$317 Million of Dairy to Be Included in USDA Food Program

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As part of the Coronavirus Farm Assistance Program (CFAP), U.S. Agriculture Secretary Sonny Perdue announced on April 17 that the USDA is exercising authority under the Families First Coronavirus Response (CARES) Act to purchase and distribute up to $3 billion of agricultural products to those in need. USDA is partnering with with regional and local distributors, whose workforce has been significantly impacted by the closure of many restaurants, hotels and other food service entities, to purchase fresh produce, dairy and meat. USDA announced on Friday $317 million in dairy products will be part of the Farmers to Families Food Box program. 

The dairy industry reacted positively to the purchase announcement on Friday. 

“Innovative solutions are demanded in these unprecedented times, and I applaud USDA for its actions to provide nutritious dairy products to families in need,” said Jim Mulhern, president and CEO of NMPF, the largest U.S. dairy-farmer group.

The International Dairy Foods Association applauded USDA’s swift movement to get the program up and running. 

“Not only will this effort purchase roughly $3 billion in food from American producers and processors and get it to people in need across our country, but the program also will establish a new paradigm for building partnerships among the public, private and non-profit sectors to respond to food insecurity. It is truly a win-win-win,” Michael Dykes, IDFA CEO, said in a statement. “IDFA is pleased to see many of our dairy processing members included in the winning bids, poised to deliver a variety of fresh, wholesome, nutritious dairy products to families across the country.”

According to IDFA, USDA embraced businesses of all sizes and regions when awarding contracts for the program. Some companies that won contracts for supplying dairy products include Borden Dairy Co. and Prairie Farms, as well as smaller farmstead creameries like Wisconsin’s Sassy Cow Creamery and Marburger Farm Dairy in Pennsylvania.

“For our dairy processors who have lost their foodservice and institutional business, IDFA is grateful that USDA plans to purchase $317 million in dairy products—from milk and butter, to cheese and yogurt—by June 30,” Dykes said. “Our hope is that these purchases, alongside traditional Section 32 and entitlement program purchases, spur demand for additional dairy products and thereby keep the dairy supply intact throughout this crisis.”

Nate Donnay of INTL FCStone says this surge in demand could help milk prices recover more quickly than previously thought. 

“Initially the USDA had signaled that they would be buying $100 million per month, so we were only expecting $150 million of dairy purchases in round 1 instead of the $317 that was announced,” he said.  

The program can only award new contracts as long as the official national emergency declaration remains in effect, Donnay explained. 

“When the Trump administration declares that the emergency is over, the USDA won’t be able to run any further rounds of this program so the USDA appears to be front-loading the program,” he said. 

INTL FCStone estimates the purchases include roughly 52 million gallons of fluid milk, 86 million pounds of cheese, 17 million pounds of butter and 7 millionpounds of yogurt. 

“That would be about 4-6% of fluid/cheese/ butter production during May and June,” he said. “On a milk equivalent basis, it works out to about 3.2% of total farm-gate milk production. That is a big surge in demand.”

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