U.S. Senator Kirsten Gillibrand, Chair of the Senate Agriculture Subcommittee on Livestock and Dairy, and Senate Majority Leader Charles E. Schumer are calling on the United States Department of Agriculture (USDA) to provide additional relief to New York dairy farmers who have taken a financial hit during the COVID-19 crisis. The Coronavirus Food Assistance Program (CFAP) was created last year to provide direct relief to farmers and help keep them afloat as agricultural markets, supply chains, and labor were upended in the wake of the pandemic. However, dairy farmers across the country received less support than other producers. The USDA provided dairy farmers with the smallest allocation of CFAP payments of the USDA’s four payment categories including acreage-based, sales commodities, livestock, and dairy.
Dairy is the largest sector of New York’s agriculture industry — the state is the fourth largest producer of milk, and the largest producer of yogurt, cottage cheese and sour cream. In recent years, dairy farmers across New York State have struggled to keep up with declining prices and an unstable dairy market, and pandemic-related costs and slashed revenues have made it almost impossible for them to recover. Gillibrand and Schumer are urging the USDA to provide more direct payments and assistance to dairy farmers through new and existing programs, such as CFAP, to help reduce the strain on dairy farmers.
“Dairy farmers in New York State have been under financial strain for years due to an unstable market and unfair pricing — now the economic toll of the pandemic has made it nearly impossible for many to recover. Hardworking small- and mid-sized farmers deserve relief and CFAP payments have been a lifeline for them,” said Senator Gillibrand. “Continuing these payments would not only give dairy farmers the relief they need as they continue to face the fallout of the pandemic, but also help stem the loss of dairy farms we are seeing across the Northeast. I will continue to urge the USDA to provide more direct payments and assistance to dairy farmers through new and existing programs, because these farms play a critical role in our food supply chain, in our economy, and in our communities.”
“New York’s dairy farmers are the lifeblood of the Upstate economy and have been squeezed by the economic effects of the COVID-19 crisis,” said Senator Schumer. “For an industry that had razor thin margins before the pandemic, for some of our dairy farmers, receiving additional federal assistance is the difference between keeping their farms and losing their livelihoods. After many were forced to dump milk and lose out on revenue streams with school and restaurant closures, direct payments from CFAP were a lifeline for our dairy farmers and they must continue for New York’s dairy industry to recover from the economic devastation of the pandemic.”
In April of 2020, the USDA announced the conception of CFAP, with funds provided by Congress, to assist farmers and consumers in response to the COVID-19 pandemic. Included in CFAP were direct payments to dairy farmers to offset pandemic-related economic losses for farmers. This assistance was critical to farmers, especially as many were forced to dump their milk after losing buyers and income. These payments were put on pause in January of 2021 when the administration announced it was doing a 60 day regulatory review. However, when the review was concluded, no further payments to dairy farmers were announced.
Even before the pandemic dairy farmers across the nation were facing the challenges of volatile milk prices that have been dropping for decades, as well as increased competition from non-dairy “milk” products. This has led to a substantial loss of licensed dairy herds, with the United States losing almost 40,000 dairy herds since 2003.
Prior to the 2018 Farm Bill, Class I milk was calculated using the “higher of” Class III or Class IV price plus the applicable Class I differential. This was changed in the most recent Farm Bill to an averaging method of Class III and Class IV plus $0.74. This change, compounded by government intervention in cheese markets as a result of the pandemic, has resulted in hundreds of millions of dollars in lost income for dairy farmers from May 2019 through April 2021. This has led to increased calls from the industry for USDA to hold Emergency Federal Milk Marketing Order National Hearings to resolve this issue with the Class I mover.
At the beginning of the 117th Congress, Senator Gillibrand was named as the Chair of the Subcommittee on Livestock, Dairy, Poultry, Local Food Systems, and Food Safety and Security. In this capacity, Gillibrand is committed to find ways to guarantee dairy farmers receive a fair price for their milk moving forward, and to recoup losses caused by the new Class I pricing formula.
Full text of the letter can be found below.
Dear Secretary Vilsack:
We write today to urge USDA to take action to support dairy farmers and help them through the crisis they are facing.
The COVID-19 pandemic has disrupted dairy supply chains and has caused disruptive price volatility. Feed, labor, farm equipment, and energy costs have all increased as the result of the pandemic and contributed to lower profits for dairy farmers. In addition, dairy farmers have experienced challenges receiving a fair price for their milk as a result of the change to the Class I milk price formula in the 2018 Farm Bill which moved to an averaging method of Class III and Class IV prices plus $0.74, as opposed to the previous “higher of” method of determining fluid milk prices. This one change has caused dairy farmers collectively to lose out on $725 million dollars in income since the change was implemented in May 2019.1 During the pandemic, this adjustment curtailed the payments dairy farmers received when the government intervened in cheese markets with purchases made for the Farmers to Families Food Box Program. This made the Class III price rise sharply by 161 percent from June to September 2020, while Class IV prices rose only 19 percent during the same period, further shaking the stability of the market. All of these components have hampered dairy farmers’ ability to receive a fair price for their milk, and the only thing that has helped them offset some of their losses was the Coronavirus Food Assistance Program (CFAP) dairy payments.
We appreciate USDA’s work to implement the relief for farmers provided by Congress, as well as the agency’s commitment to support dairy farmers during the COVID-19 pandemic across a variety of programs; however, this market distortion needs to be corrected. On March 24, 2021 USDA announced the new Pandemic Assistance for Producers initiative that established new programs and efforts to bring assistance to producers who have been impacted by COVID-19. This includes assistance to dairy farmers through the Dairy Donation Program, carrying out CFAP formula payments for cattle and eligible crops and reopening the CFAP 2 sign up period for producers that were not previously enrolled in the program. However, this new announcement did not include new payments to dairy farmers.
By allocating more direct payments through CFAP, USDA could take action to reduce the strain that dairy farmers are facing. Specifically, the agency should continue issuing payments to dairy farmers under CFAP, or through any further assistance programs that USDA conceives, including the Pandemic Assistance for Producers initiative, for the first six months of 2021 and make these payments retroactive to January 1st. Continuing these payments would help alleviate the loss of dairy farms we are seeing in the Northeast and around the country and give dairy farmers’ additional relief as they continue to face the fallout of this pandemic.
CFAP payments have proved to be very beneficial to our dairy producers during this time of financial stress. This is particularly true for our small and mid-size dairy operations, which have been hit the hardest by this pandemic and have few cash reserves on hand to cushion their losses when milk prices fall below production costs. So far throughout the pandemic the USDA has allocated more than four billion dollars of CFAP payments to dairy farmers, which is the smallest allocation of payments out of the four categories that received payments (acreage-based, sales commodities, livestock, and dairy). According to a recent National Agricultural Statistics Service (NASS) report, the United States lost 2,550, or seven percent, of its dairy herds from 2019 to 2020, and without further help from USDA this number may increase this upcoming year.
Dairy farmers support our food system with their milk, providing the beverages, cheese, butter, and numerous other products that hundreds of millions of Americans consume on a daily basis. Dairy farmers have been suffering due to declining prices for decades, which has led to almost half of dairy herds lost since 2003, and are now also feeling the ramifications of a milk pricing formula that has had unintended consequences and caused almost one billion dollars of lost income.6 Continued payments to dairy farmers through CFAP or other possible avenues would go a long way in making sure that these operations around the country are able to remain solvent as they continue to weather the effects of this pandemic.
Thank you for your serious consideration of this request. We very much looking forward to working with you on ways to ensure that dairy farmers are supported during this pandemic and beyond.