NMPF President’s Update – July 24, 2020

Senate Likely to Include More Farm Payments in Next Coronavirus Bill – Senate Republicans spent this week deliberating among themselves and with the White House on a variety of aspects of the latest, and likely last, coronavirus relief bill of 2020. GOP leaders struggled this week to finalize an agreement with the White House, but at least at this point, we expect the proposal to include $20 billion in additional funding for USDA to help compensate farmers for pandemic-related losses. We understand that the money will mostly be for direct payments, with some devoted to compensating livestock producers who had to depopulate their herds.

During deliberations, NMPF also worked successfully to include language bolstering the Paycheck Protection Program so that farmers and ranchers applying for assistance receive a more favorable calculation based on their gross income. Given political headwinds, it doesn’t appear that a final package is far enough along to be approved prior to next month. The House passed its own coronavirus relief bill in the spring, and we can expect contentious negotiations between the two parties once Senate Republicans announce a plan.

House Appropriations Bill to Include FDA Dairy Labeling Funding – Over in the House, lawmakers made progress this week on the Fiscal Year 2021 appropriations process. House lawmakers approved spending $5 million in next year’s USDA/FDA spending bill to fund the FDA’s enforcement of dairy labeling standards. Recall that one of the main justifications the FDA has given us over the years about why it can’t enforce proper labeling terminology is that it lacks adequate resources. In response to that plea, Rep. Peter Welch (D-VT), the sponsor of the House DAIRY PRIDE Act (H.R. 1769), has offered an appropriations amendment to give the FDA the resources it claims to lack. The amendment has 18 bipartisan cosponsors and was added onto the ag spending bill as one part of a larger amendment. While it’s not a binding statutory change, it’s another step in the right direction.

Dairy farmers have one more month to apply for the financial assistance offered by USDA’s Coronavirus Food Assistance Program (CFAP). As of July 20, approximately 21,000 dairy producers have signed up to receive $1.25 billion – about one-fifth of the total $6.2 billion in payouts. In addition to dairy, other commodity payments totaled $3.15 billion to livestock producers, $1.64 billion to producers of non-specialty crops and $186 million to producers of specialty crops. Applications will be accepted through Aug. 28, 2020.

The latest issue of our Dairy Market Report, released this week, explores the factors behind the sudden resurgence in milk prices, as the spring’s severe supply chain disruptions have been effectively offset by production cutbacks and federal government assistance. The report indicates the outlook for U.S. average milk prices for all of 2020 continues to rise and is approaching 2019’s average of $18.60 per cwt., not including the substantial CFAP payments. Welcome evidence of the dramatic rebound in prices was also found this week with USDA’s announcement of the August Class I base price at $19.78/cwt., up $3.22 from July.

Milk Production Rebounds in June – The price rebound is obviously a function of supply and demand, and the latest news on production indicates that producers are gradually responding to the signal sent by stronger prices. According to the USDA’s June Milk Production report, U.S. milk output rose 0.5% last month. While this signals the turn-around after a half-percent drop in output in May, it’s still the smallest year over year increase in any of the other months this year.

Peterson Talks Up Dairy Safety Net in NMPF Interview – Thanks to his leadership and collaboration with NMPF in the past decade, the dairy farmer community now has one of the strongest commodity safety nets in agriculture, according to Rep. Collin Peterson. He was the subject this week of our most recent Dairy Defined podcast. The House Agriculture Committee Chairman said that many financial risks for agriculture remain, even with the billions paid so far this year through the CFAP program. To listen to the full discussion with Rep. Peterson, click here.

McCloskey Explains Policy Needs to Achieve Net Zero by 2030 – Indiana dairy farmer Mike McCloskey, who serves as NMPF’s Second Vice Chairman, told a House subcommittee yesterday that the dairy sector’s work on reducing greenhouse gases will benefit from the creation of farmer-focused financial incentives in order to jump-start the process of achieving carbon neutrality in 30 years.

In testimony for a hearing on farm energy production organized by the House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit, McCloskey, who also chairs NMPF’s Environmental Issues Committee, said federal policy should align incentives needed for dairy farmers to widely adopt anaerobic digesters and other emissions-mitigation technologies. Manure digesters may not have the same appeal as solar panels or wind turbines, he noted, but they can generate bioenergy and reduce methane emissions just the same. He also outlined how the U.S. dairy industry has adopted an ambitious goal of becoming carbon-neutral by 2050 through its Net-Zero Initiative, a partnership among farmers and the entire production chain.

NMPF Urges Continued Action on EU Dairy Naming Practices – NMPF urged the U.S. Trade Representative this week to keep the pressure on the European Union’s unfair dairy practices through the continued use of our retaliatory tariffs against the EU in the Airbus case. Last October, the Trump administration imposed a 25% tariff on $7.5 billion worth of goods, including French and Italian cheeses, in retaliation for the unfair subsidies Europe provided to Airbus. We supported the Administration’s focus on certain Italian cheeses last fall, and in our comments filed today, we urged the U.S. government to continue to prioritize dairy products that are directly related to the EU’s campaign against common food names. In particular, we want the USTR to focus on tariff lines that involve imports of Parmigiano Reggiano, as that product is the most prominent example of the EU’s aggressive pursuit of de facto trade barriers via the misuse of Geographical Indications. USTR is required to periodically review any retaliatory tariffs authorized by the World Trade Organization, and is expected to announce changes to the $7.5 billion retaliation list by Aug. 12.

It’s been a busy week for publishing information resources for our members, as the summer issue of the NMPF Regulatory Register is also now available online. It includes updates on issues including standards of identity; the replacement regulation for WOTUS; FMD preparedness; the new Dietary Guidelines recommendations; and what we’re doing with the FARM program.

Finally, as I’m sure many of you have heard by now, dairy industry legend Louis “Red” Larson passed away last Friday. Red was NMPF’s chairman from 1978 to 1980, at a time when the Federation wrestled with many issues still familiar to us today: the need to maintain an adequate safety net for farmers during a time of economic volatility; enforcing the proper labeling of dairy products; and ensuring that dairy foods are not unjustly vilified by federal dietary guidelines (the first version of which came out in 1980).

More importantly, as everyone knows, the Larson family was synonymous with dairy farming in Florida. After his Army Air Corp service in World War II, Red and his wife Reda started a farm near Fort Lauderdale before moving to the Lake Okeechobee area, where subsequent generations of Larsons have built on his legacy of progressive, conscientious stewardship. Few people have had the life-long impact on any one profession in the way that he did for ours, so on behalf of NMPF, I want to acknowledge Red Larson’s contributions to our industry and thank him for his nearly century-long devotion to dairy. This article from the Lake Okeechobee News has more on his remarkable life.