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Weekly Digest: House ‘Heroes Act 2.0’ includes DMC provisions

Progressive Dairy Editor Dave Natzke Published on 29 September 2020

Digest Highlights

House ‘Heroes Act 2.0’ includes DMC provisions

House Democrats have unveiled the “Heroes Act 2.0,” a reworked coronavirus relief bill. The bill was introduced on Sept. 28 and was awaiting floor debate.

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Dairy provisions in the bill include:

  • Adjustments to Dairy Margin Coverage (DMC) program production history for small and mid-sized dairies that have grown over the past seven years: The bill incorporates supplemental margin coverage based on the difference between 2019 actual production and established DMC production history.

  • Reduces the cost of DMC premiums for operations that commit to participating in the program for 2021-23 by providing a payment worth 15% of annual premium costs: While premium discounts were offered during last year’s enrollment period for those who signed up for the full length of the DMC program, those discounts are not included in current 2021 enrollment period, which will be held Oct. 12-Dec. 11, 2020.

  • Provides $500 million for the USDA to carry out a recourse loan program for dairy processors, packagers and merchandisers

  • Provides $500 million to pay for milk to be processed into dairy products and donated to nonprofit entities (food banks, feeding programs, etc.): Under the program’s framework, the USDA pays for milk associated with the donated products at the current appropriate Federal Milk Marketing Order class value. The bill allows the USDA to adjust the existing Milk Donation Program payments to match the level of payment provided by this new emergency program.

As introduced, the total cost of the House proposal is about $2.2 trillion, down from the $3 trillion contained in the first version of the package approved earlier this year. If approved, it must still be reconciled with any coronavirus package coming out of the Senate.

Dairy-RP: The need for speed

Launched in October 2018, the Dairy Revenue Protection (Dairy-RP) program has enjoyed a strong adoption rate in the program’s first two years. The percentage of U.S. milk covered under the Dairy-RP program stood at about 30% for the second half of 2020, according to one of the program’s creators, Marin Bozic, assistant professor in dairy foods marketing economics at the University of Minnesota.

Speaking in a recent Dairy Download podcast, produced by the International Dairy Foods Association (IDFA) and Blimling and Associates, Bozic said driving program participation higher, involving as many as 10,000-15,000 producers, will require some program improvements. Prerequisites must include continued education of crop insurance agents throughout the country, as well as more rapid transmission of information regarding endorsements (quarterly coverage available for purchase under a Dairy-RP policy), enabling faster, informed Dairy-RP decisions. His goal is to reduce that to three to five minutes.

Empty desks mean empty lunchrooms

About 60% of U.S. students (kindergarten through 12th grade) were at home learning virtually in some form as the new school year began. Those empty classroom desks mean less traffic in the school lunchroom too, according to a recent Dairy Download podcast, produced by the International Dairy Foods Association (IDFA) and Blimling and Associates and hosted by Blimling’s Phil Plourd and Kathleen Wolfley.

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While retail dairy sales through grocery stores should increase as more students eat at home during the day, reduced in-school attendance will negatively impact fluid milk consumption, which accounts for about 8% of all U.S. fluid milk sales. Cheese consumption will also be impacted.

Restaurants need a shot

The U.S. restaurant business needs a COVID-19 vaccine, and quickly, according to Dan Basse, economist and president of AgResource Company. Discussing markets and other factors impacting dairy in a recent Professional Dairy Producers (PDPW) The Dairy Signal podcast, Basse said a National Restaurant Association survey indicates nearly 100,000 restaurants will close permanently due to the pandemic. And as colder temperatures move in, outdoor seating at restaurants will diminish, further restricting restaurant capacity and profitability. Without government financial assistance, even more closures are expected.

Loss of food service sales through restaurants would be a “body blow” for U.S. butter and high-end cheese demand, with any increase in milk supply especially worrisome.

USDA appoints members to National Fluid Milk Processor Promotion Board

U.S. Secretary of Agriculture Sonny Perdue appointed seven members to the National Fluid Milk Processor Promotion Board. Six of the seven appointees will serve three-year terms, effective immediately, through June 30, 2023. The other appointee will serve the remaining two-year portion of a vacant position, expiring June 30, 2022.

The newly appointed members are:

  • Monica Massey, Kansas City, Missouri (Region 2)
  • Hugo Lizarraga, San Antonio, Texas (Region 10, two-year term)
  • Matt McClelland, O’Fallon, Missouri (Region 11)

The newly reappointed members are:

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  • Doug Harris, Lakeland, Florida (Region 5)
  • Randell Eronimous, Seattle, Washington (Region 13)
  • Evan Rainwater, Boise, Idaho (Region 14)
  • Erin Sharp, Elmhurst, Illinois (at-large, processor)

The 20-member National Fluid Milk Processor Promotion Board develops and administers a coordinated program of advertising and promotion to increase the demand for fluid milk products. The National Fluid Milk Program is financed by a mandatory 20-cent per hundredweight assessment on all fluid milk processed and marketed commercially in consumer-type packages in the contiguous 48 states and the District of Columbia. Processors who commercially process and market 3 million pounds or less per month, excluding those fluid milk products delivered to the residence of a consumer, are exempt from assessments.

Implementation of new U.S. Dairy Sanitary Certificate to China announced

The USDA is implementing a new U.S. Dairy Sanitary Certificate to China, effective Oct. 5. Manufacturers that export dairy products to China will be required to obtain the new certificate, which will facilitate more efficient dairy trade between the U.S. and China and reduce the regulatory cost to exporters.

The current interim certificate, implemented in July 2020, allowed for only one plant to be included per certificate. Current exporters that ship products to China that were produced at multiple plants are required to obtain multiple certificates, resulting in increased costs to the exporter. The new certificate will allow multiple manufacturing plants to be included on one certificate. The USDA will host a training webinar for all impacted stakeholders and interested persons on Sept. 30, 2020.

Currently 273 firms are approved to export infant formula and dairy products to China. In 2019, U.S. firms exported more than $372 million in U.S. milk and dairy products to China.

DOL seeks to clarify worker, independent contractor status

The U.S. Department of Labor (DOL) has proposed a rule clarifying the definition of employee under the Fair Labor Standards Act (FLSA) as it relates to independent contractors.

According to Secretary of Labor Eugene Scalia, the proposal adopts an “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for himself or herself (independent contractor) or is economically dependent on a putative employer for work (employee).

The proposal Identifies and explains two “core factors,” specifically the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for himself or herself.

Also, it identifies three other factors that may serve as additional guideposts in the analysis: the amount of skill required for the work, the degree of permanence of the working relationship between the worker and the potential employer and whether the work is part of an integrated unit of production.

This Notice of Proposed Rulemaking (NPRM) is available for review and public comment for 30 days after it is published in the Federal Register. The department encourages interested parties to submit comments on the proposed rule. Today’s web posting offers the public more time to review the NPRM before the comment period begins.

Published in the Federal Register on Sept. 25, a public comment period is open until Oct. 25.

Vermont receives $7 million USDA grant for phosphorus reduction program

Vermont’s Agency of Agriculture, Food and Markets (AAFM) received a $7 million grant from the USDA Natural Resources Conservation Service (NRCS) to launch a statewide “pay-for-phosphorus” program. The program will compensate farmers for voluntary and verified phosphorus load reductions that exceed those set by state and federal standards on a farm-by-farm basis. Performance is evaluated through the Farm Phosphorus Reduction Planner (FarmPREP).

Enrolled farms will then receive payments on a per-pound basis. Payments are expected to total about $4.9 million over the five-year project. To encourage participation in the VPFP Program, farmers who successfully enroll in the program will be eligible for an incentive payment of up to $4,000 per farm.

Agriculture was responsible for 97% of the reported phosphorus reductions in the Lake Champlain Basin in state fiscal year 2019.

Minnesota Dairy Promotion Council seeks candidates

The Minnesota Dairy Promotion Council is seeking candidates for 18 district board positions. Elected board members represent dairy farmers in their respective districts and make decisions regarding the expenditure of dairy checkoff funds.

Those interested in running for a seat on the board should contact their local nominating chair by Oct. 9. After the nomination deadline, a list of the candidates will be available from the Minnesota Department of Agriculture. Election ballots will be mailed in early January. Call Jerie Heille at (651) 201-6653 for additional information. More information on the MDPC can be found here.

USDA offers aid to cover Oregon livestock losses due to wildfires

Oregon livestock owners and contract growers who lost livestock due to wildfires are eligible for assistance under the USDA’s Livestock Indemnity Program (LIP).

Owners must meet several requirements to be eligible for payments. The USDA LIP information flyer, “Have you lost livestock due to wildfire?” can be viewed here. Owners are also encouraged to contact their local USDA Farm Service Agency (FSA) offices for help in applying for assistance.

Progressive Dairy COVID-19 resources

Progressive Dairy frequently provides updates on COVID-19 news and resources on a special webpage. News posted on Sept. 28 covers:

  • The North American International Livestock Exposition (NAILE) has been approved to host a modified show, Nov. 3-19, 2020, in Louisville, Kentucky.
  • A Farm Credit East webinar on Paycheck Protection Program (PPP) loan forgiveness is Sept. 30.
  • The deadline for Pennsylvania’s Dairy Indemnity Program is also Sept. 30.
  • A DMI partnership with Subway will support the GENYouth Emergency School Meal Delivery Fund.
  • ADA North East ramped up dairy activities during the pandemic.

There’s also archived information on event changes and cancellations; a list of recent dairy organization podcasts related to COVID-19; a comprehensive list of other state, regional and national resources; and helpful articles previously appearing on the Progressive Dairy website.  end mark

Dave Natzke
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