the inverse relationship between Class III and the uniform price in multiple component pricing orders.

In fat/skim orders of the South, producers are seeing one price on their check but then “revenues available” to pay a different price. In some cases, the “revenues available” is reference to dispensing with “overbase penalties” in June because revenues were available to pay a better price on that milk.

There are no PPDs in the four FMMOs still pricing on a fat/skim basis. But those Orders are seeing a flat-out reduction in their uniform price as announced for Florida and the Southeast FMMOs being lower than May! Meanwhile the Appalachian Order gained just 13 cents over May. (See Table I above.)

During the formation of the 2018 Farm Bill, National Milk Producers Federation (NMPF) and International Dairy Foods Association (IDFA) agreed on this new way to price Class I so that Class I processors could find “stability” in their costs by forward pricing without having to “guess” which manufacturing class price contract would be the “higher of.”

Farm Bureau remained neutral at the time that this was going through, and their analysis showed, historically, this new way leveled out over time for dairy producers. In fact, supporters stated that the stability of averaging Class III and IV to make the Class I Mover offered stability in input costs to milk bottlers so they could forward price, which in turn would offer stability to farmers by keeping bottlers in a position of strength to invest for the future. These are the reasons we heard, and it wasn’t much debated at the time.

No hearings were held by USDA on this major change in Federal Order pricing for the one and only class that is actually regulated. It was done in the Farm Bill, legislatively, because cooperatives and processors agreed it was what they both wanted. (More information next week on what factors Covid and non-Covid-related that are contributing to these diverse trends between Class III and IV.)

Under the current method, instead of using advance pricing factors from the “higher of” Class III or IV to calculate the Class I Mover, the two classes are averaged together and 74 cents is arbitrarily added.

The reason this is such a big issue right now, and likely for months to come, is the size of the spread. Rapidly rising block Cheddar — which hit another record of $3.00 per pound on the CME spot market early this week – keep pushing the AMS end-product pricing higher, more than doubling the value of protein between May and June and pushing Class III milk futures further into the $20s.

In fact, Class III milk futures settled Tues., July 14 at $24.34 for July, $23.09 August, $20.23 September, $18.40 October, $17.44 November and $16.35 December. Meanwhile those months for Class IV milk futures settled Tuesday at $14.03 for July, $14.51 August, $14.85 September, $15.07 October, $15.31 November and $15.53 December. Not until December is the spread within the $1.48/cwt range where the new way of averaging the two classes returns from being so out of kilter to Class III.

Remember, these negative PPDs are the result of Class III being larger than the uniform blend price, and the large amount of depooling that resulted keeps that higher value from being shared in the pool. Class III handlers are accustomed to taking a draw, not writing a check, and there’s no requirement to be pooled unless a plant is a pool supplier or wants to stay qualified for the next month in most FMMOs.

A Farmshine article two weeks ago explained these price relationships in more detail.

Now the numbers are coming in. The recently announced uniform prices and PPDs range from nearly $4 to near $8 — just as leading dairy economists had estimated.

The least negative was the Upper Midwest FMMO 30, at minus-$3.81, where 50% of the milk utilization was Class III, and the uniform price gained a whopping $4.92 at $17.23 for June. In fact, producers in Wisconsin and Minnesota report $20 milk checks for June.

The most negative PPD was minus-$7.91 in California, where less than half of one percent of the milk utilization was Class III, and the uniform price gained just $1.18 at $13.13 for June.

The Southwest FMMO 126 wasn’t far from that at minus-$7.62 with a uniform price announced at $13.42 — up 41 cents from May.

In the Northeast FMMO One had a minus-$5.38 average marketwide PPD, but the uniform price gained $2.19 over May at $15.66 with 18.5% Class III milk utilization.

The Mideast Order PPD is minus-$7.05, and the uniform price gained $1.26 at $13.99 with just over 9% Class III utilization.

In the southern FMMOs, pricing is still on a fat/skim basis, not multiple components, but the inverse relationship of the Class I Mover to Class III pricing is keeping June uniform prices flat or lower compared with May. The Southeast FMMO 7 saw a penny decline in the uniform price to $15.38 in June, and Florida Order 6 uniform price fell 46 cents from $17.29 in May to $16.83 for June. The Appalachian FMMO 5 gained just 13 cents at $15.27 for June.

Nationwide, just over 9.5 billion pounds of milk was pooled across all Federal Orders in June, down 36% from 14.4 billion pounds a year ago and down 28% from the 13.2 billion pounds last month.

May milk production was down 1.5% compared with a year ago, but the pooling volume nationwide was already 13% lower than a year ago in May.

USDA confirms that handlers making just Class II, III or IV products are not required to pool the milk, and therefore, due to “expected price relationships,” some handlers decided to not pool some of their milk receipts in May, and most definitely elected not to pool in June.

“Only Class I handlers are required to pool all of their milk receipts no matter how it was used,” USDA Dairy Programs explained in an email response to Farmshine this week.

In Table I are the marketwide FMMO data for June from Market Administrator announcements on different dates over the past several days. Comparing Class III volumes reported to month ago and year ago, an estimated 45 to 94% of Class III milk was depooled in various FMMOs, with the exceptions of Arizona and the Pacific Northwest where depooling was less of a factor.

Looking at the Northeast FMMO, alone, the estimated 45% less Class III volume in the pool in June vs. May, kept just over $110 million in collective component value out of the Northeast pool.

The question is, since USDA confirms that money is “in the marketplace”, will that “marketplace money” make it to farm-level milk checks, 13th checks, reduced retains? And will the “Covid assessments” and “marketing or balancing fees” and “overbase penalties” be adjusted or eliminated in June?

Others wonder how this will affect the All Milk price for June as calculated by USDA NASS at the end of July. Will the erraticness of how this “value in the marketplace” could be handled make winners and losers in terms of the Dairy Margin Coverage? How will this situation translate to those margins as a national average?

USDA AMS Dairy Programs defined the NASS All Milk price in an email as follows: “The NASS U.S. All Milk Price is a measurement of what plants paid the non-members and cooperatives for milk delivered to the plant before deduction for hauling, and this includes quality, quantity and other premiums and is at test. The NASS price should include the amount paid for the “not pooled milk.”

USDA explained that, “The blend price (Statistical Uniform Price, or SUP) is a weighted average of the uses of milk that was pooled for the marketing period (month).  If some ‘higher value’ use milk is not in the ‘pool’, then the weighted average price will be lower.”

However, the USDA response also points out that, “It is important to note that the Class III money still exists in the marketplace.  It is just that manufacturing handlers are not required to share that money through the regulated pool.”

So, will it be shared at the producer level outside of the pool? From the looks of a few June milk check settlements that have been reported to Farmshine on the morning of July 15, it’s not looking like the higher Class III value is helping checks shared from the Southeast FMMO at this writing. How will that stack up to a margin that gets figured also looking at the Upper Midwest where the uniform price saw almost a $5 gain?

We’ll look at that more closely next week.

Dairy producers who want to participate in my Milk Market Moos survey of June milk checks, please email, call or text your June milk price, fat test and PPD, and the list of deduct line items, especially any “Covid-deducts,” and include any overbase penalties. Also, provide your location or in what FMMO your milk is marketed. All the information will be anonymously aggregated. Email agrite2011@gmail.com or call or text 717.587.3706.

The Jersey Cattle Association is doing a similar June milk check survey sampling across the country.

This is a big topic when risk management is based largely on components and Class III, even though Class III use is not regulated unless processors want it to be, and certainly not in a pricing scheme that no longer prices the higher of two divergent manufacturing price trends into the only truly regulated class — Class I fluid milk. 

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Round bale art gets noticed at Thiele Dairy Farm: ‘I enjoy putting a smile on someone’s face.’

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Lorraine Thiele went with the Statue of Liberty theme this week for the farm’s patriotic round bale art display ahead of July 4th. It’s attracting a lot of attention on state route 356 at the end of the farm lane just outside of Cabot, Pa. Photo by Lorraine Thiele

Round bale art gets noticed at Thiele Dairy Farm

By Sherry Bunting, Farmshine, July 3, 2020

CABOT, Pa. — The flag-draped Statue of Liberty round bale artwork at the end of the long lane leading to Thiele Dairy Farm in Butler County, Pennsylvania is attracting attention. The Thiele family placed it on their farm alongside state route 356 just outside of Cabot this week ahead of Independence Day.

“Everybody just loves it, especially in a time like this with what our country is going through, with the turmoil we are in,” says Lorraine Thiele when asked in a Farmshine interview about the community’s response. A photo of it has also created a lot of activity on the farm’s facebook page.

“We get a kick out of seeing people drive by, stop, back-up, and take their pictures with it,” she adds. “I enjoy putting a smile on someone’s face, to have something that can make people smile on their way to work or wherever they are going.”

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James, William, Lorraine and Edward Thiele at their sixth-generation dairy farm in Butler County, Pa. Photo courtesy Marburger’s Dairy

Edward and Lorraine Thiele and their twin sons William and James farm 300 acres of corn, soybeans, hay and oats and milk 40 cows at the sixth-generation Dairy of Distinction, established in 1868. Lorraine does the bookkeeping and all the feeding. She hops on the tractor and helps with other things when needed, although she doesn’t milk much anymore.

Lorraine is also the artist behind the series of round bale portraits that have been created over the past several years. She credits her husband and sons for helping with some of the technical strategy and by providing custom-sized round bales when she asks for them.

“When Ed sees me with the skid loader stacking and piling round bales, he’ll get involved and we’ll draw it out. He likes to help with the more technical side,” she adds.

Her Statue of Liberty this year was painted on three large round bales. Last year she did just the American Flag on six. She’s been doing the round bale art projects for several years now – ranging from turkeys and pilgrims at Thanksgiving, to cows and milk jugs for June Dairy Month, and from tractors with wagons full of pumpkins in the fall, to Santa Claus, reindeer, Christmas trees (with lights) and a Nativity last Christmas.

“I try to do something different every year,” she says, explaining how she “googled” for some patriotic ideas to see what struck her fancy for the 2020 July 4th rendition. She came up with the Statue of Liberty.

“I can’t do faces, so I found a silhouette for the design. I also found a ceramic statue with the flag draped over and figured I would try that.

“I’m not an artist,” Lorraine states humbly. To guide what she calls her ‘graffiti style’ spray painting, she used big baler twine pinned to the stacked bales. If her design gets too big, she tailors it down with a background color.

She admits she has been surprised by how relatively easy it is to paint round bales. Their straw bales are not plastic wrapped, so they take a lot more paint than one would imagine.

“Always buy more spray paint than you think you need,” she suggests, adding that painting it on the net-wrapped side holds the paint better than painting the face of the bale of hay or straw, which “really sucks up the paint.”

She also likes to get creative, using items that are laying around. One year, Lorraine painted wood planks in different colors for the feathers on the Thanksgiving turkey.

One year, for June Dairy Month, she used black drain tile pipe and painted the tip white for the cow tail after Ed drilled-in a rod to hold it.

Once she gets an idea in her head, and thinks about it for a while, it comes together.

“It’s fun, and something different to do. It looks harder than it really is.

“Don’t be afraid to try something,” Lorraine encourages. “The nice thing is, if it doesn’t work out, throw it in for bedding and no one will ever know!”

While the Independence Day Statue of Liberty is creating the buzz right now. It was the reaction to the June Dairy Month art that really surprised Lorraine.

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For June Dairy Month, the painted milk pints had many people turning into the farm lane to buy milk, but the Thiele family explained that all of their raw milk goes to the Marburger Farm Dairy plant in Evans City — a great local brand.  Photo by Lorraine Thiele

“I painted milk chugs — chocolate and strawberry milk pints — to put beside the bale-painted cow,” she explains. “You would not believe how many people turned in the lane and came up to the farm wanting to buy milk. I never would have thought just a straw bale done up as a milk pint would do that!”

In fact, the response was so great, Lorraine had to put a post on the Thiele Dairy Farm facebook page (and a sign by the artwork), explaining that the family does not sell milk right off the farm and that their raw milk all goes to Marburger Farm Dairy in Evans City — a great local brand.

The Statue of Liberty took about a week to finish, but she only works on round bale art when she has the time. After a painting is complete, they haul it down the lane to position it by the main road.

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Faith, family and farming are alive and well on the Thiele family’s dairy farm.

The Thiele Dairy Farm facebook page is also something Lorraine enjoys. She started it almost 10 years ago through her love of photography and her desire to promote agriculture in a positive light.

“There’s a lot of negative out there,” she says. “Our son (William) has a drone, and he videos the baling, mowing, and planting. The average person doesn’t have a clue what we are talking about or how it is done or what is involved, so our sons love to show it, to do things like that to educate people about what we do.”

Each family member is a steadfast advocate for agriculture, and they are active in Butler County Farm Bureau and Dairy Promotion Committee. They participated in the Butler County milk donation drive-through back in April before the CFAP program. It was coordinated by Community Action Partnership with Farm Bureau, the Butler County Dairy Promotion Committee, Marburger Farm Dairy, AgCoice Farm Credit, and others, where 1200 gallons of milk were distributed along with a bag of groceries and a box of frozen products.

Lorraine is a positive person, and that was demonstrated in this interview and throughout her connections to the community in person and through social media. People appreciate it, even putting gifts or thank you notes to the family by the round bale Christmas tree at holiday time.

As difficult as things can be in the dairy business at times, Lorraine loves the farm and the cows and is thankful her family is farming together — where everyone in the family does everything on the farm.

As for the round bale art? If she can make someone else smile for even just a second. It is worth it.

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Summer sunset this week at Thiele Dairy Farm in Butler County, Pennsylvania. 
Lorraine loves taking photos on the dairy farm and the Thiele Dairy Farm facebook page is full of her photos as well as drone videos by her son William.  Photo by Lorraine Thiele

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Industry, government follow grassroots donations lead, CFAP adds to dairy demand driving markets higher

By Sherry Bunting, Farmshine, June 26, 2020

WASHINGTON, D.C. – Government and industry dairy donations and record-setting CME cheese prices all got their starter fuel from grassroots dairy producers in what has become one of the good news stories of the COVID-19 era.

Today, USDA has systemized the donating through the Coronavirus Food Assistance Program (CFAP), and dairy processors, cooperatives and checkoff organizations have partnered with food banks and non-profits to extend the reach of efforts begun originally by generous dairy producers and their agribusiness partners supplying grateful consumers.

In April, when milk dumping was at its height, and stores had purchase-limits or sparse supplies of milk and dairy products, farmers and their agribusiness partners and communities went into immediate action. Examples of milk donation drive-through events began popping up in succession – just a fraction of them featured in the pages of Farmshine.

Also in April, farmer-funded Dairy Pricing Association (DPA) purchased 228,000 pounds of block cheddar, immediately moving the CME block cheese price from its $1/lb plummet to $1.20 (adding $1.00 to Class III milk values at the same time).

This DPA move, working with charities for distribution and a Midwest processor to turn their CME-style bulk purchase into consumer-packaged goods for donation, gave a green light to other cheese market participants. Within a week of that purchase and the initial 20-cent gain in blocks that followed, block cheese continued its climb to $1.80/lb, and the upward momentum has not stopped — fueled now by huge government purchases and food-service pipeline re-stocking.

On the heels of these grassroots efforts, dairy checkoff organizations began getting involved to work with their partners and “convene” the industry to do big donations in May.

Meanwhile, the U.S. Congress had passed the Coronavirus Food Assistance Program (CFAP) in April, with $3 billion of the $19 billion set aside for the Farmers to Families Food box purchases. But it was mid-May before USDA announced those first-round contract awards totaling $1.2 billion in fresh food — $317 million of it for fluid milk and dairy products – for distribution May 15 through June 30.

This week, USDA Secretary Sonny Perdue called the food box program a “trifecta, win-win-win”, pointing out how the program is getting farmers, processors and non-profits together to directly provide fresh food to people without burdening food banks with refrigerated inventory they aren’t prepared to handle.

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In April, when block cheddar was plummeting to $1.00/lb, the farmer-funded Dairy Pricing Association based in Wisconsin with member-contributors nationwide, purchased 228,000 pounds of block cheese to be cut-down for distribution by several charities. DPA Facebook photo

This was the model of grassroots groups and individuals on their own dime and time doing dairy donation drive-throughs, milk-drops, and whole milk gallon challenges from late March to the present. It was also the model of DPA, funded by voluntary dairy farmer milk check deductions, when DPA purchased the block cheese in April for cut-down and donation. Also in April, we saw the partnership initiated in Pennsylvania between 97 Milk and Blessings of Hope. They raised funds to buy local milk for donation to families in need.

As these grassroots efforts began having an impact, Midwest Dairy got approval from USDA in May to use checkoff funds to donate cheese, and UDIA of Michigan was allowed to provide minimal funding to food banks for “handling costs” associated with receiving cheese donated in May by DFA.

Now, with USDA systemizing that smart approach — started by grassroots efforts — the department stated in a news release that as of June 23, its CFAP Farmers to Families Food Box Program had delivered more than 20 million boxes of fresh food, including milk and dairy products, to families impacted by COVID-19.

The initial round of USDA CFAP contracts ends on June 30. But this week, USDA announced it will extend “well-performing” first-round contracts for similar amounts in a second-round from July 1 through August 31 to total an additional $1.16 billion.

The share of this second-round to be devoted to fluid milk and dairy purchases was not specified in the USDA announcement. One thing USDA did note is that even though most of the second-round dollars will be spent with “selected” current contract awardees, a few new contracts may be awarded to previous applicants that had been passed over due to technical errors or to provide boxes in areas identified as “underserved.”

Throughout the USDA CFAP food box delivery process, regional dairy checkoff organizations have been involved as “facilitators.”

Week after week, Farmshine has received press releases from dairy checkoff organizations, and there have been numerous social media posts, about the CFAP milk and dairy box donations. Regional checkoff organizations say they are working with processors, cooperatives and non-profits — in conjunction with the USDA CFAP food box program — and that area dairy farmers are involved as volunteers to hand out the boxes.

According to National Dairy Council president Barb O’Brien, dairy checkoff organizations began “convening the industry” before CFAP.

“We have leveraged the checkoff’s unique ability to convene companies from across the value chain to identify a number of ways to redistribute excess milk and other dairy products to families facing food insecurity,” writes O’Brien in an email response to Farmshine recently.

In a specific cheese example she had mentioned in a media call described as block cheese being purchased and cut into consumer size portions, our inquiry for details was met with this response:

“In response to lost food-service markets and dairy farmers being asked to dispose of milk, we’ve worked to connect coops to partners that donated processing capacity for any excess milk available for food banks,” O’Brien wrote. “Many other dairy companies — such as the example I gave from DFA of cheese donations in Michigan — provided massive quantities of dairy products to food banks before the USDA Farmers to Families Food Box Program was even put into place. Moving forward, it will be important that we continue working together as an industry to target the greatest needs and find long-term solutions to our nation’s hunger crisis.”

O’Brien cites DMI’s “long-time partner” Feeding America and other relationships with local food banks and pantries. Former Ag Secretary Tom Vilsack, now a top dairy checkoff executive with DMI, sits on the Feeding America board of directors.

O’Brien also noted in her response that dairy checkoff “counseled industry partners and others on how to direct dairy products toward the greatest needs.”

She reports that, “This widescale approach enabled us to pinpoint some of the biggest barriers in getting excess dairy products to hungry families during the pandemic” and to “rapidly initiate an industry response.”

As communities began doing their own grassroots efforts through the generosity of dairy farmers, agribusiness and individuals purchasing milk or contributing milk for dairy donations in the early days of the COVID-19 ‘stay-at-home’ orders, checkoff organizations took note and began to look at what they could do in terms of refrigeration equipment and setting up refrigeration trucks for industry and governmental efforts.

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Grassroots whole milk donation events like this one just outside of Lancaster, Pa. in May, have been providing whole nutrition to families across the state and region since the height of COVID-19 ‘stay-at-home’ orders in April.  Photo by Michelle Kunjappu

While many of the grassroots-organized milk donations were comprised of whole milk purchases vs. low-fat milk, this week marked the first time a checkoff news release showed red-cap whole milk gallons or even referenced whole milk in their facilitation of USDA CFAP box deliveries. This is another win led by early grassroots efforts.

ADA Northeast (ADANE), for example, indicated in a press release this week that 200,000 gallons of milk will have been handed out in the Northeast / Mid-Atlantic region by the time June Dairy Month ends. The release stated that 20,000 gallons would be donated this week, alone, from DFA, Upstate Niagara and Schneider’s Dairy to be given out in New York and Pennsylvania through the Nourish New York state funds and CFAP food box federal funds.

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For the first time among the many news releases sent by ADA Northeast (ADANE) touting checkoff ‘facilitation’ of fluid milk and dairy donations, whole milk is in the box! Here, dairy farmer Joel Riehlman of Fabius, N.Y., and a 4-H member, hand out whole milk in mid-June at a Nourish New York and USDA CFAP Farmers to Families Food Box donation drop in Syracuse. Photo provided by ADANE

In a recent Watertown, New York drop point for these donations, ADANE board member Peggy Murray of Murcrest Farm, Copenhagen, N.Y. volunteered, and she noted in the ADANE press release that, “It was heartwarming to see their gratitude – especially for the whole milk — and to know that people really want the products that we produce on the farm.”

This has been the experience of so many farmers and ag community members involved in the grassroots distributions, as well as the industry and governmental distributions, because each event affirms that consumers love milk and dairy products, especially whole milk, and that they want to support local farms — as evidenced by their comments and long car-lines of families eager to receive these products. In some cases, recipients gave money asking it be put toward more drive-through dairy events.

In the Southeast and Midwest, CFAP contract recipients Borden and Prairie Farms have also been visible this month with Dairy Alliance and Midwest Dairy checkoff organizations often as partners, along with several state dairy producer group members joining in as volunteers and location coordinators.

Overall, the CFAP food boxes have been well-received. The program was designed by USDA to give farmers and food providers a presence within their communities, working with local food banks and non-profits without creating inventory hardships. In this way, USDA has taken what local communities were doing at the grassroots level — on their own dime and time — and systemized it with federal funds and contracts.

While dairy’s share has not been specified in USDA’s announcement of the second round of $1.16 billion in fresh food purchases in the contract extensions through August 31, it is believed fluid milk and dairy purchases will be similar to the first-round total of $317 million because several non-profits indicate they will be supplied with all their milk and dairy needs through the USDA until at least August 31.

This includes Blessings of Hope, which had partnered with 97 Milk in April, and raised over $50,000 for purchasing and/or processing local milk for families they serve in Pennsylvania.

Farms in southeast and southcentral Pennsylvania that were wanting to donate “over-base” milk for this 97 Milk / Blessings of Hope program will have to wait until after August 31, when the USDA CFAP food box program is set to end. It is possible that the CFAP program may again be extended until all $3 billion in food box funds are exhausted.

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When Dairy Pricing Association (DPA) first ran an ad in the Cheese Reporter in early April looking for 200,000 pounds of USDA-graded cheddar cheese less than 30 days of age, the calls they received could not fill the order. By requesting USDA-graded cheese, the delay in their eventual purchase of 228,000 pounds showed a void in supplies that led to the initial turnaround in the plummeting block cheese price on the CME, which fueled the advances in manufacturing milk value. CME cheese prices drive Class III milk futures, which have risen rapidly since the DPA purchase bridged the gap in April. Current market strength has been extended through the large USDA food box program demand occurring at the same time as the re-opening of the food-service sector. DPA Facebook image

A positive outcome for farmers from all of these efforts — now extended by these large government purchases — is the real impact they are having in helping drive dairy markets higher since that first farmer-funded DPA purchase of block cheddar in April turned the CME away from its $1.00/lb record-low plummet.

Block cheese is traded every day around noon on the CME spot auction, and the price has set several new record-highs in June, including the most recent record-highs of $2.70/lb on Monday, June 22 and $2.81/lb on Tuesday, June 23.

This rally has pushed Class III milk futures into new contract highs for June, July, and August, while adding strength across the board.

In CME futures trading Monday (June 22) the June Class III milk contract hit $21, up $9 from the USDA-announced May Class III price of $12.14. July’s contract topped at $22.19, and August edged into the $20s. Monday’s Class III milk futures averaged $17.98 for the next 12 months, and Tuesday’s futures trading held most of that level, even adding to the July contract.

There is a supply side to this scenario also. See the related article on USDA milk statistics, pooling, production and dumping.

Trade sentiment is mixed on how long the upward momentum in dairy markets can last.

On the one hand, cheese prices are being driven by the combination of USDA CFAP purchases now continuing through August, re-stocking of food-service pipelines as the country re-opens, and the USDA Dairy Market News reports of consumer buying strength shown in strong pizza sales throughout the Covid period, and stable to strong retail sales meeting tighter supplies of milk and cream.

On the other hand, some experts warn of weakness ahead as these record-setting prices may prompt milk production expansion by fall when demand may wane after the USDA CFAP food box purchases end and food-service pipelines are re-stocked.

Much of the future will depend on how the re-opening of America goes for families, the food-service sector, schools, sports, and the economy at-large.

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Eye on markets as reined-in supply vs. strong demand drive dairy higher

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By Sherry Bunting

Trade sentiment is mixed on how long the upward momentum in dairy markets can last as producers wait for these higher levels to land in their milk checks.

On one hand, USDA Dairy Market News reports strong pizza sales, stable to strong retail sales, and government purchases all stoking demand against reined-in supply. On the other hand, some analysts see weakness ahead as higher prices may prompt milk expansion by fall when demand may wane after CFAP food box purchases end and food-service pipelines are re-stocked. Much will depend on how the economic re-opening goes for families and food-service, as well as what happens with schools and sports. Experts suggest producers evaluate their risk management tools while markets present positive margins in a tumultuous time.

To-date, the USDA Coronavirus Food Assistance Program (CFAP) Farmers to Families Food Box Program has delivered 18.5 million boxes. The first round of May 15-June 30 fresh food purchases totaled $1.2 billion, including $317 million for milk and dairy products. Now USDA is poised to announce a second round of $1.16 billion for July 15-Aug. 30, of which dairy’s share has not yet been specified.

Also, as of June 22, USDA paid $895 million in CFAP dairy farm payments, and a total of 15,222 dairy producers (about half) have applied. The dairy payment formula equates to $6.20 per hundredweight on Q1 milk (including dumped milk). CFAP enrollment continues through August 28, 2020.

Meanwhile, milk futures continued their multi-week march higher on the heels of record-setting CME block-cheese prices through June, pegged at $2.70/lb Monday, June 22 and then $2.81/lb Tues., June 23. Barrels shared the advance, but were a record 44-cent spread behind the block trade at $2.37/lb.

June’s Class III milk contract hit $21 Monday, up $9 from the USDA-announced May Class III price of $12.14. July’s contract topped at $22.19, and August edged into the $20s. Monday’s Class III milk futures averaged $17.98 for the next 12 months — up 69 cents from two weeks ago.

Part of the extent of Monday’s advance is attributed to new rules when higher trading surpasses the 75-cent limit, as happened Friday, the limit doubles for the next trading day, allowing more speculative activity up or down. But Monday’s spot cheese increase shored-up the gains, while after-hours trading hinted a 20-cent pull-back before another spot cheese market gain Tuesday noon narrowed the dip in fall milk futures. At mid-day Tuesday, summer 2020 front-months were another potential nickel or dime in the green, and penny to nickel gains were applied to 2021 Class III contracts.

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Screenshot of June-Sept. Class III milk futures trading at Noon CDT Tuesday, June 23 — just after the spot cheese auction on the CME in Chicago saw 40-lb block cheddar trade at yet another record high of $2.81/lb with 500-lb barrels also higher at $2.36/lb — behind blocks by a new record-setting 45-cent spread.

New block cheese futures at the CME were launched in 2020, helping processors manage the risk of the wide spreads between 40-lb block and 500-lb barrel cheddar that broke records in 2019, setting new record spreads again this week.

Class IV milk futures gains into this week have been less stellar as butter had melted off a previous advance, but firmed up late last week, then pegged a 2-penny loss at $1.81/lb Tuesday. Spot powder strengthened last week in active trade after the biweekly Global Dairy Trade auction index rose 1.9%. The first two days this week, the Grade A nonfat dry milk spot price remained pegged at $1.03/lb with just two loads changing hands on the CME.

The awaited June 22 USDA Cold Storage report confirmed that accumulating cheese moved to food-service with a seasonally-unusual and record-large natural cheese inventory pull-out for the month of May. Despite this inventory pull, cheese stocks remain 5% above year ago, and butter stocks are up 21% vs. year ago. Inventory is apparently not as negative to markets as it was pre-Covid due to the retail shortages experienced in April during the height of ‘stay-at-home’ orders. Some companies report wanting to keep more inventory instead of operating ‘hand-to-mouth.’

On the farm side, USDA confirmed 1.1% less milk was produced in May vs. year ago. USDA data also showed 13% less milk was pooled on Federal Orders vs. year ago — abruptly reducing the pooling of dumped and diverted milk. At 36 million pounds, the volume of milk pooled as “other use / dumpage” in May was a fraction of April’s 350 million pounds of “other use / dumpage” milk pooled.

DumpedMilk_Table(withMay2020)

‘GHG Guru’ talks about cows as key to ‘climate neutrality’

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Innovation in the face of disruption, that was one of the themes of the Alltech ONE Virtual Experience last week. In fact, Alltech CEO and president Dr. Mark Lyons talked about how innovation has been the driving force behind 35 years of the annual “ideas conference”.

This year, due to COVID-19 preventing the conference from happening in-person, innovation turned the ONE conference into a virtual experience for the first time with participation by over 23,000 people from 144 countries.

“We live in a time of great opportunity, we have younger people asking questions, and when farmers get those questions, they should answer them and not defer,” said Dr. Frank Mitloehner. Friday’s ONE keynote speaker.

Dr. Mitloehner is a University of California-Davis animal science professor and air quality specialist as well as world renown greenhouse gas (GHG) emissions expert. He talked on his favorite subject: “Clearing the air: Debunking the myths of agriculture.”

Mitloehner is a foremost authority on air quality emissions and how to mitigate them within the context of livestock and agriculture, and he is an integral part of a benchmarking project for the environmental footprint for livestock.

The project he deems most important of his career is “getting animal agriculture to a place where we consider it climate neutral,” he said, adding that climate was top-of-mind before COVID-19, and will be again. “There’s a lot of interest in this.”

But the path to climate neutrality begins with proper accounting for methane and how it behaves in the biogenic cycle.

“The one missing entity is the media on this,” said Mitloehner. “We are seeing a major new narrative about animal agriculture and the accurate quantifying of methane, but it is problematic that media are not reporting about it.”

Despite lack of media coverage, Mitloehner expects the new narrative to take hold.

He gave a vivid example of why accurate measurement is needed. Speaking in Ireland recently, he compared photos of the Emerald Isle to photos of Los Angeles to photos of a coal-fired power plant in Europe.

Ireland is so green, with pastures, hedges and forages everywhere, he said. But the way carbon is conventionally quantified, Ireland would have the largest carbon footprint of the three examples.

“But the change in how we perceive GHG is materializing as we speak. We have to think about methane not just produced but also degraded, and how GHG is sequestered,” Mitloehner explained.

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In the old way of quantifying carbon by looking at methane budgets (left side of graphic), not only are methane’s short-lived properties as a ‘flow gas’ ignored, but also the sequestration (shown on the right side) provided by agriculture and forestry as part of a biogenic cycle. Screenshot from Friday’s keynote presentation by Dr. Frank Mitloehner during Alltech’s ONE Virtual Conference.

Using the old way, “They don’t think of sectors like forestry and agriculture serving as a sink for GHG,” he said, comparing the three GHGs — carbon dioxide, methane and nitrous oxide — in terms of their heat trapping capacity.

“So they look at methane and translate it to a CO2 equivalent. That’s what people have been doing since 1990,” he said. “At that time, scientists had several footnotes and caveats, but they were cut off and people ran with the slides without the footnotes. That is a dangerous situation that has gotten animal agriculture into a lot of trouble actually.”

He explained that CO2 is a long-lived climate pollutant, whereas methane is short lived. Methane is different. Unfortunately, when methane emissions are calculated globally for sectors each year, they don’t consider the whole picture.

“If we don’t get this question right, and the livestock moves, then we have ‘leakage,’” he said. “Most people add it up and stop discussion there, but they shouldn’t. On the right side of the graph are these sinks, and they amount to a respectable total, so the net methane per year is a fraction of the total number they are using.”

Another difference is the life span of these gases. CO2 lives 1000 years, nitrous oxide hundreds of years, methane 10 years, Mitloehner explained. “The methane our cows put out will be gone after 10 years, it is produced and destroyed.”

Dr. Mark Lyons brought up all the talk about “planetary diets” and the “spin and marketing” of eating for you and the planet.

Mitloehner said “the inference of diet on environment is greatly overplayed for PR purposes. The impacts are much lower than some people say who want to sell their alternatives. If and when comparing food groups, it must be done fairly. A pound of beef has a different footprint than a pound of lettuce, but it also has a vastly different nutritional profile.”

Another example he gave was dairy vs. almond juice. “Using the old way of assessing the impact of dairy milk, it is 10 times greater, but almond juice has a 17 times greater water footprint. You can make any food shine, but drill into it and there is no silver bullet. People will continue to eat animal sourced foods and the sound argument is to allow us to produce what people need and crave in the lowest impact possible and that is the route we are going.”

The good news, he said, is that for every one vegan, there are five former vegans. The retention is not good.

He talked the virtual ONE attendees through the process of where carbon comes from and where it ends up. This is why GHG from livestock are significantly different from other sources such as fossil fuel.

Plants need sunlight, carbon in the form of CO2, which is made into carbohydrate, cellulose or starch, ingested by the cow into the rumen where some of it is converted into methane. And after a decade, that methane is converted back into CO2 needed by the plants to make carbohydrate.

“The carbon from our methane originates in the atmosphere, goes through plants, to animals, to air, and again, on repeat,” said Mitloehner.

In this biogenic cycle, if there are constant livestock herds, “then you are not adding carbon to the atmosphere, it is all recycled,” he explained. “What I’m saying here doesn’t mean methane doesn’t matter, but the question really is: Do our livestock herds add to additional methane for additional warming, and the answer is NO.”

This is a total change in the narrative around livestock, and it will be the narrative in the years to come, according to Mitloehner. Because dairy and beef herds have declined so much since the 1950s and 1970s — producing more animal protein at the same time, “We have not caused an increasing amount of carbon in the atmosphere but have decreased the amount of carbon we put in the atmosphere,” said Mitloehner.

The difference between animal agriculture and fossil fuels is a cycle vs. a one-way street.

“Each time you drive to work, you put CO2 into the atmosphere that lasts 1000 years, and it is a stock gas that adds up each day,” Mitloener said. “Everytime we put it in the atmosphere we add to the existing stock. This is why the curve always goes up, because it is a long-lived climate pollutant. Methane on the other hand is flow gas. Cows can put in the air Monday, but on Tuesday a similar amount that is put in is also being taken out. By having a constant number of cows, you are not adding methane into the atmosphere. The only time you add is throughout the first 10 years of its existence or by increasing herd size.”

He quoted researchers from Oxford University who are also communicating this science and technical papers to the public. But again, the media in general are ignoring it.

What really gets Mitloehner energized are the concepts like biogas and use of it as a renewable fuel in vehicles, for example, and other technologies where dairy and livestock operations can take their climate neutrality and turn it into a cooling effect by counteracting the warming caused by other sectors.

“The current way of accounting for it is a flawed way of looking at it, because it does not account for the fact that keeping methane stable, the amount of warming added is actually zero,” he said. And this is where to build incentive to make up for other sectors that are actively adding to the warming.

“If we were to reduce methane, we could induce cooling,” he said. “We have the ability to do that. This is how agriculture, especially animal agriculture, can be the solution to the warming caused by other sectors of the economy and life.”

Mitloehner measures to quantify the impact of mitigation technologies to see if we can get to that point of reducing other emissions. He talked about California law mandating reduction of methane by 40% by 2030.

“They’ve reduced by 20%, using the carrot instead of the stick. The state incentivizes the financing of technologies that mitigate,” said Mitloehner. “We are now at 25% of the 40% total reduction. If we can do it here, it can be done in other parts of the country and the world… and it means our livestock sector will be on the path of climate neutrality.”

If you have a ‘beef’ with GHG reporting, contact Dr. Mitloehner on Twitter. You can follow him there @GHGGuru. He urges farmers to get involved, get engaged.

— By Sherry Bunting

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New CFAP details emerge: Dairies eligible for payments on milk, cull cows, some youngstock, some crops

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USDA Farm Service Agency has created this guide for farms applying for CFAP payments.

By Sherry Bunting, Farmshine, May 29, 2020

HARRISBURG, Pa. — When Coronavirus Food Assistance Program (CFAP)payment details were first released last week, the understanding was that payments for livestock price losses would not include dairy production cattle. Also noted at that time was that crops on dairy farms could only be claimed if they were cash crops.

This week, however, as USDA Farm Service Agency (FSA) began the enrollment process on May 26, new details about implementation have emerged, meaning dairy farms have multiple areas of assistance to apply for.

Dairy cull cows and youngstock sold for other than dairy purposes can be claimed under certain classes of livestock under CFAP.

“This was a confusing point, and some portions are still not clear yet,” said Cynthia Walters, FSA dairy programs specialist for Pennsylvania in a Center for Dairy Excellence industry call Tuesday.

“Dairy cows sold for beef from January 15 through April 15, 2020 are eligible for payment under the ‘slaughter cattle, mature cattle’ category. We are still waiting to find out if dairy cull cows can be listed in inventory for that second portion of the payment for second quarter,” she said.

Walters also explained that cattle kept on a dairy farm as beef inventory will qualify for the inventory calculation. This would pertain to animals fed for beef or youngstock intended for sale to a veal grower or beef feedlot, or fed for the beef market as part of the dairy farm operation.

As for feed crops, Walters explained that some calculations are still being worked out to convert dairy feeds grown on farms to grain rates under the “non specialty crop payments” portion of the spreadsheet.

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The Center for Dairy Excellence created this table to show examples of CFAP payments for various farm sizes based on first quarter milk production.

Milk payments

As reported in Farmshine last week, only the first quarter milk production on a dairy farm is used by FSA to calculate the farm’s total Q1and Q2 milk payments.

Walters explained that producers will “self-certify” and keep their documentation on hand in case they are pulled for spot checks. Farms will not provide this documentation to FSA but use their milk statements and other records (such as dumped milk recorded) to fill out the forms.

She confirmed that the only production information the producer puts on the form / spreadsheet are the pounds of milk produced from January 1, 2020 to March 31, 2020. This will be paid at a rate of $4.71 per hundredweight. The second quarter production will be calculated using the January through March production figure, multiplied by a factor of 1.014, and then paid at $1.47 per hundredweight.

The total payment — using these two formulas together — will then roughy equate to $6.20 per hundredweight for the equivalent of first quarter milk pounds.

Walters reminded dairy producers that all first quarter milk production is eligible, even those pounds that were enrolled in risk management programs.

CFAP_Livestock_Payment_Rate_Figure_2 (1)

Farm Bureau created this graph to show payments for eligible classes of livestock.

Cattle payments

There are two parts to the assistance for cattle: A payment per head for cattle sold between January 15, 2020 to April 15, 2020 and a different payment per head for cattle inventory subject to price risk on a date of the producer’s choosing between April 16 to May 14, 2020.

For example, cull dairy cows sold for beef between Jan. 15 and April 15 would be listed under ‘slaughter cattle, mature cattle” and qualify for $93 per head. The inventory method for after April 15 does not apply to dairy cows that are considered dairy inventory, only beef cattle inventory are eligible for the second type of cattle payment.

For calves and heifers sold for other than dairy purposes, the Jan 15 to April 15 marketings would be listed under Feeder Cattle. In the less than 600-pound category, the payment is $102 per head. In the over 600-pound category it is $139 per head.

As for choosing an inventory date between Apr. 15 and May 14 for youngstock that are intended for sale as beef, veal or feedlot animals, they can be listed for an additional $33 per head payment.

Dairies feeding Holstein or Dairy-cross cattle for the beef market or raising / backgrounding such calves for feedlots may apply for all relevant cattle payments.

USDA confirmed in a media call that livestock payments will only go to producers with eligible livestock. Processor-owned livestock are not eligible for these direct farm payments, and a separate program will be designed for livestock producers who were forced to euthanize animals due to COVID-19 supply chain disruptions.

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Farm Bureau has created this graph to show payments for eligible non-specialty crops.

Crop payments

Included under non-specialty crops are payment rates for malting barley, canola, corn, upland cotton, millet, oats, soybeans, sorghum, sunflowers, durum wheat and hard red spring wheat.

These crops, if grown on dairy farms for feed, are also eligible under inventory with conversions to grain prices — as long as these crops were “subject to price risk” or incurred market costs due to COVID-19 disruptions.

In the case of corn silage, for example, Walters said producers would use their Jan 15 inventory, the amount owned by the producer on January 15 that was subject to future price risk.

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This payment calculator spreadsheet is part of the application form for CFAP payments. It can be downloaded at farmers.gov/cfap under “CFAP Application” or at this direct link 

FSA application process

“The direct financial assistance through CFAP is for commodities with 5% or greater price decline or market costs from disruptions due to the virus,” said Walters.

She noted that farm enrolled with FSA for other programs have their eligibility already on file (AGI forms, highly erodible lands conservation, banking information for direct deposit, and contact information). This streamlines the process for filling out the application electronically or faxing or mailing it in.

Walters said FSA employees can help dairy producers walk through these categories on the calculator spreadsheet that is now available at farmers.gov/cfap.

Producers can also enroll for CFAP payments online and do not have to set up an appointment with FSA as long as they have been an FSA customer in the past and have all of the FSA forms in place. The USDA has provided a payment calculator for farmers to download at farmer.gov/cfap under “CFAP Application.” It is also available at this direct link.

This gives producers the option to print the application after entering their data, and then sign it and submit it to their County FSA Office by email, fax, or mail.

Farm consultants, such as nutritionists, can assist their clients in downloading and using these forms and in calculating relevant feed crop inventory.

FSA offices are being inundated with calls. Walters noted that a CFAP Call Center is also available for producers who would like additional one-on-one support with the CFAP application process at 877-508-8364.

The main information needed to begin the application process includes:

1) Settlement milk checks for January through March 2020,

2) Receipts of cull cows sold January 15 through April 15, 2020,

3) Inventories of grain not under contract and inventories of corn silage on hand as of January 15 paid on grain conversion,

4) Direct deposit information,

5) Farm ownership structure if needed to be eligible for expanded payment limits for larger, multi-generational farms.

Walters was quick to point out that there is plenty of time to apply for CFAP payments.

“These funds are NOT first-come, first-served. The department is paying 80% of a farm’s total eligibility to be sure there is enough funding for all farms,” said Walters. “Applications will be accepted until August 28, 2020, and the other 20% of a farm’s payment will come later.”

In addition, USDA is purchased $437 million in additional milk and dairy products, including $317 mil. so far for the Farmers to Families Food Boxes as part of the CFAP program.

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Signups begin May 26 for $16 bil. CFAP; dairies payments equate to Q1 milk x $6.20/cwt

Farmers and ranchers deemed essential to our nation’s future; bulk of payment totals under two calculations to be sent a week to 10 days after signup

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By Sherry Bunting

WASHINGTON, D.C. – President Trump and USDA Secretary Sonny Perdue released the long-awaited details on the $16 billion Coronavirus Food Assistance Program (CFAP) direct payments to farmers this week, indicating that dairy farmers will be eligible for two payment rates across first and second quarter production — and those rates pencil out to be equal to $6.20 per hundredweight multiplied by first quarter production, including milk that was dumped.

Farms using USDA Dairy Margin Coverage (DMC), Dairy Revenue Protection (DRP) or Livestock Gross Margin (LGM) programs, or certain types of forward pricing through cooperatives or brokers based on futures markets, are eligible for CFAP direct payments on all pounds of milk production, even the pounds enrolled in these types of risk management tools. Participation in other forms of government aid through the Small Business Administration does not affect a farm’s eligibility for direct payments through CFAP.

Signups with USDA Farm Service Agencies began May 26, and USDA intends to send 80% of the total calculated Q1 and Q2 payment to farms within seven to 10 days of their signups. The remaining 20% will be paid later, pending the availability of funds in the $16 bil. package after all eligible commodity applicants receive first payments.

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Screenshot of CFAP payment spreadsheet calculator across all eligible commodities. A preview video on how to use the calculator and fill out forms can be found at this link — Check back at www.farmers.gov/CFAP for the spreadsheet calculator or find it through your FSA portal.

Applications will be received until August 28, 2020. USDA has a video for signup, explaining how to use the online calculator spreadsheet, across commodities at this link.

To calculate payments, USDA is using $4.71/cwt from the CARES Act applied to a dairy farm’s first quarter (Jan-Mar) “actual” milk production and $1.47/cwt from CCC funds for a second quarter (Apr-Jun) “calculated” production that is equivalent to the first quarter pounds multiplied by a factor of 1.014 to reflect seasonal production increase for Q2.

Those two payment rates with the second quarter calculation of production push the total payment to be equivalent to multiplying first quarter production by about $6.20/cwt.

With the 80 / 20 split in how this total payment will be sent, farms shipping 5 million annual pounds of milk with roughly 200 cows could expect a payment around $60,000 by early June if they sign up at the end of May, with the balance of roughly $15,000 in a later payment, pending availability of funds.

Responding to bipartisan support from members of Congress asking for payment limits to be increased so that larger multi-generation family farms can benefit, USDA expanded the payment limits to $250,000 per farm entity even with multiple eligible commodities. The previous limit was $125,000 per commodity and $250,000 per farm.

The payment limits were increased for larger farms with multiple ownership structure. Partnerships with two owner-operators would have a payment limit of $500,000, and the maximum limit for any farm structured as an LLC, LLP or corporation with three or more owner-operators is $750,000.

These payment limits apply to the total amount of money a farm can receive even if applying under more than one commodity, such as dairy and crop or dairy and beef.

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Graphic by Center for Dairy Excellence risk management coordinator Zach Myers.

Doing the math on larger herds, it appears that a 1000-cow dairy would stand to receive around $325,000 total payment (split 80%, or $260,000, right away, and the remaining 20% later pending available funds). This puts a 1000-cow dairy over the single-owner limit but under the partnership two-owner limit.

The rough math on a 2000-cow dairy comes out to a total payment of around $650,000, which is getting close to the hard-cap of $750,000. A farm of this size or larger, with three or more owner-operators, would have a payment limit of $750,000.

Dairy economists Mark Stephenson and Andrew Novakovic at the Dairy Markets and Policy website have a more detailed paper on this that can be downloaded downloaded here.

Eligibility is limited to owner-operators who materially participated in the dairy (400 hours minimum). For those deriving 75% or more of their income from farming/ranching, there is no adjusted gross income limit for eligibility. For owners not in that category, the adjusted gross income limit to be eligible for CFAP payments is $900,000.

To be eligible for these payments, farms must also show “conservation compliance” regarding the highly erodible land and wetland conservation regulations.

The original USDA notice stated that milk priced on forward contracts would be ineligible for CFAP direct payments, and under ‘dairy eligibility’ was original language stating: “Any milk production that is not subject to price risk for any time during January, February or March is ineligible.” However, USDA removed this language about forward contracting in the final rule for May 21 Federal Register publication.

USDA has confirmed that milk pounds covered by USDA risk management programs like DMC, DRP and LGM, as well as some types of forward contracts based on futures markets through cooperatives and brokers, are eligible for the CFAP direct payments. 

Forward contracts are a gray area. An example of ineligibility could pertain to milk pounds that are specifically priced under a binding contract where pricing is determined ahead of time, such as cost-plus, and where no changes were made to reduce those contracts or charge marketing fees during COVID-19. These are not common contracts, but some larger farms have such contracts with certain processors outside of the Federal Milk Marketing Orders.

In short, the final rule as prepared for Federal Register publication on May 21 no longer contains language excluding risk-managed milk from being eligible, but a farmer applying for CFAP payments is still signing a statement that the pounds of milk certified had price losses of more than 5% and incurred other marketing and inventory costs or deductions during COVID-19.

Producers are encouraged to call their local FSA offices as soon as possible to set up phone appointments for application and to find out how to provide the information required for their applications and forms, such as tax ID number, ownership structure of the farm, adjusted gross income if applicable and pounds of first quarter milk production via milk check settlement statements Jan. through March, or other documentation for dairies doing on-farm processing.

Any milk that was dumped on farms in March due to COVID-19 supply chain disruptions that is not included in the milk check pounds can also be self-certified by a producer’s record of this dumping, according to USDA.

These CFAP payments help producers offset COVID-19-related declines in income by price loss and sales loss for dairy as well as livestock and identified specialty and non-specialty crops.

Secretary Perdue indicated that for livestock and poultry growers forced to euthanize animals due to supply chain disruptions, a different program will handle those losses once USDA has the data on these occurrences to review. These CFAP payments are only for animals sold in the first quarter and animals subject to price risk that are a part of a producer’s inventory on the date chosen in the second quarter.

Dairy producers are eligible for compensation for certain types of livestock and feed.

Included under livestock are payments per head for specified classes of cattle (excluding cattle intended for dairy production), hogs, sheep (lambs and yearlings only) and wool.

CFAP_Livestock_Payment_Rate_Figure_2

It is clear that cattle sales intended for dairy are not eligible for cattle payments. However, dairy producers feeding Holstein or Dairy-cross cattle for the beef market, or raising / backgrounding such calves for feedlots may apply for cattle payments.

Cull cows are also eligible under “Mature Slaughter Cattle” for Q1 actual sales, but the “inventory at risk” method is not appropriate for dairy cull cows since they are dairy production animals while they are in “inventory,” not beef animal inventory waiting for a slot at the packing yards. Youngstock sold for to beef or veal growers, not dairy replacements, can be entered under feeder cattle. Check with your FSA office.

Assistance to cattle producers has two components – cattle sold between January 15, 2020 to April 15, 2020 and cattle inventory subject to price risk on a date of the producers choosing between April 16, 2020, to May 14, 2020. Livestock payments are per-head are shown in the Farm Bureau chart above by the two rates used for Q1 and Q2.

USDA confirmed in a media call that payments will only go to producers with eligible cattle and livestock, including contract growers if their contract allows them to have price risk in the livestock. Processor-owned livestock are not eligible for these direct farm payments.

CFAP_Non_Specialty_Payment_Rate_Figure_1_CorrectedIncluded under non-specialty crops are payment rates for malting barley, canola, corn, upland cotton, millet, oats, soybeans, sorghum, sunflowers, durum wheat and hard red spring wheat. These crops grown on dairy farms are also eligible under inventory with conversions for silage to grain prices — as long as these crops were “subject to price risk” or incurred market costs due to COVID-19 disruptions.

Also, included under specialty crops are payment rates for a variety of fruits and vegetables as well as almonds, pecans and walnuts, beans and mushrooms.

USDA has a special webpage devoted to the CFAP program at https://www.farmers.gov/cfap

CFAP payments are not government “handouts” or “bailouts”, but rather the government’s recognition that our nation’s farmers and ranchers are essential to our nation’s future. Like other businesses receiving federal assistance during this worldwide COVID-19 pandemic and economic shut down, the losses farmers are suffering are monumental and totally outside of their control and outside of the disrupted supply chain’s ability to handle under these unprecedented conditions.

Throughout the past eight weeks of publicized empty shelves, purchase limits and dumping of milk — as well as euthanizing of livestock and plowing under of produce unable to be harvested – consumers are showing renewed appreciation for American farmers and ranchers. These much-needed funds will not make farmers whole but are a life boat in uncharted waters.

According to American Farm Bureau Federation, this program is considered “an important downpayment in helping farmers and ranchers deal with the unprecedented and unexpected economic fallout related to COVID-19.”

According to Jim Mulhern of National Milk Producers Federation, the details on the dairy payments are “more than we anticipated,” but at the same time “more is needed,” he said.

Both AFBF and NMPF – as well as other farm organizations – indicate they are working with lawmakers for additional assistance in the future as the full extent of the pandemic and crisis become known. USDA will be replenishing the CCC by $14 billion in July, and Congress is currently looking at what additional measures are necessary to assist producers of commodities not included in the CFAP package.

Mulhern noted in a PDPW Dairy Signal webinar Tuesday that the dairy industry stands to lose nearly $9 billion this year if the recently released World Agriculture Supply and Demand Estimates of 2020 milk price comes to fruition – or worsens.

He said that even with the expanded limits for CFAP, “This still leaves larger operations (over 2000 cows) without coverage for larger losses. I think there’s a good chance that additional legislation, like the House ‘HEROES’ bill, to have the payment limit issue removed.”

Mulhern also noted that one of the biggest CFAP benefits to all dairy farmers right now are the nearly $450 million in new dairy purchases that were recently announced through the $317 in dairy product awards for the new food box program May 15 through June 30 and the $120 million in additional Section 32 dairy purchases out for bid for delivery to food programs in July.

The good news is that cheese, butter, powder, and milk futures prices have been rallying over the past four weeks with near-term Class III milk contracts well into the $17s — more than $5/cwt higher than the current for May. Mulhern expects to see a volatile pattern in dairy product and futures markets for the rest of this year.

To stay up to date on information from USDA about the CFAP payments, including an FAQ, click here

The 40-page official rule on was published today, May 21, in the Federal Register. Read it here.

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‘Forgotten Farms’ will be remembered in NYC

Over 100 food-thinkers and influencers attend Forgotten Farms film premier in New York City, bring questions and perspectives

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Lorraine Lewandrowski (left) and Forgotten Farms film creator Sarah Gardner (second from right) take questions from attendees after the premier showing at Project Farm House in Manhattan on March 9. Photo CADE / Zachary Schulman

By Sherry Bunting, Farmshine, May 8, 2020

MANHATTAN, N.Y. — While new farmers are celebrated by food-thinkers and thought-influencers, there’s another farmer mostly left out of the local food celebration. Traditional dairy farmers are underestimated and seen as declining, when in fact, they remain the backbone of rural communities and are integral to a renewal of regional food systems — their farms have served urban neighbors in some cases for a century.

Yet these essential farms have been essentially forgotten by the food movement as they fight for survival…

On March 9, they were remembered and celebrated thoughtfully during a premier showing of the acclaimed Forgotten Farms film in New York City. A group of upstate dairy farmers hosted the occasion. The documentary shows the cultural divide between the new food movement and traditional farming. It can be streamed at http://www.forgottenfarms.org or by purchasing a DVD.

After months of work and years of time invested in building relationships with food-thinkers in the metropolitan area, Herkimer County, N.Y. dairy producer and attorney Lorraine Lewandrowski — working closely with the Center For Agricultural Development and Entrepreneurship (CADE) — secured a beautiful Manhattan venue at Project Farmhouse to show the documentary film.

Lewandrowski is @NYFarmer on Twitter with near 33,000 followers and has tweeted nearly a quarter of a million times over the past decade spanning everything from issues of the day to simple photos of a day on the farm.

Always looking for ways to connect dairy farmers with food-interested people, Lewandrowski and other dairy producers tag-teamed as hosts for the Forgotten Farms film premier in Manhattan on March 9 and had a booth at the International Restaurant Show at the Javits Center on March 10.

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Photo CADE / Zachary Schulman

For many of the 100 food-thinkers, food-writers, and food-influencers attending the film, it was their last congregating event before New York City began safe-at-home policies as the novel Coronavirus pandemic hit the region a few days after. In the throws of the pandemic’s impact on global and national food supply chains, the Forgotten Farms documentary brings a timely message — looking into the past and ahead at a vision for a future regional food system.

“This event was made possible by (CADE) in Oneonta, New York and event coordinator, Lauren Melodia of Brooklyn,” writes Lewandrowski in an email interview with Farmshine recently. “We had seating for 100 New York City food-thinkers, influencers, writers and students. In just over an hour, the film told the stories of Northeast dairy farmers. Actual dairy farmers, some of them ‘real unique characters,’ were the stars of this award winning film created by Sarah Gardner and David Simonds.”

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Sarah Gardner and David Simonds (Photo S.Bunting)

Gardner was also present to join Lewandrowski on a panel taking questions from attendees as they enjoyed the beautiful cinematography while learning about a few central themes: The challenges of farming, milk pricing, history of farm communities, abundant natural resources of the Northeast and the feeling in dairy farm communities that dairy farmers were forgotten by the popular urban food movement.

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Photo capture from Forgotten Farms preview trailer

“The event was also a ‘deep listening’ session for us as farmers while attendees expressed their ideas, asked questions of us and gave us information from their perspectives,” Lewandrowski reflects. She notes that for the group of New York farmers the opportunity to really hear what is on the minds of city food-thinkers is essential to bridge the gaps and communicate about the future of food systems and dairy farming.

All the more telling in the eight weeks of COVID-19 impact to the national and global food supply chain, were the regional themes of the Forgotten Farms film showing the wealth of resources tended by farmers within a short drive of New York City.

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Dr. Keith Ayoob tells the audience his concerns about public belief that imitations are ‘equivalent’ to dairy milk. Photo CADE / Zachary Schulman

“A young coffee bar owner asked what she should say to the increasing number of consumers who ask for oat ‘milk.’ A pediatric nutritionist, Dr. Keith Ayoob, told the audience his concerns about public belief that imitations are ‘equivalent’ to dairy milk,” Lewandrowski relates. “Dr. Ayoob brought copies of a letter he had written in the March 7, 2020 New York Daily News rebutting Brooklyn Borough President, Eric Adams, who has called for ‘plant based’ milks and for dairy farmers to transition out of producing milk.”

Attendees asked the farmers if they knew which New York City officials are interested in regional food and who they should support politically.

Lewandrowski described these encounters:

One consumer asked how to respond to fellow environmentalists who disparage dairy milk while urging almond beverages as better for the environment.

A group of food studies students told how the film inspired them to question food “shockumentaries” they have seen in their programs and to seek trustworthy sources of information.

“Each of these questions and comments gave us ideas on other projects we as farmers can do during future trips into the City,” writes Lewandrowski.

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Photo capture from Forgotten Farms preview trailer

“A high point of our Project Farmhouse event was the support shown for the Cobleskill Dairy Judging team by attendees, most of whom have never touched a cow,” she notes. “Our announcement that the students from SUNY Cobleskill had placed first in the nation in junior college dairy judging was met with a big round of applause. We sold raffle tickets for a gift basket of New York food products to benefit these students, and the atendees gave generously to support the dairy students that they saw as their “home team.”

In speaking with guests after the film, Lewandrowski reports they were invited to do more showings in Queens, Brooklyn, Manhattan and Westchester County.

“We also met New York City food policy leaders and some of the people who have quietly worked behind the scenes as the ‘guardian angels’ of the farmers and NYC food security,” she writes. “It is the work of these unsung people that has built an extensive network of farmers markets in NYC and who are now connecting with more rural dairy farmers who sell into commodity networks.

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Photo CADE / Zachary Schulman

“Now is the time that the work of these people will be recognized and respected as city planners think about regional food in the years following the Coronavirus impact,” she adds. “Young urban supporters of farmers showed us the seaport area of southern Manhattan and invited us to return to host a NYC Dairy Festival. They urged that the public would love to see and sample cheeses, ice creams, and other products of our rich dairy region. How could such an event be accomplished?”

On the following day, Jacob Javits Center hosted the combined International Restaurant Show, the Natural Foods Show and the Coffee Festival. The dairy presence was very thin, while imitation “milks” had several booths, Lewandrowski reported. CADE organized a booth for dairy farmers where they proudly handed out fresh whole milk bottled by Clark Farm in Delhi, New York.

“Although the dairy and beef checkoffs were absent, we were happy to see booths from Belgioioso Cheese and Tillamook Creamery, both of whom drew enthusiastic cheese sampling,” Lewandrowski explains. “The Government of Quebec had multiple booths showcasing their dairy, cheeses, beef, bison and specialty lamb. Irish beef also had a presence, catering to specialty marketing in New York City.”

To be continued

Whole Milk Gallon Challenge: Titusville couple uses ‘stimulus’ payment to bless, educate, inspire

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Jake and Casey Jones wanted to bless and educate their community with a Whole Milk Gallon Challenge they hope will inspire others.

By Sherry Bunting, Farmshine, May 8, 2020

TITUSVILLE, Pa. – Whole Milk Gallon Challenge? It’s not a milk-chugging contest. It’s a way to bless the community, support local farms, educate the public, involve the school district, and get people talking about the choice of whole milk for healthy kids, healthy families, healthy communities.

Jake and Casey Jones of Titusville, Pennsylvania held their first Whole Milk 500 Gallon Challenge at the local middle school last Friday, May 1. They purchased 500 gallons of whole milk from a local bottler and 500 educational handouts through 97 Milk and worked with the Titusville Area School District to set up a drive-through in a parking lot adjacent to where families pick up school meals on Fridays.

The response was overwhelming and the gratitude from the community, humbling.

It all began when the CARES Act passed by Congress resulted in COVID-19 ‘stimulus’ payments to Americans last month. Jake, a territory manager for Mycogen, was still working full time in agriculture and had not been asked to take a pay cut. As the ‘stimulus’ credit showed up in their bank account, they were seeing farms forced to dump milk.

They decided to use the ‘stimulus’ funds to do something that would have an impact on their community and local dairy farms.

Both Jake’s and Casey’s parents have dairy farms, and they are involved in Jake’s parents’ farm. They saw the level of losses, revenue down 30% in a month and down potentially 60% by June. They had previously contacted Farmshine about the whole milk choice in schools petition  and they were seeing schools provide meals during COVID-19 closures.

At first, they thought they could donate whole milk for the school to give out with meals. However, the USDA waivers for that were only in force for the month of April, and the process was complicated. Schools had to prove the fat-free or 1% milk was not available.

“We were frustrated — always hearing reasons why you can’t do this or that, when it comes to milk. We were tired of seeing and accepting roadblocks,” Jake related in a Farmshine phone interview this week. “We decided to find a way to do what we could to impact the situation. We feel incredibly blessed, and this felt like the right thing to do — putting the ‘stimulus’ money to something bigger to hand out a gallon of whole milk separately, but in conjunction with the school lunch system.”

Now they are hoping to inspire others to keep do the same.

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Jake and Casey Jones (left), along with (l-r) student volunteer Joey Banner, Titusville Area School District superintendent Stephanie Keebler, school maintenance manager Garret Rose (front), and Ralph Kerr (not pictured) from Titusville Dairy helped make the Whole Milk Gallon Challenge successful.

In April, one of the first contacts they made was to the Titusville Area School District superintendent Dr. Stephanie Keebler. “We told her our idea, and she immediately jumped on board as one of our biggest supporters,” the couple confirmed.

“Jake reached out to me by email, and it was just amazing, very generous,” said Keebler in a phone interview. “They worked collaboratively with their church (Pleasantville Presbyterian) and the milk board and with our local Titusville Dairy and the manager Ralph Kerr to acquire the milk.”

Keebler coordinated things on the school end to make sure they distributed the whole milk in a way that would not put their foodservice program at risk (low-fat rules) and got building maintenance, Garret Rose, involved to set up the traffic flow for safety.

The school has been serving 450 to 650 individual students’ two meals a day since the COVID-19 closures. Meals are grouped for pickup on Mondays, Wednesdays and Fridays at three locations.

“When you talk about the critical need we have within our community, our foodservice people have been fantastic. They have never taken a day off and there has been no lapse in service for our families,” Keebler indicated.

By Tuesday, April 28, the Joneses had the details set. Keebler used the district’s all-call technology to notify the families of the district’s 1,915 students to let them know about the milk distribution.

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A steady flow of cars came through the Titusville Area middle school parking lot Friday as the Whole Milk Gallon Challenge was set up at the front of the school as meals were picked up at the back.

“As families drove in the back through the bus loop for the meals, we reminded them to enter the front and follow the driving pattern to where they had the refrigerated truck with the milk,” Keebler related.

Jake and Casey, with two young children at home, were assisted by a student volunteer Joey Banner in handing out the gallons and information cards. He was enthused about the challenge too.

“We are extremely grateful they reached out with this idea. The ease of collaboration between the family and the district pulled off a very successful event. Developing relationships and connecting with the community is vital,” Keebler noted.

On the milk end, Ralph Kerr and the Titusville Dairy team were instrumental, according to Jake. They provided logistics, the refrigerated truck and put them in touch with Marburgers Dairy to arrange the purchase of the milk.

“Once we had the green light, setting up the logistics went fast. We wanted every gallon of whole milk to have a handout with information,” he added. “We wanted to bless and educate at the same time, while building some ground level support for the choice of whole milk in schools.”

Other than the school district’s automated call to student families, the Joneses did not advertise the event. Until Friday.

“We did a facebook post at 10:30 a.m. that morning, knowing the school lunch pickup was set for 11 a.m. By 10:35 a few vehicles were lining up,” Jake explained. “As the first few cars drove through, we told people to let their friends and neighbors know. By 11:00 a.m., we had a big rush, and then it was steady. People were excited and asking questions.”

After the school meal pickup ended at 12:30, traffic hit a lull. That’s when their facebook post and word-of-mouth drove visitors in from the community.

“Grandparents said their grandchildren told them to come see us. People drove through saying neighbors told them or that they saw it on facebook,” Jake reflected. “We had a massive second rush of people, and some asked for extra gallons so they could take to others.”

It was gratifying to see the blessing multiply.

By 3:30, they had given out 408 gallons of whole milk and contacted the local Associated Charities to receive the remaining 92 gallons.

“The director pulled in to pick those up as we were cleaning up. She told us ‘you have no idea how many people ask for dairy products — especially milk.’ She was also excited about the 97 Milk cards, to learn something new about whole milk and to give them out with their meal boxes,” said Jake.

“By the end of the day we were exhausted, but amazed,” said Casey, and by the evening, they heard from someone involved in agriculture who was inspired to provide funding for another Whole Milk Gallon Challenge if Jake and Casey would help with logistics.

“That’s phase two of our mindset, that anyone can do this,” said Jake. “Whether it’s 500 gallons or 200 gallons or 100, or maybe it’s 200 ice cream cones — to be creative and give not just based on financial need, but as something positive, uplifting and informative for the community.”

While they were distributing, parents were already posting their appreciation on social media. Jake and Casey updated everyone with a post later that day, and it spread through over 200 shares, nearly 500 likes and over 100 comments in short order. Local families contacted them with thanks, and children sent cards.

“Seeing the gratitude, that’s when it hit us,” Casey observed. “This was impactful, and it touched people.”

“It was based on the spirit of things, not the money or financial need, but something positive that everyone could be excited about and thankful for, because it was cool and different,” Jake added. “Handing out the 97 Milk cards (item #400 at the download area at 97milk.com) with each gallon of whole milk was pretty powerful. We saw people mesmerized, looking at them.”

All printable items at 97milk.com have the cost and printer contact information noted. The Joneses ordered on a Friday and had them by mail that Tuesday.

The printer even included some extra cards they made available to local stores interested in putting them out.

“What started as a gesture, opened up a ‘conversation’ with the education piece,” Jake related. “If the public is not educated about whole milk, then all the pushing in the world won’t make the choice of whole milk in schools happen.”

“We want to keep things happening in this town, and it can happen elsewhere,” Casey suggested.

“That’s the challenge,” Jake added. “If someone picks up the idea into other towns, states, with heavier population. Maybe a few families, a business, a group, take on the Whole Milk Gallon Challenge together and build some interest to get schools and families talking.”

Most important, said Jake: “If you are feeling you want to do something but think you can’t do enough, just do what you can. If a handful of people each do a little something – together — in a lot of different places, a lot can be accomplished.”

His advice? First, contact a local bottler. “Google to find a plant in your area or region. Start there. It was very easy once we talked to the people at Titusville Dairy and Marburgers,” Jake advised. “By using a local bottler, the local community gains more bang for your buck in supporting local farms.

“If you are not involved in agriculture and want to do this in your community, ask a local farm where they ship their milk,” Jake suggested.

“Many farms have facebook pages, look for one in your area and contact them that way about milk bottlers in the area,” Casey added.

Other advice: Call an area food bank or charity ahead of time to have a place for remaining milk. Pre-set the hours to a tighter window, like 11 to 2. Start publicizing 4 to 5 days in advance. And work with your local school district.

“Schools have big parking lots with traffic patterns already in place, and they can help you set up a safe flow of traffic and a way of communicating it to families in the district,” Jake said. “Plus, getting the school involved — superintendent, building manager, foodservice — increases awareness and gets them thinking and talking about whole milk.”

“It has to be whole milk with the educational component for the long-term impact,” said Casey. “Our mindset was to buy the milk and give it away, along with the information.”

“Let people know this is as much a gift as an educational thing, and that all are welcome to receive,” Jake concluded. “Don’t be intimidated by a number, just do what you can.

“We would challenge all of us to do what we can because we can all be doing more.”

To contact Jake and Casey Jones for information and advice to do a Whole Milk Gallon Challenge, email them at Jake.t.jones46@gmail.com

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May 1, 2020 was ‘food heroes’ day — a national day to honor school nutrition personnel. In Titusville, Pa., cars had brightly colored signs of thanks for their every day food heroes at the school preparing meals for pickup, and for the milk heroes providing gallons of whole milk to their community.

Monitor, document, reassess, reach out

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On the financial side of handling the plummeting prices and disruptions to what was previously expected to be a better year for dairy, Dr. David Kohl, Virginia Tech, talked about the Coronavirus pandemic’s impact and how to manage it during a Center for Dairy Excellence industry call last week.

“What is different about this is that it hit everyone in the world and how sudden it was. It created demand destruction, and it has affected consumer behavior.”

Kohl said 70% of the U.S. economy is driven by consumption, and 40% of that consumption economy is tied to airlines, hotels, restaurants, recreation and the sports world. “Now that 70% of the U.S. economy has been knocked down to 30%,” he said. “We are not going to just flip that switch.”

He sees the “consumption economy” coming back to just 75% of its prior strength in the restaurant, hospitality and foodservice sectors, “because people are changing their behavior.

“We also export a lot of dairy, but we will see a move from globalization to ‘selective’ globalization,” said Kohl. “This black swan will turn into an angry bird with agriculture as the point dog for extreme volatility.”

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Dr. David Kohl

Kohl stressed three entities need to work together: producers, government, and agribusinesses/lenders. “Lenders will have to think about interest-only and principle deferments because producers will need good sound financials to get through this.”

Kohl said it is too early to tell what effect COVID-19 will truly have on exports. “The value of the dollar vs. other currencies is still strong. The economic health of countries we export to is important, watch for how the middle class is doing in those countries.”

Overall, Kohl sees the economic recovery being more of a Nike-shaped swoosh than a v-shaped bounce-back. As recovery takes shape, the foodservice and export demand will come back but not in a big way, he said, and not immediately.

He gave this advice as a financial expert, ag economist and part owner of a creamery:

  • Monitor cash-flow month-to-month and compare actual to projected to see where you stand.
  • Document losses so we can send a message about them to congressional delegations about what we need.
  • Meet with lender and accountant and go over the financials.
  • Communicate, be flexible and adapt.
  • Be real careful of knee-jerk reactions — that goes for farmers, lenders, and the government.
  • Follow protocols for the virus and know what your protocols are.
  • Never equate self-worth to net-worth.
  • Keep re-assessing your goals.
  • Reach out. Remember, you are not in this alone.

Kohl also sees opportunities for the future. “I have been outspoken on this. There is too much consolidation and concentration in our industry — whether it is dairy or beef,” said Dr. David Kohl, Virginia Tech professor emeritus as a Center for Dairy Excellence industry call guest last Thursday, April 23.

“We have to look at our supply chains and the vulnerability of them, the vulnerability of having too much power in the control of two few in the food and agriculture industry.

“America was built on small business and entrepreneurship. Even as small processors, we can go bankrupt very quickly, but this is where we also have great opportunity in the future,” Kohl suggested.

Participating on industry teleconferences and webinars over the past few weeks of the Coronavirus pandemic, Dr. Kohl has voiced his observations about how COVID-19 is changing consumer behavior and exposing food supply-chain vulnerabilities.

Some of his insights offer a systemic reality-check, but also present some forward-looking opportunities.

“We had a run-up in demand the first couple weeks of this thing. In general, it is still stronger, but we are also seeing people want local, and they want transparency,” Kohl reported. “People want to know where it comes from, how it is processed and to know the producer.”

He described the supply chain disruptions in dairy over the past several weeks as being attributed to large processing entities built on serving restaurants, universities, schools and other institutional foodservice, and catering to a segment of the international market – bulk products or tiny table sample products — not retail family-sized.

On the other side of that spectrum… “We are feeling this movement back to local, and it’s getting stronger,” said Kohl, adding that creamery home-delivery, for example, is taking off. “People want delivery.”

The other thing Kohl sees in consumer behavior is a return to “emotional food,” something some would call “comfort food.”

Consumers are not only following the science and realizing the healthfulness of dairy fat, they are gravitating toward natural, local and emotional food that brings comfort. Dairy can fit that mode very well if the consolidated supply chain can loosen the grip, open up, and welcome opportunities for local and regional models of processing and marketing.

Kohl said he sees it in the big trends and at the creamery — demand is growing for products like whole milk and ice cream — emotional comfort food.

Various fresh dairy products

— By Sherry Bunting, Farmshine, May 1, 2020

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