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Weekly Digest: USDA to allow voluntary termination of CRP contracts

Progressive Dairy Editor Dave Natzke Published on 27 May 2022

Digest highlights

USDA to allow voluntary termination of CRP contracts

Citing potential threats to global food security due to food shortages, the USDA will allow Conservation Reserve Program (CRP) participants to voluntarily terminate contracts and harvest crops from some land without having to return rental payments. Producers making one-time termination requests must be in the final year of their CRP contracts.

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The FSA is mailing letters to producers with expiring acres that detail this flexibility and share other options. Producers will be asked to make the request for voluntary termination in writing through their local USDA Service Center.

If approved for voluntary termination, preparations can occur after the conclusion of the primary nesting season, which vary by state and region. Producers will then be able to hay, graze, begin land preparation activities and plant a fall-seeded crop before Oct. 1, 2022. For land in colder climates, this flexibility may allow for better establishment of a winter wheat crop or better prepare the land for spring planting.

Participants can also choose to enroll all or part of their expiring acres into the continuous CRP sign-up for 2022. If producers are not planning to farm the land from their expiring CRP contract, the Transition Incentives Program (TIP) may also provide them two additional annual rental payments after their contract expires on the condition that they sell or rent their land to a beginning or veteran farmer or rancher or a member of a socially disadvantaged group.

In addition to CRP contracts, the USDA also announced additional flexibilities for the Environmental Quality Incentives Program (EQIP) and Conservation Stewardship Program (CSP). The USDA’s Natural Resources Conservation Service (NRCS) will allow participants to either modify their plans to plant a cover crop (and instead shift to a conservation crop rotation) or delay their cover crop plans a year without needing to terminate the existing contract. This will allow for flexibility to respond to market signals while still ensuring the conservation benefits through NRCS financial and technical assistance for participating producers.

Producers and landowners can learn more about these options by contacting FSA and NRCS at their local USDA Service Center.

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USDA announces sign-up for Commodity Container Assistance Program

U.S. dairy exporters may have easier access to shipping containers. The USDA will begin accepting applications through the Commodity Container Assistance Program (CCAP) in an effort to reduce export market disruptions caused logistical challenges associated with the availability and flow of shipping containers to transport agricultural commodities.

The program will help provide access to shipping containers and subsidize the cost of those containers under partnerships with the Port of Oakland in California and the Northwest Seaport Alliance (NWSA) in Seattle and Tacoma, Washington.

In the Port of Oakland, agricultural companies and cooperatives will have easier access to containers at the Howard Terminal “pop-up” site. The USDA’s Agricultural Marketing Service covered 60% of the startup costs for the site, and under CCAP, the USDA’s FSA is providing a $125 per container payment to partially assist agricultural commodity owners for the additional logistical expenses. The FSA will also provide payments of $200 per dry container and $400 per refrigerated container to help cover additional logistical costs associated with moving the shipping container twice, first to the preposition site and then to the terminal loading the vessel, along with the cost of temporary storage.

In the Northwest, a 49-acre existing near-dock facility pop-up site will be used to accept either dry agricultural or refrigerated containers for temporary storage at NWSA in Seattle. The FSA will make monthly direct payments to agricultural companies and cooperatives on a per-container basis based upon the location of the port and the type of shipping container. Both sites will have the ability to pre-cool refrigerated shipping containers to receive perishable commodities.

For application information, click here.

U.S. dairy export outlook jumps

Container struggles aside, the USDA has substantially boosted its forecast for U.S. dairy product exports in fiscal year 2022.

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The latest USDA quarterly Outlook for U.S. Agricultural Trade report, released May 26, projects the value of U.S. dairy exports at a record-high $8.4 billion in FY 2022 (Oct. 1, 2021-Sept. 30, 2022). That’s up from $7.8 billion forecast in February. The increase is based on higher forecast exports of cheese and butter coupled with higher unit values for a range of dairy products.

The value of FY 2021 dairy exports topped $7.31 billion, continuing a three-year growth trend, up from $6.46 billion in FY 2020 and about $5.6 billion in both FY 2018 and 2019.

The forecast for FY 2022 dairy imports increased $100 million from last February’s report to $4.1 billion due to higher unit values and volumes of cheese and milk proteins. Cheese imports were forecast at $1.7 billion, also up $100 million.

FY 2021 U.S. dairy imports totaled $3.72 billion, with cheese imports valued at $1.43 billion.

Vitaliano: Input costs and food inflation are tempering dairy gains

Robust growth of both domestic consumption and exports of all cheese have been bright spots in the overall U.S. dairy situation, notes National Milk Producers Federation’s Peter Vitaliano, summarizing markets in the May 2022 Dairy Management Inc./National Milk Producers Federation Dairy Market Report.

But despite record-high milk prices, record or near-record levels of the cost of virtually all inputs needed to produce milk are tempering the gains on farmer balance sheets. Meanwhile, retail price inflation has been accelerating for several dairy product categories, including fluid milk and butter, which are significantly outpacing consumer price increases for all food and beverages as well as the overall rate of inflation

For more information on commercial use, dairy trade, milk production, product inventories, prices and margins, click here.

U.S. farm wages up 8%

April 2022 U.S. gross farm wages were up 8% compared to a year earlier, according to the USDA’s latest Farm Labor report. Farm operators paid their hired workers an average of $17.22 per hour during the reference week (April 10-16, 2022). Among individual worker categories:

  • Field workers received an average of $16.50 per hour, an increase of 8%.
  • Livestock workers earned $15.82 per hour, up 7%.
  • The field and livestock worker combined wage rate at $16.27 per hour was up 8%.

The quarterly USDA survey analyzes workers' numbers and wages in January, April, July and October. For state and regional averages, view the full report.  end mark

Dave Natzke
  • Dave Natzke

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