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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Consumer trends amid COVID-19 have DMI a bit perplexed

Gallagher skeptical about ‘comfort and nutrition’, wants data from partners, not opinions. O’Brien says ‘future of dairy’ may go fast-forward

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Data shared by DMI in the May 4, 2020 industry call shows all retail dairy sales categories are up significantly year over year. DMI CEO Tom Gallagher noted that the level of increased sales of fluid milk compared with a year ago are “still relatively consistent” as of the end of April.

By Sherry Bunting, Farmshine, May 15, 2020

CHICAGO, Ill. — Amid the supply chain disruptions brought on by COVID-19 restrictions, Dairy Management Inc. (DMI) and the National Dairy Board are having weekly conference calls. They say 100 to 150 farmers have been participating.

And they are scratching their heads a bit over what to make of the now ‘unleashed’ consumers.

‘Unleashed consumers’ is the phrase I have coined for describing consumers now in control over their food, beverage and dairy choices, now that they are not so completely influenced by away-from-home and institutional feeding that adhere more closely to the dietary guidelines.

This has emerged most notably in the huge increases in whole milk sales that have boosted the fluid milk category well over year ago levels to the first year-over-year increase last month in decades. It has also shown up in the demand for butter, full fat cheeses and other cream products that sell out quickly at retail and prompt spot shortages.

On the May 11 DMI call, Russell Weiner, Domino’s COO and president of the Americas, was a guest and he highlighted his company’s partnership with dairy checkoff since 2008. That is a separate and quite interesting story. One thing he referenced is that pizza sales have been strong through the pandemic, and that consumers historically spend 5% of their disposable income in the quick-serve-restaurant (QSR) sector through recessions and other crises. This appears to be holding true amid the pandemic.

DMI CEO Tom Gallagher and National Dairy Board president Barb O’Brien also gave updates about what DMI is doing about consumer buying patterns and future trends. It was evident in the discussion that DMI has a future of food concept for dairy based on prevailing insights from its partners and does not want to deviate from this framework unless data from partners points to a true shift in consumer purchasing and unless they have a “why” behind the shift.

Gallagher stressed that DMI, and the states and regions, are collecting every piece of information from every partner they can to “see what it will mean post-COVID or during COVID. There are a lot of opinions out there,” he said, “but it’s too early for us to put our stake in the ground as to this is what it will be.”

He talked about DMI’s data partner Inmar Analytics, which did the recent 2019 “Future of Food Retailing” report. “At no charge to us, they are looking at the buying patterns after the initial ‘panic buying,’” said Gallagher. “We know what people bought, but why did they buy it? Was it because they were interested in comfort food or nutrition? Or were they hoarding? Or were they baking more? I am a data guy. I want to see the data as to why they buy what they bought.”

In a skeptical tone, Gallagher went on about these so-called “opinions” on the buying patterns revealed by COVID-19 impacts.

“Some say, ‘Oh, it’s a return to nutrition.’ And some say, ‘Oh it’s a return to comfort food.’ But what really drove their behavior? And what strategies should really influence our thinking about the future? We don’t know. In the meantime, we will collect information,” Gallagher said. “We all have opinions, but we want to be informed with data, not opinions, to design how we move forward.”

Gallagher mentioned a study coming out this week on what food companies are thinking will be the patterns after COVID. When pressed later about how to hang on to the new-found bump in purchases of certain dairy products at retail (such as whole milk and butter), given that some of these purchases may be relatively new for some consumers, Gallagher was steadfast on not changing the future plan because of current “opinions.”

He stated — again — that Inmar Analytics will be able to tell DMI “exactly what shoppers put in their baskets and compare it to what they put in prior to COVID. They will be able to tell us what changed and through technology, why did that change occur, that’s the data I want,” he said.

One ‘why’ for ‘what changed’ (in this reporter’s opinion) may be too subtle for the Inmar Analytics surveys to detect — that is the nuances of just how much consumers have been controlled by the Dietary Guidelines pre-COVID, without even realizing it. There is rarely any talk from DMI about what those flawed guidelines — set by the government with very little opposition by the dairy industry — actually do to buying patterns when people are consuming 54% of their calories away from home and much of that in schools, workplaces, quick-serve-restaurants and other institutional settings where food choices are more “formulated.”

The COVID-19 pandemic has abruptly unleashed consumers nationwide from the fat-restrictive Dietary Guidelines. Now, consumers are able to use more of their own discretion and choice apart from institutional food settings, guidelines and formulas. Some experts ‘reading the tea leaves’, such as Nielson Global Insights, observe that after a significant event like a pandemic of this magnitude, consumers can be expected to stay with some of the choices that made them feel healthy and safe during the pandemic, once the world gets back to a new-normal. That could be significant for dairy — but it may not line up with the ‘future of dairy’ pathway set by DMI and its partners.

O’Brien explained that dairy checkoff teams are actively involved in both long-term and immediate efforts.

“We are looking at the future of dairy. COVID-19 may fast-forward some of that future to happen more quickly,” she said. “In the immediate term, our retail teams are working with MilkPEP, to keep stores stocked and address the concerns people have about value, and we’re doing things with e-commerce to offer recipes that extend the use of the dairy products they bought.”

DMI’s ‘future of dairy’, as we know, is built on partnerships, innovation, and promotion of dairy farmers and sustainability and animal welfare practices, not education and promotion about milk and dairy products. It is well known that the innovations over the past decade have been focused on consumers eating dairy, not drinking it; and in the fluid space, these innovations emphasized through DMI partnerships have focused on ultrafiltered, shelf stable, lower-fat dairy beverages and blends and away from the whole milk gallon jug.

But we also can see that in their time of freedom to choose for their families amid the pandemic, consumers are reaching for the whole milk gallon jug. In fact, prices are rising on whole milk by $1 to $2 per gallon, while other fat content milks have remained the same, and still sales of whole milk are strong.

A producer from Wisconsin on the call asked Gallagher to make sure to track convenience store purchases when gathering the data, not just grocery retail, noting that many consumers buy their milk at convenience stores. Gallagher responded that they may have to check with another data partner for that piece.

O’Brien also stressed that while they gather data about consumer patterns, DMI will continue to chart the path it has set. That is to “gain the trust of consumers and celebrate dairy’s role in sustainably nourishing families and communities,” she said, adding that a media segment is being prepared for Fox and Friends next Monday morning, May 18 that will feature Katie Pyle of Cow Comfort Inn Dairy in Maryland.

“That piece will help bring to life our dairy farmers’ commitment to sustainably producing nutritious food,” said O’Brien. An estimated 2.5 million viewers will see the spot, and it will be supplemented with “live-streaming” on two other network stations where farmers will be interviewed to “tell their story.”

“That piece is supported by a 30-second video drawing footage from many farms and will run this week to the end of the month in streaming venues,” said O’Brien. She also explained that DMI has been working extensively with MilkPEP (fluid milk processors promotion) and that MilkPEP’s ‘Love what’s real’ ads are on television right now during the COVID period (when everyone is at home). The ads review the essential role of dairy farmers, and others involved in the dairy supply chain, she said.

“We co-brand these ads using the Undeniably Dairy logo, and design ways to help them reach consumers with these interests,” said O’Brien. “That’s our runway into June Dairy Month.”

While Gallagher said he expected to have some data insights from Inmar Analytics as early as next week, he added that it will begin a process to use technology to interact with consumers to learn more of the why’s behind their choices so that DMI — and its partners — can “appeal” to those drivers.

Stay tuned.

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Dairy farmers prompt Franklin County, Pa. Milk Drop

Over 2000 families blessed with 3600 gallons of whole milk

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Zach Meyers (center), Franklin County Farm Bureau president among the volunteers ready with gallons of whole milk and half gallons of whole chocolate milk

By Sherry Bunting, Farmshine, May 15, 2020

CHAMBERSBURG, Pa. — “Watching Franklin County help Franklin County is the best way I can summarize this. Seeing the community come together was a blessing to witness,” says Lucy Leese who helped organize the 3600-gallon Milk Drop at Franklin Feed and Supply, Chambersburg, Pa. on Saturday, May 2. Leese is the office manager for the Franklin County Farm Bureau, and she works part-time on a local dairy farm.

The idea came from dairy farmers in the county seeing other such events in Lancaster and Tioga counties. Franklin County Farm Bureau president Zach Meyers, an area feed nutritionist, was contacted about it by one of his dairy clients.

“They knew Farm Bureau could reach more people to make this work, so we helped organize it,” says Meyers. “But the farmers get the credit. They made most of the donations. With this event, they basically sent a personal message to the entire community — that dairy farmers love you and care for you.”

May 1st dawned sunny, and people were itching to get out. They came in droves for the Milk Drop, some even breaking out their restored cars for the lineup.

Organizers say some people came because of true need in these hard times, others simply to show support for the dairy industry, and others just wanting something to do — to take a drive and be part of something. Whatever the reason or season – sunshine or rain – these Whole Milk Donation Drops, Drive-throughs, Challenges, call them what you will, are really catching on and spreading all over.

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Lucy Leese works for a local dairy farm and as office manager for Franklin County Farm Bureau. Along with the whole milk, they gave out goodie bags with dairy facts, recipe and coloring books from county dairy promotion. Photos submitted

From idea to event, a whirlwind eight days transpired. Leese communicated with county Farm Bureau members and others by email and social media about the plan, and she quickly saw the high level of community interest through donation pledges as well as people expressing interest in coming out.

“We also reached out to others who have done this. Mike Sensenig (New Holland) had a lot of insight and gave us some things to think about ahead of time,” she said.

“Our biggest thought was that we wanted to be sure to use Pennsylvania milk, so we worked with Harrisburg Dairies,” Meyers relates in a Farmshine interview. “Most of the dairy farmers here are already producing milk at a significant income loss, and yet they still gave money to buy milk for the Milk Drop.”

According to Meyers, the vast majority of funds were donated by dairy farmers and supportive agribusinesses. A few donations also came from individuals and businesses with no connection.

“We wanted it to be whole milk,” said Meyers. “What is better than giving a gallon of whole milk and a half gallon of whole chocolate milk and having our community actually taste something good?”

Over 2000 vehicles, in about a five-hour time frame, snaked through the Franklin Feed property off Rte 11 into four lines on either side of two Harrisburg Dairies trucks with 30 volunteers handing out milk and a goodie bag with a dairy fact sheet, recipe book and coloring pad courtesy of Franklin County dairy promotion.

The size of the event exceeded early expectations. They initially had money pledged for 500 gallons on Sat., April 25. By Monday evening, when they had their video chat to organize the event, they had funds to buy more than 2000 gallons. By Wednesday, April 29, three days before the event, they had pledges and paypal funds for seven times the original amount and confirmed their final count with Harrisburg Dairies for Saturday morning.

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Pretty cool to see 15 tons of milk come in on three box trucks. Harrisburg Dairies sent employees to man the lifts and keep the milk moving to the distribution tables between four lines of cars. 

“It was pretty cool to see 15 tons of milk come in on three box trucks,” says Leese. “Harrisburg Dairies sent their own guys to man the lifts and keep the milk moving to the distribution tables.”

The community was eager. “We had cars coming in at 7:45 a.m. right behind the trucks, so we started letting them through at 9 instead of 10,” says Leese, describing the initial rush of cars that gave way to a steady flow into the early afternoon.

In the end, Shippensburg Food Pantry sent a refrigerated truck for the 150 gallons that were left at 2:15. Earlier in the day, folks from a nursing home in Waynesboro had come through for 40 gallons. “They said they weren’t able to get whole milk, and their folks needed milk,” Leese reports.

Hearing the emotion in Leese’s voice as she described the experience in a Farmshine phone interview, it’s obvious that an event like this truly touches the givers and the receivers.

“Several times people asked for additional milk for their neighbors or grandparents. We said from the beginning all are welcome, no questions asked, because we are all in a tough situation right now,” Leese explains.

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Two teams of volunteers kept milk moving from three trucks. Throughout the 5 hours, area dairy producers took shifts. For them, it was personal, to show love for their community.

“It was encouraging for us as volunteers to be able to serve and give back to the community here at a time that we have felt helpless for so many weeks. This was an opportunity to be active and to serve,” she adds. “The folks coming through were just so grateful with words of thanks and blessings, and if they could, they gave money to pay forward for other Milk Drops.”

The way the lines flowed into Franklin Feed from Rte 11 gave the event a special touch for homebound families getting out. Wide-eyed children looked around at the sights of grain bins and feed equipment and then the milk trucks as they lined up between them.

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Over 2000 vehicles, in the space of five hours, filed off route 11 in Chambersburg, snaking around the grain bins at Franklin Feed and Supply before breaking into four lines on each side of two Harrisburg Dairies trucks.

“People actually thanked us for the tour,” Leese said. “We needed to move quickly so the line wouldn’t back up to route 11, so we had four lines, and the volunteers came in shifts.”

While the Franklin County Farm Bureau is not planning another, others in the community are talking about more milk drops.

“As people are seeing and recognizing the need and the positive response, the idea is really taking off,” Leese observes, adding that they’ve been contacted by their peers in Centre County wanting to do one. Also, Harrisburg Dairies has been involved in other events like this, but this was likely their largest one-day, one-location event.

“We learned that people will give whatever they can to support something like this,” she says.

Leese’s advice for others includes: Overplan your volunteers, have popup tents for shade, wear gloves and masks.

“When you are standing there giving something to people, you can still smile with your eyes and be pleasant — even wearing a mask,” says Leese.

“People have been missing interactions, so we wanted to be cheery and welcoming, and people noticed. It helps raise everyone’s spirits,” she reflects.

Leese is grateful to the dairy farmers who had the idea, the many volunteers, and to Franklin Feed and Supply for providing the accommodations and being so helpful.

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Ron Wenger, county Farm Bureau vice president, directed traffic into four lines to keep traffic from backing up onto rte. 11.

She says Farm Bureau first vice-president Ron Wenger, a dairy farmer from Pleasant Hall, was instrumental in figuring out the traffic patterns to make sure they had things flowing well.

“Coming from a farm background, working for a farm and the Farm Bureau, I know what farmers are going through, what they are facing, and it’s not pretty. Yet a portion of the donations came directly from dairy farmers, and they were out here to share and to give and to protect people. To see the community respond in such a positive way to this outpouring from the dairy farmers was gratifying.

“People understood that they were getting something good for them from farmers who care for them, so we got some kind of understanding happening here,” she observes.

“Now the question is how to hold on to that, and make it flourish.”

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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.

If you have to divert milk, here’s some advice

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By Sherry Bunting

Production reduction and milk disposal were top-of-mind in a Center for Dairy Excellence industry call last week. Dr. Mike Van Amburgh of Cornell had advice for those dairy producers facing this impact of COVID-19 market disruptions.

Dr. Van Amburgh stressed avoidance of knee-jerk reactions based on hearsay. He urged producers to know, calculate, evaluate, prioritize, monitor, manage and review.

First and foremost, know what your cooperative is actually requiring and what the penalties are and the time frame. Producers should not assume a production cut of 10 to 15% in the next two to four months unless they have received a letter from the buyer of their milk.

Do the math for your herd. “What is the actual penalty for milk shipped over the new base? Figure out how much milk you have to divert. Calculate the pounds and the deduction and spread that over all the milk produced. What does this do to the income average?” The math is important because, he said, “you don’t want to do things that damage the herd’s ability to make milk in the future.”

UdderComfort_FreshCowflipPrioritize cow health, and “avoid strategies that truly damage the ability of your cows to produce milk,” he said. “You don’t want to make decisions that cost you more in the end.”

Go through your records, Van Amburgh advised. If a 10 to 15% reduction is specifically required for your market, set priorities.

Be methodical, not abrupt, he stressed.

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Dr. Mike Van Amburgh

Once you determine pounds of reduction to target, Van Amburgh gave these recommendations in order of priority:

1) Dry off cows: “Look first at which cows could be dried off earlier, and do the math on those pounds and percentages.”

2) Cull cows that are not paying their way. “Don’t cull too hard, be methodical,” said Van Amburgh. Even if the beef market doesn’t pay well with plant closures and disruptions, cull the cows that are costing you money and will cost you even more money when over-base penalties kick-in for those producers who have received letters.

He advised culling cows not bred and longer in milk and cows that have a history of milk quality and udder health issues.

Cull the cows that will leave your herd in a better position to bounce back in the future, and cull the problem animals that require more time and labor or have issues with health and quality.  Refine the herd for high quality milk and to have fewer health problems that drain labor resources. High quality milk is an insurance policy in a selective market.

3) Pen cows over 200 DIM separately and adjust. These are the cows to make adjustments with to slow down by feeding differently or milking 2x instead of 3x.

Check your forage inventory to be sure you have enough to do this: Van Amburgh suggests raising NDF levels on later lactation cows. Go back to the basics — 34 to 38% NDF diets are the best way to back off production, he said. To keep the rumen and the cow healthy, bring forage up to 45 to 50%, then 65 to 70%, and pull starch accordingly to slow those later lactation cows down.

By making a group of later lactation cows and pulling back toward earlier dry-off over the next 120 days — load more forage, balance protein and amino acids and pull back on starch, “you can titrate some of that milk down,” said Van Amburgh.

The key, he said, is good NDF management because it is important to manage this strategy so these later lactation cows do not get fat to avoid metabolic issues when they calve back in.

LINGEN834) Focus on health when evaluating strategies and additives. Don’t just take a lot of the extras out, but do it in a way that makes feeding a less expensive but keeps them in good health, said Van Amburgh.

5) When lowering production, keep the butterfat. This helps keep the income from deflating.

6) Feed saleable milk. “One easy way to divert milk is to feed all the calves some of the salable milk,” he said. “Feeding milk to cows or heifers is also a strategy, and we have some Cornell Pro Dairy bulletins on that.”

Van Amburgh reminded producers that feeding milk to older animals creates a little more work than feeding whey. Work with your nutritionist to see if it it’s doable.

7) Add more forage and pull back starch. “It is crucial to focus on maintaining rumen health,” he said. “It’s important to compare how much this pullback will cost you vs. what the penalties are if you don’t divert all the milk you are being asked to divert. Weigh those dollars and consider the longer-term impacts. As the market adjusts, will your herd be positioned to be healthy and productive for future cash-flow opportunities?

Van Amburgh said the Cornell Pro Dairy team is providing diet and management considerations in an effort to help dairy producers and their advisors meet the request, while maintaining cow health and working to ensure capacity to resume normal milk production relatively quickly once the situation stabilizes.

A question asked on the call was: If dairy farmers reduce their milk production with nutritional measures now, what steps can they take to come back four months from now as conditions change?

This question shows the importance of thinking through how you are going to reduce production and weigh into that decision what the market conditions might be four months from now.

“The key to the answer is the four months,” said Van Amburgh. “That’s 120 days. If you are looking at a 365 or 305 day lactation, you aren’t going to be ramping back up that part of the herd in late lactation four months from now.”

“It’s algebra and biology,” said Van Amburgh. “Yes it is possible, but first sit down and really look at these cows. The last thing you want to do is damage high production cows up front.”

He noted that Cornell is working with herds in New York that if they can’t afford to send that extra milk at a severe discount, take a step by step process for reducing it instead of the knee-jerk reaction of pulling everything out of the program.

UdderComfort_MilkingParlor_18) Going from 3x to 2x milking is the last thing to consider, according to Van Amburgh. That is, unless there are acute labor considerations in the mix. Either way, Van Amburgh advised doing this strategically.

“Weigh this carefully,” he said. “Don’t do it at peak milk. If you are a 3x herd, a smarter strategy is to go to 2x on tail-enders, especially as you move them toward being candidates for an earlier dry-off.”

He said the other group to potentially target for 2x is fresh cows up to 21 days.

These considerations may fit management for some but not all dairies. Every operation will have to determine what might work best for them under their current management conditions. More on this can be found here.

Producers also wondered what they can do privately with milk needing diverted. The answer to this question varies. Robert Barley from the Pa. Milk Marketing Board was on the call, and he said there are no government entities requiring producers to cut production. This means that a producer’s cooperative is best to answer the question about other uses for diverted milk, and the answers may vary.

Producers can also talk with their cooperatives about appropriate donation channels.

On the regulatory side, selling raw milk to consumers is prohibited by most cooperatives, but where it is allowed, producers would have to obtain a raw milk license from their state department of agriculture, and only some states allow the sale of raw milk with a license.

Excess milk can be fed to other livestock on your own farm without a permit. But if it goes into commerce to another operation, it probably needs a permit as it would be identified as commercial feed. Check with your state’s ag department or bureau of plant industry.

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‘Hearts full.’ Whole Milk Donation Drive-through tops 7400 gallons in New Holland

As stores raise prices and limit sales, while farmers are forced to dump milk and see their prices fall to historic lows, many respond with dairy purchases for donation drive-throughs. This example in New Holland provided whole milk from farm to table with love. It was a beautiful blessing to see…

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By Sherry Bunting, preview of Farmshine cover story for May 1, 2020

NEW HOLLAND, Pa. — At a time like this, we all need good news. Brothers Mike and Karl Sensenig of Sensenig’s Feed Mill, New Holland, Pennsylvania started thinking about the concerns of farmers and people in their communities during this Coronavirus pandemic. They couldn’t understand why farmers were having to dump milk with nowhere for it to go, while stores had limits on purchases or empty shelves and higher prices.

So, they did the one thing they could do… They gave.

We wanted to give back to our community — and the shelters and missions and food pantries — while helping support our family farm customers at the same time,” the brothers said.Sensenig-4851The idea started coming together two weeks ago. Many of the feed mill’s dairy farm customers in eastern Lancaster County ship their milk to Clover Farms Dairy, a bottling plant in Reading. The Sensenigs spoke with Brian Ohlinger at Clover and put together a purchase order for a tractor trailer load of over 4000 gallons of whole milk for donation.

That number quickly grew to 5200 gallons as word of the plans for a Whole Milk Donation Drive-Through “From Farm to Table with Love” quickly spread through phone calls and social media.

Mike’s wife Nancy fielded over 150 calls with groups and individuals wanting to pre-order for families in need. The entire company — all of the employees — were involved. They amassed a list of over 25 outreach organizations pre-ordering hundreds of gallons to distribute from New Holland to Lancaster to Reading and Allentown, including notables like Water Street Mission, Blessings of Hope, Crossnet, Crossfire, Petra, Safehouse, Good Samaritan and other ministries, churches, shelters, town and company food banks, fire companies, nursing homes, youth centers — so many organizations.

The Sensenigs saw the need and desire for whole milk growing, and they quickly realized even this would not be enough. So, they worked with Clover to get a second single-axle truck of 1152 gallons.

Cars lined up early on the first day of the Whole Milk Donation Drive-through (Apr. 23), while trucks were loaded with bulk orders for charities. The drive-through lines were opened ahead of schedule, and within the first 30 minutes, they had already served around 100 cars.

If this pace kept up, the Sensenigs feared they would run out. So, they called Clover again, and within two hours, a third truck arrived on the premises with another 1100 to 1200 gallons. 

All told, Sensenig’s Feed Mill had purchased 7,476 gallons of milk for donation so supplies would last through both days of drive-through times.

Two generations of the family — Karl, Mike, and Mike’s sons Kyle and Kurt, along with employees Devin Shirk, Steve Morris, Greg Hill, Curtis Hershey, and Lee Stoltzfus loaded vans, trucks, and cars with fresh gallons of whole milk, while Mike’s wife Nancy and employee Dawn Wright directed cars through the M&T Bank parking lot into two lines on either side of the truck and tent.

Even Karl and Mike’s parents Ken and Sandy drove over to watch.

Sensenig-4914They are quick to point out that this would not have been possible without their employees. “This isn’t just us,” he said. “Everyone was excited to do this and to be involved.” The family’s feed mill is celebrating its 75th year in New Holland.

Also wanting to make an impact, a group of concerned citizens affiliated with M&T Bank joined their neighbors in the parking lot — bringing 150 dozen eggs and 50 fresh-baked loaves of bread from Achenbach’s Bakery, Leola.

Sensenig-4786Kurt Sensenig even donned an inflatable cow costume at the start, before he was called back to the feed mill.

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“We have been overwhelmed by the response since we first started taking pre-orders to gauge how much milk we would need. Then the steady stream of people just driving through was amazing. There is so much emotion,” said Mike.

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“This brings home the reality of how many people are struggling right now. And it shows how many people LOVE WHOLE MILK!” said Karl. “Some who drove through the line had tears in their eyes. It seems like something so little. Then you realize how it helps so much, and it shows us how much we can take for granted.”

He tells of a grandmother who drove through with her two grandchildren she is raising. She tentatively asked if she could have two gallons. “I said, ‘you can have more if you need it,’” Karl reflected. “She wondered if it’s not too much trouble, she would use four gallons. I said, ‘sure!’ What she said next really got to me: ‘Now my grandkids can have milk with their cereal.’”

Cereal is a popular item for food bank distribution, but milk is hard to come by, especially whole milk.

One person drove through, saying they had stopped at their usual store to buy milk, but found no whole milk, so they came to Whole Milk Donation Drive-Through and took home four gallons.

Many veterans in the area came through and were grateful for the whole milk they accepted with smiles. Drive-through crews, in turn, thanked them for their service.

Sensenig-4903The bottom line for the Sensenigs and their employees was to bless others even as they believe they are blessed; to do something positive for their community; to help dairy farmers by connecting dots to get whole milk to missions, food banks and families; to bring smiles to young and old during uncertain times that have changed life as we know it.

“We have many dairy farm families as our customers, and we see the milk they have been forced to dump in the past few weeks due to supply chain disruptions while at the same time stores limiting purchases of milk or having little or no whole milk on the shelves,” said Mike. “Clover gave us a price for just the milk, and they packed the first two orders in boxes for us and provided the refrigerated trucks to stay here two days.”

“It takes teamwork,” said Karl. As part of the loading crew, he and his brother were busy all day in constant motion, unloading skids, opening boxes, loading trucks and trunks, and handing out gallons to appreciative people as they drove through.

“I’ll sleep good tonight,” said Karl.

Mike agreed: “Our minds and bodies are exhausted, but our hearts are full.”

The community of farmers and citizens thank all involved! This scene being repeated in other communities is a beautiful thing to see.

Sensenig-4869Others have stepped up doing similar milk donations. Some businesses have bought 500 gallons to give to employees and food banks; one couple in western Pennsylvania feeling blessed to still be working in agriculture are using their stimulus check to buy 500 gallons of whole milk to donate in a drive-through next week at their school; young farmer clubs and other organizations are working with milk cooperatives and processors to donate and raise funds for dairy donation drive-throughs in other parts of Pennsylvania, New York, the Southeast and elsewhere. Some are set up weekly, with people giving donations as they pick up milk and dairy products that are then used the next week to purchase more for donation.

Meanwhile, many store chains are raising prices and limiting purchases to shoppers for milk and dairy products on their sparsely stocked shelves, claiming a shortage, even as farmers are receiving letters that they must cut production because their product “has no demand,” and they are seeing the price they are paid for their milk fall by more than 35% in just four weeks.

The COVID-19 pandemic is revealing how the centralized supply chain is broken — not making the shift from foodservice to retail. Drive-through donation deals like this one, connect the dots at a more localized level so families get access to the milk and dairy products — especially whole milk — that they need want, while helping outreach organizations distribute to the growing number of families facing unemployment and business closures.

On Friday, April 24th, as the New Holland Whole Milk Donation Drive-Through came to a close, 97 Milk LLC — a grassroots volunteer milk education effort — announced on facebook a fundraising collaboration with Blessings of Hope food pantry mission. The new campaign specifically raises funds to purchase whole milk gallons for the ongoing blessing boxes to families in a 200-mile radius of the Blessings of Hope warehouse in Leola, Pa.

Dozens of dairy-related agribusinesses already sponsor the grassroots farmers’ 97 Milk education effort, which began a little over a year ago with a round bale painted by Berks County, Pa. farmer Nelson Troutman with the words Drink Whole Milk (virtually) 97% Fat Free.  (Whole milk is standardized to 3.25% fat). Such ‘baleboards’ now dot the countryside, along with banners, vehicle signs, a website, facebook page and other social media platforms (97milk.com and @97milk on facebook and instagram; @97milk1 on twitter).

As for the new 97 Milk / Blessings of Hope Whole Milk fundraiser, the response has been immediate. Within the first hour of announcing it on facebook Friday — $4100 had already been raised to keep purchasing whole milk for blessing boxes. Check it out here.

WholeMilkDonationDriveThrough4834Postcript: Karl and Mike Sensenig wish to recognize the mill’s entire team of employees for making the April 23-24 Whole Milk Donation Drive-Through possible: In addition to Karl, Mike, Kurt, Kyle, Scott, Emily and Nancy Sensenig, employees Calvin Buckwalter, Dale Clymer Jr., Ryan Crowther, Raymond Geiter III, Ashley Gesswein, Jared Grosh, Tim Hall, Curtis Hershey, Greg Hill, Dr. Don Jaquette, Joshua Kenderdine, Gerald Martin, Lawrence Martin, Nathan Martin, Steve Morris, Todd Morris, Steven Oberholtzer, Ron Phippen Jr., Devin Shirk, Eugene Shirk, David Stauffer, Allen Steffy, Terry Tshudy, Dwayne Weaver, Elmer Weaver, John Weaver, Logan Weaver, Nelson Weaver, Thomas Weaver and Dawn Wright were all involved. Even the previous generation to run the feed mill — Ken and Sandy Sensenig — came out to watch.

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The Sensenigs and their employees are happy to be part of something that blesses others, to see it multiplied, to see people appreciate whole milk, and to know what their customer dairy farm families produce is in demand. These efforts are uplifting and make a difference.
More links to stories on this and other efforts:

 

Proposed Milk Crisis Plan would tie farm aid to production cuts, issue forgivable loans to processors, lift federal fat limits on school and WIC milk, funnel dairy inventory to needy

NMPF and IDFA jointly propose ‘Milk Crisis Plan’ for USDA. American Dairy Coalition and Minnesota Milk Producers have alternate proposal.

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This photo posted on facebook April 2 by Colleen Larson of south Florida was reposted many times by others across social media platforms this week — one of many examples from New York to Florida and Wisconsin and Texas — where dairy farmers were forced to dump significant amounts of milk as COVID-19 pandemic restrictions disrupt supply chains as the industry shifts from foodservice to retail packaged goods. Meanwhile, stores are not well stocked, some are choosing to limit purchases instead of increasing orders, and food banks are receiving more requests as over 15 million people are newly out of work. Against this backdrop of upheaval, a Milk Crisis Plans was proposed by National Milk Producers Federation and International Dairy Foods Association this week, and an alternate plan was also put forward by Minnesota Milk Producers and American Dairy Coalition.       Photo by Travis Larson

By Sherry Bunting, Farmshine, April 10, 2020

WASHINGTON, D.C. — In the face of potential dairy industry collapse in what many are calling a “mixed up supply chain” and “upside down market” due to the impact of the COVID-19 pandemic on every aspect of American life, the National Milk Producers Federation (NMPF) and International Dairy Foods Association (IDFA) came together to propose a “Milk Crisis Plan for USDA,” released Tuesday, April 7.

It is a top to bottom overhaul of dairy production, processing and government feeding programs, including a price program for producers to cut 10% of their production over the next six months as well as removing all restrictions from school lunch programs and the WIC program to allow consumer choice of milk, cheese, yogurt, etc. – including all fat percentages of milk!

Specifically, one element of the plan asks USDA to stop requiring 1% low-fat or fat-free milk for persons over two years of age in government feeding programs – including the WIC program and school meals (provided in or out of school) — even asking USDA to allow servings over 8 ounces per meal for schoolchildren. This means schools could offer whole milk (3.25% fat) and 2% milk at least for calendar year 2020, if the proposal is adopted by USDA.

These industry organizations representing dairy cooperatives and processors cite “collapse of the foodservice industry, export disruptions and massive economic insecurity” as the demand factors that are now colliding with a “seasonally rising milk supply creating a massive gap.”

Their proposal estimates milk supply exceeding demand by “at least 10% — a gap that could widen as supply increases to its seasonal peak and as ‘shelter in place’ conditions endure.”

The dairy industry is navigating a major upheaval as the supply chain tries to adjust to plunging foodservice and institutional sales at the same time that retail demand surges at grocery stores.

NMPF and IDFA state that this is leading to a lack of orders for finished goods, several processing plants cutting or stopping operations and in general leading to “cancelled milk orders.”

In addition to the significant and continuing dumping of milk in the U.S. — something that has also begun this week in Canada – reports are coming in about processors terminating or potentially terminating small co-op contracts; processors and cooperatives seeking voluntary supply reductions from their producers; and some even looking for ways to encourage producers to consider quitting dairy altogether.

Indicative of the collapsing dairy market is this projection in the NMPF-IDFA proposal stating that second quarter Class III futures averaged $13.14 Monday while Class IV were in the $11s. Using the Dairy Margin Coverage (DMC) formula, NMPF projects a milk margin over feed cost getting close to that $5 catastrophic margin, estimated at $5.80 for the second quarter of 2020 and $6.76 for the third quarter according to Monday’s futures prices for milk. The highest insurable DMC margin is $9.50.

The industry organizations also point out that, “There is financial stress across the supply chain, and with more than 10 million Americans already losing jobs, food banks are seeing significant increases in demand, a trend that will likely only intensify in the weeks ahead.”

The NMPF-IDFA proposal aggregates many different tools with the objectives of providing aid to dairy producers, easing financial liquidity risks across the supply chain, stabilizing the dairy commodity markets and filling food banks with dairy products and removing restrictions that would limit the availability of dairy products in USDA feeding programs.

As for the aid to dairy producers? NMPF-IDFA want to “tie producer aid to limits in their production.”

The NMPF-IDFA proposal regarding dairy producers asks USDA to “offset the steep decline in farm milk prices and encourage producers to reduce excess supply” which they say is the result of “demand disappearance.”

Specifically, the proposal seeks to pay producers $3 per hundredweight (extra) on 90% of their milk production IF they cut production by 10% below their March 2020 baseline over the next six months of April through September 2020. Payments during any of those months would be suspended if the average of Class III and IV prices in that month exceeds $16/cwt.

An alternate plan put forward by the Minnesota Milk Producers Association (MMPA) and supported by the American Dairy Coalition would provide aid to dairy farmers differently as a more immediate lump sum payment of $3 per hundredweight on 100% of each operation’s March 2020 baseline for three months (April-June), irrespective of market prices, and paid in April. MMPA’s Dairy CORE plan calls for reassess of conditions in June to see if another round is needed for the next three months (July-Sept). ADC and MMPA contend this approach would be more fair to all regions of the U.S., including seasonal grazing dairies.

American Dairy Coalition noted in a statement Wednesday that direct payments should not be conditioned on arbitrary, top-down, one-size-fits-all production cutbacks. The organization believes that if producers receive a needed large, one-time direct payment, milk handlers and processors would then be in a better position to implement their own marginal incentives to “right-size” their own milk supplies.

The NMPF-IDFA Milk Crisis Plan also calls for a Temporary Milk Disposal Reimbursement to compensate handlers for milk that must be disposed of because of supply chain disruptions resulting from the COVID-19 pandemic. This would provide coverage of milk at the USDA Class IV (or lowest value class) price for three months – April through June 2020.

NMPF and IDFA want USDA AMS Milk Marketing Orders to administer these programs through their audit functions.

Their proposal also seeks recourse loan programs to expand the availability of “working capital” for dairy processors. This proposed program would allow firms to carry heavier-than-normal inventories and reduce systemic financial risk associated with those heavy inventories they would carry. In addition to specialty cheese products that are often inventoried longer anyway for aging, the proposal wants this to apply to as many other products as possible, namely basic commodities.

Also in the proposal for processors is the request for forgivable loan programs similar to the ones for small (non-ag) businesses in the CARES program being administered currently through the Small Business Administration. To qualify, processors would have to continue to purchase milk from dairy producers and maintain their employee staffing.

The NMPF-IDFA proposal also requests the immediate purchase of substantial volumes of dairy products for feeding programs and the aforementioned end to mandates on low fat levels of milk in feeding programs.

In addition, the proposal asks USDA to allow producers to retroactively sign up for 2020 Dairy Margin Coverage (DMC) with no premium discount for the latecomers.

Other aspects of the proposal deal with how to “maximize the buying power of SNAP (food stamps) recipients” at a time when the nation face double-digit unemployment and reliance on SNAP is expected to increase. At the same time supporting that with continued purchasing of butter, cheese, fresh milk and powdered milk to the tune of $525.5 million.

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