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NMPF’s Mulhern provides COVID-19 dairy update

Contributed by Jim Mulhern Published on 23 March 2020

As the full national, indeed global, scope of the coronavirus pandemic begins to come into focus, it is becoming clearer that we are experiencing a public health crisis unlike anything we have seen in our lifetimes.

Normal is gone. Like many of you, our staff is working remotely. But they are also working overtime and with great effectiveness. We’ve been in crisis management mode throughout this period and are closely engaged with Congress, the White House and all relevant federal agencies, as well as with our allied organizations, executing a multiphased approach to the challenges before us.

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I’m pleased to report that our actions have already helped to shape some of the initial decisions that Washington officials have made even as broader, longer-term measures continue to be debated.  

One of the biggest challenges all of us face is managing the information flow across our computers, trying to discern what’s most important for our businesses and families to know. This week’s update is likewise organized into areas that will help you best understand the dairy-related developments of the past week.

Dairy COVID-19 information resources

First, we continue to update our website offering a collection of helpful resources and latest news. The URL has changed this week, so for anyone bookmarking it, click here for the new address.

We’ve uploaded several items of significance this week to that page. These include a farmer-focused handbook, with several pages of topline advice on what to know about the coronavirus and how to manage farm employees during a time when a highly communicable disease is spreading. It will be updated on a regular basis as new information and resources become available.

Our coronavirus page also has several new podcasts featuring interviews with our staff who are the subject matter experts in confronting COVID-19. This includes a discussion with Dr. Jamie Jonker, our vice president for sustainability and scientific affairs, who reviews why U.S. milk supplies are safe thanks to pasteurization and how dairies are working to keep milk production going 24/7 while looking out for their own workers. 

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We also have a podcast with Clay Detlefsen, senior vice president of regulatory and environmental affairs, who details his role as the lead food and agriculture industry private sector liaison with the U.S. Department of Homeland Security (DHS). He describes the impact of the pandemic on food supplies and why any current dairy food shortages will be short-lived.

COVID-19 policy responses – near term

Through our engagement with federal agencies, we’ve advocated for several important administrative decisions made this week that will help keep the dairy chain functioning.

First, the DHS and the Cybersecurity and Infrastructure Security Agency (CISA) declared the U.S. food production system part of our nation’s essential critical infrastructure and released guidance concerning the treatment of those in the workforce on farms and the food supply chain. 

This means that food workers, including dairy employees and those at processing plants, are encouraged to maintain their previous work schedules without disruption by any local or state social distancing orders that are spreading from California to New York.

Please keep in mind that this document is advisory; DHS cannot tell states and localities what to do in this area. But hopefully states and localities will defer to the federal government on this. National Milk Producers Federation’s (NMPF) Clay Detlefsen has been instrumental in getting the food and ag sector critical infrastructure jobs appropriately characterized in this DHS guidance.

The declaration is designed to help minimize any arbitrary decisions that would harm the process of producing, processing and selling dairy foods. We will be providing a template letter that dairy producers are encouraged to provide to their employees, citing the DHS “Guidance on the essential critical infrastructure workforce” document that lists all agriculture workers as essential. Workers should be encouraged to carry this letter with them if stopped by local officials in an area that is subject to a shelter-in-place directive. Look for that template letter to appear on our website.

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Second, the Federal Motor Carrier Safety Administration announced the expansion of its Nationwide Emergency Declaration to exempt the transportation of various goods from its hours-of-service rules. The full declaration is available here. The transport of bulk loads of milk, i.e. tankers, is included. Should we experience either an exacerbated driver shortage or plant closures that cause milk to be diverted in the coming weeks, such flexibility will be essential for milk to move in a timely manner. 

Third, the FDA has relaxed its facility inspection schedule, meaning that routine surveillance inspections of U.S. food facilities are suspended for now. Interstate milk shippers (IMS) check ratings by FDA are considered routine inspections and are suspended. The inspections are typically conducted by employees of state agencies under contract with FDA.

In the legislative arena this week, Congress passed the second in a series of what is expected to be at least three coronavirus assistance packages. Among other things, the measure provides an additional $1.2 billion in food assistance for needy populations and extends unemployment benefits for what is sure to be a surge of people laid off. The food program includes:

  • $500 million in food aid for pregnant women and mothers under the WIC program
  • $250 million to deliver meal packages to millions of seniors
  • $400 million for the USDA to buy up commodities and distribute them to food banks.

It also suspends work requirements for food stamp recipients and allows states to use SNAP funds to help feed families who qualify for free or reduced-price school meals.

We have encouraged Congress and the USDA to consider measures such as these that will ensure needy populations still have access to nutritious dairy products, which obviously will include milk that otherwise would be flowing right now to schools. Fortunately, many school districts have made alternate arrangements to feed low-income students. Of note, the USDA has indicated that shelf-stable milk will be eligible for school meals during this time.

COVID-19 policy responses – longer term

Lawmakers on Capitol Hill are currently working on a third disaster assistance package, and we are talking with Congress and the USDA on a series of dairy-specific requests aimed at helping the dairy community during this difficult time.

Based on input provided this week by NMPF’s executive committee and following discussions with USDA leadership, we are preparing a dairy-specific letter to the USDA to ask for certain types of assistance, either directly from the USDA or as the result of combined action between the USDA and Congress.  At this point, among the possible inclusions are:

  • Dairy Margin Coverage reopening. Asking the USDA to reopen the 2020 DMC program sign-up, as based on current DMC decision-tool calculations, payments are now expected for the majority of the rest of the year. This is an existing risk management tool that has the potential to deliver known benefits to producers.

  • Product purchases. We are exploring a range of possibilities on this front. The USDA has authority to make purchases under Section 32, but it’s unclear how much funding the Commodity Credit Corporation (CCC) still has available at the moment. Congress would need to replenish that fund as it did last fall should money be needed, possibly as part of the next economic stimulus package.

We believe a substantial purchase of multiple dairy products will be important in light of restaurant closures and school and food service cancellations. Such purchases would send a clear signal to dairy markets of strong product demand. An expected large spike in unemployment will create huge food needs and possibly unprecedented demands on food banks for donations. Dairy is a very popular food in food banks, thus providing an immediate outlet for government purchases.

  • Milk disposal compensation. Given the potential for supply chain disruptions during spring flush or the summer school hiatus, we are reviewing whether other programs that have been created to compensate producers for milk dumping could be adopted for this situation. It’s possible that elements of existing programs could provide the basis for a similar setup to compensate farmers or processors depending on where dumping occurs, potentially with an incentive to donate milk. 

Know that we are looking at and are open to sharing other options in order to protect our industry and preserve our nation’s dairy production capacity, particularly in light of its critical importance in feeding Americans now and in the future.

The pressure on dairy margins from the spread of COVID-19 are likely to be made worse as U.S. milk production rebounds. According to the February USDA Milk Production report, total national output rose 1.7% from 2019, adjusted for leap year. Cow numbers reached 9.37 million last month, up 0.2% from 2019.

Lastly, although the news headlines are filled with fear, I do want to share a reminder of the good things that happened last year in the dairy sector. Take a look at the 2019 NMPF annual report, a copy of which we shared at our board meeting last week.  

Despite the current dramatic challenges we now face, working together, I firmly believe this great industry can surmount them. The path ahead may be rocky, but I know we will rise to meet these challenges. 

Thanks for reading and please stay safe.  end mark

Jim Mulhern
  • Jim Mulhern

  • President and CEO
  • National Milk Producers Federation

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