The projected aid for dairy comes to $6.18 per hundredweight. However, that money will be split into two payments of $4.71 and $1.47 per cwt., respectively.
That’s according to the joint paper, USDA’s New Direct Payments Program for Dairy Farmers, by Christopher Wolf, Mark Stephenson, and Andrew Novakovic, who are regular contributors to Hoard’s Dairyman DairyLivestream.
The Direct Pay CARES Act funds will partially compensate producers for price losses from the first quarter of calendar year 2020. The first quarter payment rate will be 80% of the decline in prices as determined by USDA. For dairy, that estimate was $4.71 per hundredweight.
As for the second quarter rate . . . a 25% reduction was the benchmark. With that being the case, the payment rate will be $1.47 per hundredweight.
A $250,000 cap
There are many nuances to this relief package.
For starters, the payment caps stand at $250,000. Different payment limits do apply to LLCs, closely held corporations, and limited partnerships. These entities may receive up to $750,000, according to USDA guidelines.
There are a number of other issues that each farm must be aware. Ultimately USDA’s Farm Service Agency (FSA) will determine how this program gets rolled out.
Additional questions
During the May 20, 2020, episode of DairyLivestream, a dairy farmer viewer asked if hedged milk or participation in risk mitigation programs such as the Dairy Margin Coverage (DMC) program or Dairy Revenue Protection (DRP) would impact payments from the Coronavirus Food Assistance Program (CFAP).
The short answer is no.
That’s because payments are based on milk production, not participation in other programs.
Also, dumped milk pooled under a federal order will automatically be included in the reports for FSA and the CFAP payments to dairy farmers.
Farmers may begin signing up at their respective Farm Service Agency on May 26. Payments could be issued as early as June 1.
There have been some questions on beef sales. Specifically do bob (veal) calves, cull cows, or dairy beef qualify for CFAP payments?
On late Thursday, FSA staff held a training call, and it appears that cull cows and bob calves will qualify for payment, but dairy breeding herd inventories will not qualify. The rules should be published Friday, May 29.
The total payment will be calculated using the sum of the producer’s number of livestock sold between January 15 and April 15, 2020, multiplied by the payment rates per head, and the highest inventory number of livestock between April 16 and May 14, 2020, multiplied by the payment rate per head.
