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 begin 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.

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.

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As a side note, there are questions about whether or not CFAP payments for beef cattle apply to dairy cull cows. 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 may be 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. Crops grown for on-farm feeding of dairy animals or livestock are not eligible, but cash crop sales are.

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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From USDA to checkoff, no one in farmer’s corner

By Sherry Bunting, Farmshine, April 17, 2020

BROWNSTOWN, Pa.– From the fortress of the USDA to the ivory towers of the dietary command to the branches of the checkoff government-speech machine and the centralized, globalized food system ‘partners’ in between — No one is in the farmer’s corner. Not even the people paid by the farmers to be in their corner.

This much is crystal clear by now in the collapsing markets and stark realities laid bare by the COVID-19 pandemic.

The curtains have been opened.

And the usual players do what they do.

They pat themselves on the back, converse about their insights from within their echo-chamber, and lecture those who would dare call attention to the sight before us or deviate from the script.

Over the last week, dairy checkoff newsletters have bragged about what they are doing for dairy demand amid the deepening crisis; how DMI is “adjusting to move more dairy.”

Yep, the bulk butter and bulk cheese and bulk powder plants in growth areas are moving more dairy — right into the already bursting at the seams cold storage inventory warehouses.

Few if any reports from states with these large plants indicate any milk dumping whatsoever.

Butter inventories were already 25% higher than year ago heading into the COVID-19 pandemic and cheese inventory was already growing too.

Reports indicate such fully functioning cheese and whey or powder plants are running full tilt, while a shopper has to store-hop through three or more establishments to find a package of butter, walk into Walmart and see rows of empty cheese racks, try to walk out of a Walmart or Sam’s Club with two gallons of milk and be forced to give one back.

Other supermarkets aren’t much better, except for the smaller family-owned markets. Pictures and texts continue to pour in, while our leaders assure us that the purchasing limits are really lifted.

Go to Kroger’s website (a DMI partner) and see their explanation of why they’ve raised the price of milk. It’s because there is a shortage, they say, while farms all around them are forced to dump milk. Just six weeks ago, a Kroger executive I spoke with said, ‘no we can’t raise the price of milk — it was $1.25/gal pre-COVID (not in PA of course but elsewhere).

I was making the point that we have loss-led and commoditized this deal long enough. Please respect the milk. “No,” I was told, “raise the price? How is that going to sell more milk?”

What is Kroger doing today (and Walmart and other heavy hitters for that matter)? NOW, they are raising the price, even canceling some orders without much to spare, as they are being asked to stop limiting sales.

Meanwhile farmers are forced to dump milk.

As the commodities crash with barrel cheese at around $1/lb and butter headed there too, are the food system heavy-hitters holding back to buy that higher-priced inventory on the cheap just to turn it around and charge more?

We are getting to see how the system works — how the losses and consolidation of a decade or more are threatening our farms and food security. But leaders and policymakers are still convinced this system is the best, and thanks to new stricter rules coming on animal proteins and fat, it’s about to get better, more diluted, and void.

Take the DMI update in the ADA Northeast newsletter from April 6, how proud they are of the “seven ways checkoff is working for you during COVID-19” and how they are “adjusting to move more dairy”, how GENYOUth is “keeping the meals flowing to students”, while in reality the real school chefs and lunch ladies — even bus drivers — are out on the front lines figuring it out for real on their own every day; how proud they are that the National Dairy Council “sorted through milk myths.”

Now that last one is a doozie. Here’s one of the seven ways checkoff is working for you: “National Dairy Council is among the expert organizations to debunk claims that milk can help ward off coronavirus.”

Remember the news about milk and it’s immune-building properties? Even Hoards Dairyman noted milk was “flying off the shelves” as consumers sought the health benefits and comfort of milk.

Remember how DMI tells us “you can’t educate people to drink what you want them to drink?” How “we want to move people away from the habit of reaching for the jug and toward the new innovative products?”

It wasn’t even a week after fluid milk sales skyrocketed 40% that the National Dairy Council helped debunk some of that immune-building “myth” in Reuters story.

And yes, rest assured, DMI is talking to “your (their) partners” to get them to “move more dairy”.

So here’s the clincher. Watching the President’s daily COVID-19 press conference Wednesday evening (April 15), it really hit home, bringing together so much of what I have seen and heard over the past few weeks and the months and years before that.

Agriculture Secretary Sonny Perdue was part of President Trump’s daily presser Wednesday, and I was hopeful when he went to the microphone that he would talk about impact to food and agriculture during the COVID-19 pandemic.

He told Americans that “Our food system is strong, resilient and safe,” despite the bare shelves and limits on purchases that people are seeing in supermarkets.

“In the United States, we have plenty of food for all of our citizens,” Perdue said. “I want to be clear, the bare store shelves that you may see in ‘some’ cities in the country are a demand issue, not a supply issue.” (Huh? At least he didn’t phrase it the way Pennsylvania’s Ag Secretary does, saying in a PDA public service announcement to radio and television stations that store limits, bare shelves and dumped milk are a ‘hoarding issue”, and saying in a dairy industry conference call: “this is what happens when people hoard food.”

No Mr. Secretaries, this is not hoarding and it’s not a ‘demand’ issue, it’s a centralized, consolidated, globalized food industry structure issue.

Back to Sec. Perdue’s moment before the American people… Perdue said simply that there has been a large shift from people eating in restaurants and fast food businesses, and now eating at home, which has spiked in the last few weeks and placed a high demand on grocery stores.

“Our supply chain is sophisticated, efficient, integrated and synchronized, and it’s taken us a few days to relocate the misalignment between institutional settings and grocery settings.” Perdue said.

Bingo. The accelerated creation of this machine over the past decade has been designed by government policy from the flawed dietary guidelines, to the government speech farmers are forced to pay for, to the mergers and acquisitions and antitrust behaviors, to the globalization and centralized decision-making, to the erosion of local/regional milksheds and foodsheds.

Yes, Mr. Secretary, that sophisticated, efficient, integrated, synchronized food supply chain has moved our country closer to cow islands and food deserts and fracturing of regional food security.

Some of the best minds in agriculture economics are seeing it. Consumers are waking up to the realization of what that means when the chips are down. They are watching their communities’ farmers dump milk, depopulate poultry flocks, send milk herds to slaughter.

This pandemic has peeled back the band-aid covering gaping wounds inflicted for years, and now when it is open and bleeding for all to see, the Secretary reassures the nation that this big beautiful bountiful ag food system simply needs to “relocate a misalignment.”

Tammy Goldammer, a cattle rancher friend of mine in Missouri put it bluntly in a social media post after listening. Here are some of her words:

“Production Ag People?

Did you happen to listen to US Ag. Sec. Perdue’s comments today at the Rona Update press conference? Were you reassured about your occupation of raising the highest quality protein sources to feed the world?

Did you find it interesting that there was no mention about “producers” and what is going on with what they raise to feed people?
1. There was no mention of the killing of millions of ready to harvest chickens and turkeys…to leave them to compost.
2. There was no mention of the dumping orders for milk and the orders to let cows go dry and to sell the dairy cow herds.
3. There was no mention of the shuttering of ethanol plants and the resulting depletion (no supply) of by-products utilized in the livestock feeding industries.
4. There was no mention of the Mercantile Exchanges and the crashing commodity prices for livestock, dairy and grain futures.
5. There was no mention of the bankruptcies and insolvencies of feeders who grow the nation and the world’s protein sources.
6. There was no mention of the sucking sound to the south of the beef cattle industry.
7. There was a mention there are a few “slaughter” plant closures due to Covid-19 being detected in some employees.
8. There was a mention that our nation’s food supply is abundant and there should be no fear about food availability.
Do you all like math? Mr. Perdue? Your commentary today to assure the American public was absolutely “void” of speaking to the producers/people who produce what you stated is in good shape and rest assured there are no shortages.
To say I was “stunned” at your “void” on the big picture, well, let’s say I was totally bewildered.”

But never fear oh sophisticated, efficient, integrated and synchronized food system, President Trump followed the Perdue comments with news that there is $15 billion in tariff money left in Sec. Perdue’s charge to help farmers who were targeted and he gave the Secretary the go ahead to use it.

Later this evening, word came that the government will begin buying milk and meat. Yes, as mentioned by Pennsylvania’s own Secretary in his PSA ‘stop hoarding food’… ‘food banks need the food’… ‘we have a system…’

Yes, the integrated centralized system is the proper channel while communities take care of their own with whatever resources they can muster. Good people in communities like mine right here in Lancaster County, Pa. are buying milk, giving it to the needy or seeking processors (for pay) to process milk headed to manure pits so it can be donated, only to bump up against that integrated system.

Kudos to those businesses in the community who are buying milk to give to the needy or stepping up to allow their smaller processing plants get milk ready for food banks before it is wasted.

The efficient, sophisticated, integrated, synchronized food system is not. But it will when the price is low enough and the government starts buying.

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Call to action: Feds ignore science on saturated fats, poised to tighten restrictions in 2020-25 guidelines

Where is our dairy industry? No time to waste!

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By Sherry Bunting, Farmshine, April 3, 2020

 WASHINGTON, D.C. — While Congress, USDA and HHS are all consumed by the health concerns of the COVID-19 pandemic, the Dietary Guidelines Advisory Committee is moving forward full-steam-ahead with what looks like more restrictions on saturated fats to be announced in May. Meanwhile, dairy leadership organizations sit on the sidelines, just letting it happen.

According to the Nutrition Coalition, and this reporter’s own following of the DGA Committee process, the process has been flawed from beginning and has reached a critical juncture. There is an urgent need for the public to pay attention and get involved.

Many had hoped the Committee would review and include the sound science and revelations about the flaws in the saturated fat limits in the current dietary guidelines to remove those restrictions or improve them in the 2020-25 guidelines. But the opposite is occurring.

As reported previously in Farmshine, some of the very best and most rigorous science on saturated fats and in relation to dairy fats vs. cardiovascular disease have been excluded from the review process from the very beginning.

Unfortunately, the process that began in 2019 is poised to move Americans even further down the wrong road with even more restrictive fat rules that will govern and inform all institutional feeding and which heavily influence the foodservice industry. Even worse, farmer checkoff funds are forced, by USDA, to help promote these unhealthy guidelines.

While National Milk Producers Federation, International Dairy Foods Association, Dairy Management Inc., and other industry organizations are silent, the Nutrition Coalition, founded by Nina Teicholz, author of The Big Fat Surprise, is sounding the alarm.

“We need your help to ensure that the federal government not continue to ignore large, government-funded rigorous clinical trials — the “gold standard” of evidence — that could reverse decades of misguided nutrition policy on the subject of saturated fats,” writes Teicholz in a recent communication.

She’s right. From the beginning, the DGA Committee was formed, and the research pre-screened by USDA, in such a way that many of the best studies and minds have been excluded.

Processed With Darkroom

Part of the screening process used by USDA for science that will be included or excluded from Dietary Guidelines Advisory Committee consideration is this curious item shown above: “Framed around relevancy to U.S. Federal  Policy”. Committee members in October asked for more information on this research screening criteria. USDA explained it to them and those watching that this refers to including only the research that “aligns with current federal policy.”

Interestingly, one of the criteria for screening the research the Committee can consider is that it must “align with current federal policy.”

This dooms the entire process to a slanted view that is entrenched in the flawed bureacracy right from the start!

During the recent meeting of the DGA Committee in March — the last such meeting before release of the 2020 Dietary Guidelines for Americans (DGA) in May or June 2020 — the Committee failed to consider any of this evidence on saturated fat.

Instead, the committee announced it had found the link between saturated-fats consumption and cardiovascular disease to be “strong,” for both children and adults.

In fact, the committee recently proposed lowering the caps on saturated fat even further, from the current 10% of calories down to 7%!

“These conclusions ignore the entire last decade of science, during which a growing number of scientists have concluded that the caps on saturated fats are not supported by the science,” Teicholz points out.

She cites the work of a group of leading scientists who have reviewed the research on saturated-fats and released a consensus statement.

“Scientists are concluding that the most rigorous and current science fails to support a continuation of caps on saturated fats,” writes Teicholz. “So, why is the current DGA Committee — yet again — simply rubber-stamping the status quo and ignoring the science?”

The Nutrition Coalition is working fervently to expose the flaws in the process the DGA Committee is using under the USDA Food Nutrition Services umbrella. This in turn is what is used by USDA and HHS to govern what Americans eat.

These are not just “guidelines”, these are edicts to which everything from school lunches to military provisions are tied.

In fact, even farmers are tied to these guidelines as the dairy checkoff program leaders maintain they cannot promote whole milk because they are governed by USDA to stick to the guidelines, forcing farmers to mandatorily fund this completely flawed and unscientific “government speech.”

Americans deserve a recommendation on dietary saturated fat that is based on the most current and rigorous science available, and the Nutrition Coalition is issuing a call to action for Americans to join them in calling on the 2020 DGA Committee to critically review the most up-to-date evidence and modify its position on saturated fats accordingly.

“When we refer to “rigorous science,” we mean the data from well-controlled, randomized, clinical trials—the type of evidence that can demonstrate cause and effect,” writes Teicholz. “These trials were conducted on some 75,000 people addressing the question: do saturated fats cause heart disease? The results are that fats have no effect on cardiovascular or total mortality. This evidence has never been directly reviewed by any DGA committee.

“Ignoring evidence in order to preserve the status-quo is not acceptable,” she continues. “It’s not good policy, and it has not been good for the health of the American people. With the next iteration of the guidelines, your help is more crucial than ever to ensure that the USDA critically review the most up-to-date evidence and modify the government’s position on saturated fats to reflect the science accurately.”

Meanwhile, the dairy industry leaders continue to drag their collective feet.

As reported in Farmshine over the past few years, the call to action and support for healthy recommendations that consider the science on saturated fats and the goodness of whole milk, for example, has been largely pursued by grassroots efforts while industry organizations either fall in lockstep with the guidelines or stay neutral on the sidelines.

Once again, it will be up to the grassroots to get involved, for the public to be aware and get involved, for the Congress to be contacted, informed and involved.

How many times have we heard industry leaders shrug their shoulders and say “it all hinges on the Dietary Guidelines”?

dga1

When presented at the October DGA meeting with the first 12,000 names on the “Bring the choice of Whole Milk Back to Schools” petition (now numbering close to 30,000 online and by mail), Brandon Lipps, USDA Deputy Under Secretary of Food Nutrition Services, gave this response: “We have to see the science start coming together and be sure to bring everyone in… into the process.” Now it appears the Dietary Guidelines that control food at school, daycare, work settings, military, and many other foodservice and institutional feeding settings will be even MORE restrictive allowing even LESS of the healthy fat we — especially our children — need. The fat we eat is not the fat we get! Why is USDA moving us further in the wrong direction and excluding the science on this?! Act now. There are links in this article to speak out. Sign the Whole Milk in Schools petition also!

If there is even a chance that our children can have whole milk and healthy meals at school, that farmers can use their mandatory checkoff to promote the true healthfulness of whole milk and full-fat dairy foods, this biased process of DGA Committee guidelines has got to be challenged in a big way.

Here’s how you can help.

Contact your Senators and Representatives in Congress with a simple message. Ask them to please ensure that USDA is not ignoring the science on saturated fats.

Below is a message that the Nutrition Coalition suggests, which you or your organization can adapt and share with others in communicating with members of Congress:

Please urge the agencies in charge of the Dietary Guidelines for Americans (DGA), the USDA and HHS, to stop ignoring large clinical trials-the “gold standard” of evidence – that could reverse decades of misguided caps on saturated fats.

Shockingly, none of this evidence has ever been reviewed by any expert committee overseeing the science for the Guidelines. In fact, the current committee is pushing to lower the caps even further.

This is extremely alarming given that a growing number of prominent nutrition scientists have concluded the evidence shows that saturated fats have no effect on cardiovascular or total mortality. In fact, a recent panel of leading scientists reviewed the data and in a groundbreaking consensus statement, soon to be published in a medical journal, found that the science fails to support a continuation limits on saturated fats.

The current DGA committee appears to be one-sided and biased on this issue.

Please urge the USDA to stop ignoring the science and give serious consideration to lifting the caps on saturated fat for the upcoming 2020 DGA.

An easy way to do this online is available at this “take action” link https://www.nutritioncoalition.us/take-action

Or find the name and contact information for your Senators and Representative at this link and contact them that way https://www.govtrack.us/congress/members

Also, comment at the Federal Register docket for the DGA Committee by May 15, 2020. The sooner, the better, because the committee is expected to make its recommendations in May. Submit a comment to the Dietary Guidelines Advisory Committee here https://www.regulations.gov/docket?D=FNS-2019-0001

Also take this opportunity to sign this petition to “Bring the Choice of Whole Milk Back to Schools” at https://www.change.org/p/bring-whole-milk-back-to-schools

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Farmers forced to dump milk while stores limit consumer purchases

AUTHOR’S NOTE: There is no single “reason” why farmers are being forced to dump their milk and why stores are largely still limiting the amount that consumers can purchase this week. The situation is complex, and two rumors are confirmed to be untrue. First, there is no health problem or health-related plant closure, nor is there a shortage of gallon jugs, according to Department of Agriculture sources. And no, milk jugs are NOT made in China. Most milk processing plants have their own plastic blow-molds and U.S. companies produce them as well.

Now that a few rumors are out of the way…  Here is the industry narrative for plunging farm-level milk prices and farms being forced to dump their milk. It goes something like this: “Schools are closed, foodservice demand is stalled and exports are drying up. The first two weeks of so-called “panic buying” at supermarkets settled into a third week into the COVID-19 national emergency finding consumers continuing to ‘buy’ more milk and dairy products, but “not buying enough to overcome” the aforementioned sales losses…”

It’s difficult to buy something that is not available or has store-level restrictions enforced on how much to buy. Schools account for 8% of fluid milk sales under normal conditions, and children are still served milk with grab-and-go meals offered, which keeps a portion of that 8% going. It is not a ‘panic buy’ when a family of four wants to buy 8 gallons of milk a week because all family members are home due to COVID-19. Interestingly, one week earlier, before store purchase limits were set, USDA reported Class I beverage milk usage quite differently and Nielson Global insights showed sales up exponentially (See more here and here)

While a full report is still in process, here’s my take below as filed for the midnight April 1 press deadline for Farmshine after exhaustive calls, emails, texts, messages, reports, and analysis of letters and forms that I am still pouring over for a more complete report for next week’s edition… One late breaking detail not found below, is that some farms were able to find private food pantries such as Blessings of Hope to take milk that was destined for dumping. In order to go to food banks, the milk needs a processor to pasteurize and bottle it or turn it into something like cheese. Another late-breaking detail not found below is the unofficial tally of milk dumped in the Northeast and Mid-Atlantic region north of 200 loads, and the Southeast could approach 150, meanwhile sources indicate large national footprint cooperatives handling nationwide farm milk supplies met a weekly demand increase in the East of twice that amount. The math isn’t adding up.

 

Younker_dump_milk

Stephanie Younker of Mohrsville, Berks County, Pa. watches as her family, along other farms shipping to Clover Farms Dairy in Reading, dump two days worth of milk early this week. According to the Northeast Market Administrator’s office, six to eight different milk ‘handlers’, many of them cooperatives, reported dumping milk at the end of March and that more reports are expected into the first week of April as stores continued limiting purchases with varying availability.

March ends with dairy supply chain bottlenecks, utilization management; Farmers forced to dump milk while stores limit dairy purchases

By Sherry Bunting, Farmshine, Friday, April 3 edition (updated)

BROWNSTOWN, Pa. — While most supermarkets placed limits on consumer purchases of milk, butter and other dairy products — with the majority still enforcing those limits through April 1 at this writing — dairy farmers were forced to dump unprecedented amounts of milk throughout the Mid-Atlantic, Northeast and Southeastern states. Reports late Wednesday indicate some dumping also began in Wisconsin this week.

On Wednesday, the Northeast Market Administrator’s office confirmed six to eight different handlers, principally cooperatives, had reported dumping milk at the end of March in the Northeast Federal Milk Marketing Order. (Payment, pricing and utilization of Class I beverage milk is regulated by the U.S. Department of Agriculture (USDA) under 11 Federal Milk Marketing Order regions across the country. Prices paid to farmers are based in part on the receipts and utilization reports that are filed by milk “handlers” at the end of each month — dividing the milk by how it was used into four classes of which Class I beverage milk is the highest priced, Class II is frozen and soft products, Class III is cheese, and Class IV is butter and powder and is typically the lowest class.)

USDA Dairy Programs in Washington had received numerous phone calls and inquiries from milk handlers (processing plants and cooperatives) last week and issued a notice late last Wednesday, March 25, stating that, “In response to questions from the dairy industry, USDA will be implementing allowable flexibilities … to meet the changing consumer demand within the Federal milk marketing order program. The flexibilities will meet changing needs of both the dairy farmer and dairy processor and manufacturing communities to ensure efficient milk movements from farm to table. USDA wants the public to feel reassured that retail outlets will have milk available.”

Microsoft Word - GEN-#522324-v1-Covid-19_Response_Letter-March_2This was followed by a letter (above) from the Northeast Milk Market Administrator, allowing flexibility for milk to move from unregulated non-pool dairy product plants into regulated Class I beverage or pool plants and between Milk Marketing Order areas to serve “increasing demand” for fluid milk. The same document states that milk disposal on farms that are “historically associated” with the Order can be dumped, pooled and priced on the Order as “other use” at the lowest Class value. (Clarification: Outside milk from other Orders going into Class I use would be pooled and priced on the Order from which the milk came.)

For March 2020, Class IV is the lowest value, with the price announced for all Federal Orders Wednesday, April 1 at $14.87 per hundredweight (100 pounds) or $1.27/gal. compared with the Class I beverage milk price in the Northeast for March at $20.71 ($1.78/gal). The more Class IV or dumped ‘other use’ milk priced on the order for March, the lower the blend price paid to all farmers for all uses combined. It is already looking like prices paid to farmers for the next three months could fall into the $13 to $14 / hundredweight ($1.16/gal) range or lower. Average breakeven price for farms to produce milk is $17/hundredweight or $1.45-$1.50/gal.)

What started with the news that Mount Joy Farmers Cooperative and the greater DFA cooperative would be forced to dump eastern Lancaster County milk into manure pits for lack of a plant to process it over the weekend (March 28-29), grew to include confirmation of farmers in Berks, Lebanon, Cumberland, Franklin and Perry Counties being forced to dump milk into early this week. And reports from western Pennsylvania indicate the same.

By Monday, all independent dairy farm producers for Clover Farms Dairy in nearby Reading, Pa. were receiving notices that they would have to dump 48 hours worth of month-end milk between Monday and Wednesday (March 30-Apr. 1).

Add to this, confirmation that DFA members were having to dump milk in New York and Vermont, and that small independent cooperatives in New York were either having to dump some of their milk or were being shut out of the ‘spot’ market and having to dump all of their milk. Farms in the Southeast states began reporting they, too, were being notified they would have to dump milk with no where for it to go.

Furthermore, Land O’Lakes member farms in Pennsylvania’s mid-state reported dumping significant milk loads Tuesday, after shipments to the Weis Markets bottling plant in Sunbury, Pa. were turned away despite the Weis Markets stores throughout the region having scant supplies of milk and still enforcing 2-gallon per shopper limits as of Wednesday, April 1.

Walmart

Walmart’s milk cooler in Hamburg, Berks County, Pa. on April 1, 2020

As Walmart, Weis, Aldi’s, Target, some Giant stores, and others were confirmed to have sparse or empty dairy coolers — and a few chains and small town stores reported good stocks of milk and some dairy products — farmers continued to be forced to dump their milk, being told the dairy plants were full, the stores were not ordering, and consumer demand had shrunk after being described by USDA the previous week as “exponentially higher” than a year ago and “extraordinary”, “haywire” and “overcoming inventories” the week before that.

target_butter

Signs like this one at Target were the rule, not the exception among many store chains this week, while nearby dairy farmers were forced to dump milk.

Adding to the complexity of the issue is milk silos and tanks full of cream that could not be moved as candy makers and bakeries closed or cut back, and foodservice and institutional trade came to a standstill.

As the industry supply chain adjusts product lines from schools, restaurants and other foodservice products to retail-packaged products, some plants reported not being able to process milk fast enough for two weeks of surging demand, bringing outside milk in — only to find the stores had started limiting consumer purchases or were spreading their risk of running out by stocking other brands. Difficulties unloading milk to stores in New York City was also cited.

In store dairy cases where milk was most scarce this week, store managers indicated issues with getting supplemental milk from other processors in other areas due to regulatory pricing “zones”, which they interpreted to mean that milk was being rationed so a more uniform distribution of available supplies would occur.

In terms of retail manufactured products, butter continues to be mostly unavailable at stores checked throughout the Mid-Atlantic region, and reports coming in from other areas indicate similar scant supplies and restricted purchases.

By Wednesday, April 1, some stores were re-stocked with milk and dairy products, and a few chains were lifting restrictions on gallons of milk, but they were the exception, not the rule. Almost universally, however, butter was absent or limited at retail outlets despite a cold storage bulk inventory report by USDA last week stating there was 25% more butter in storage than a year ago. Still, last week, processors made more bulk butter for foodservice that ended up in inventory, doing ‘print’ butter for retail on more of a hand-to-mouth basis, and the result is obvious in the lack of butter available to consumers seeking it at retail.

Jennifer Huson, senior director of communications for DFA Northeast reports that anyone having to dispose of milk should take measurements.

According to USDA Dairy Programs, producers should also collect an agitated sample. If not available, it is possible that missing samples can be quantified using previous and next samples in order to calculate protein and butterfat levels for the volumes of discarded milk that in most cases officials say will still be pooled and priced on the Federal Orders.

It is also apparent — according to Federal Order rules and the announced flexibilities — that Class I handlers have a clear financial incentive to price and pool this dumped milk on the Order because it will be priced at the lowest class value ($14.87 instead of $20.71), allowing them to draw from the pool while diluting the previously exponentially higher Class I utilization percentage experienced across the entire Northeast Federal Order the previous two weeks in terms of reducing the USDA blended price based on the milk handlers’ reports of receipts and utilization for March due around April 10 to the Market Administrator’s office.

While there are conflicting reports from some plants and handlers about whether farmers will be paid for the milk they are forced to dump, DFA says dumped milk will be pooled and paid, but they are tracking and looking at it from a comprehensive standpoint to see how to handle and aggregate it going forward.

“We want to make sure we are doing everything we can to fully understand our best opportunities moving forward through dynamics that are changing day by day and hour by hour,” said Huson. “Most importantly, in these uncertain times, we are working to make sure milk continues to be picked up, plants continue to operate, and wholesome dairy products continue to be available to consumers. We are not sure what is coming at us, and we want to make sure as this is evolving that we are doing all of those things.”

Look for a full and ongoing report next week in Farmshine.

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