NMPF President’s Update – May 29, 2020

Local Office Signup Now Underway for USDA Coronavirus Farm Aid – USDA’s Farm Service Agency began accepting applications on Tuesday for the $16 billion in direct payments that producers of many commodities, including milk, can tap this spring to help them endure the coming months.

The $2.9 Billion dairy main component in the Coronavirus Food Assistance Program – a payment that equals about $6.20/cwt. on first quarter milk production – should be simple enough for most producers not impacted by payments limits or unique farm ownership or management structures.  While we were successful in getting important increases in payment limits – from an originally proposed $125,000 to potentially $750,000 for an entity with three or more shareholders – the limits still will hit larger dairy operations.

Farmers need to call their local USDA-FSA office to arrange for the application process.  The USDA’s main CFAP page is here. USDA created a new Excel calculator this week, available to download here, to make the process more straightforward. We have provided extensive information on the NMPF website to help answer question on the CFAP coverage and process for signing up. You can access that info here.

As a reminder, the initial payment of 80% will be sent to farmers shortly after they sign up, while the later 20% portion will be issued in the summer, assuming that not all of the $16 billion total has been depleted by that point.

As we anticipated, there are already reports of confusion over the extent to which dairy producers are also eligible for payments under the cattle portion of the CFAP, including for their cull cows, bull calves and dairy steers.  While our office has received assurance from USDA Washington, DC staff that these are eligible categories for dairy animals, some applicants at the county level this week have received responses with varying degrees of consistency to the assurances we’ve been given.

We’ve even heard that two adjacent county FSA offices in one state have given opposite responses about the payment eligibility for certain types dairy cows.  Please know that we are keeping track of all these anecdotes shared with us and are pressing USDA to assure consistency in applying the CFAP rules in a manner most beneficial to dairy producers.

These kinds of errors in local interpretation crop up in virtually every new program USDA administers, and it takes some time to get them worked out. If you or your members are experiencing such problems, please let us know so we can help get them worked out.

As noted above, we continue to highlight important resources related to the coronavirus pandemic and its impact on dairy production at our webpage.  This includes podcasts and interviews such as one I did earlier this week, when I joined with IDFA’s Michael Dykes to discuss the rollout of the CFAP, what is covered and how producers can apply, at this Hoard’s Dairyman LiveStream webinar.

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New Senate Bill Aimed at Strengthening Food Supply – A bill introduced this week in the Senate, the Food Supply Protection Act, is aimed at helping protect both the food supply as the COVID-19 crisis continues to disrupt the entire food value chain, as well as workers. We expressed our thanks to Sen. Debbie Stabenow (D-MI) for including in the measure additional funding to enhance donations of dairy and other foods to food-insecure populations and to fortify the food and agricultural supply chain by helping meet critical resource needs. The Senate is expected to begin consideration of another broad COVID-19 package sometime in June.

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Paycheck Protection Program Continues to Evolve – Although both chambers of Congress have not passed a new bill on the Paycheck Protection Program (PPP) since April, both the Senate and House have indicated separately they plan on further refining the program through legislation. Over the past few weeks, the House of Representatives passed two measures which make changes to PPP, and the Senate is expected to pass its own version in the coming weeks. The Small Business Administration (SBA) and Treasury Department also continue to issue guidance on the implementation of the program, which changes how the program works for both borrowers and lenders.

A fair amount of both Congress’s proposed changes and the executive branch guidance focuses on loan forgiveness, and SBA just released the PPP loan forgiveness application form and accompanying instructions.  Given the high probability that loan forgiveness rules will change in favor of the borrower – including a longer forgiveness period and an expansion of expenses that will qualify for forgiveness – our recommendation is that borrowers should not rush to submit loan forgiveness applications just yet. While reviewing the forgiveness application and reaching out to lenders with forgiveness questions is generally recommended, borrowers may want to wait on fully submitting the forgiveness application until Congress has acted on further refining PPP.

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Vietnam Lowers Dairy Tariffs Thanks to Work by USDEC, NMPF – Thanks to the persistent efforts of our USDEC/NMPF dairy trade team to open new markets in Asia, the Vietnamese government announced this week it is lowering tariffs on key U.S. dairy products, including milk powder, cheese, whey protein isolate and infant food preparation products, effective July 10, 2020.

This positive development for U.S. dairy suppliers is the result of a coordinated initiative started by our joint trade policy team more than a year ago. It was necessitated by the fact that when President Trump withdrew from the Trans-Pacific Partnership agreement the U.S. lost out on the dairy tariff reductions that were part of that agreement. The new Vietnamese decree reduces tariffs by 50% or more for most covered products and will help the U.S. better compete with other nations that already have free trade agreements with Vietnam, including Australia, New Zealand and the European Union.

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New Dietary Guidelines Draft Delayed – The committee working on the 2020 update of the federal dietary guidelines has delayed the release of its advisory report for a second time, with a new release target of mid-July. The Dietary Guidelines Committee will host its final meeting via webinar on June 17, offering updates on the committee’s draft conclusions and discussing the final pieces of the report. The Committee is expected to submit the advisory report to the Departments of Health and Human Services and Agriculture to be available to the public by mid-July.  A new public comment period will then start to gather feedback, in anticipation of the final 2020-2025 dietary guidelines being completed by the end of the year.

Lastly, look for us to join with other groups on Monday to start June Dairy Month with the celebration of World Milk Day. We will be promoting the important role of milk through our suite of digital media platforms – a role that is particularly crucial at a time when so many people are in greater need of proper nutrition and health. We hope that all of you are joining in efforts to kick-off the month-long dairy promotion efforts with your own World Milk Day celebration.

Thanks for reading and enjoy your weekend.