Dairy farmers are asking the Trump administration to recognize the significant economic losses dairy producers are suffering due to the imposition of tariffs on major trading partners and those partners’ retaliatory tariffs on imports of U.S. dairy products.
National Milk Producers Federation calculates those losses for the last half of 2018 at $1.5 billion, and its board of directors this week passed a resolution calling for federal aid commensurate to that damage.
“In light of the administration’s decision to establish a program to compensate farmers for the damage caused by these retaliatory tariffs, we call on the president to direct the U.S. Department of Agriculture to provide assistance to dairy producers at a level that reflects the damage they have caused,” the resolution states.
The initial USDA mitigation package announced in August allocated just $127 million in payments to dairy farmers, representing 12 cents per hundredweight of milk on 50 percent of producers’ production. The agency has indicated a second round of assistance might be made this year.
“USDA is still preparing the second tranche of assistance, looking at their formulas and circumstances of different commodities,” Alan Bjerga, NMPF senior vice president of communications, said.
NMPF wants that assistance to be at levels commensurate with dairy producers’ losses, as opposed to the first round of assistance – which was way off, he said.
“There’s a big discrepancy between the pain producers have faced” and USDA’s calculated losses, he said.
USDA’s own monthly World Agricultural Supply and Demand Estimates showed a drop in its forecasted milk prices for 2018 of 70 cents per hundredweight between its June and July updates, equating to a loss of $1.5 billion for the year, NMFP said in a letter to USDA.
NMPF also commissioned two studies on the impact to dairy farmers, one by Informa Agribusiness Consulting and one by Texas A&M. Those studies calculated losses of $1.5 billion and $1.17 billion, respectively.
Based on a $1.5 billion loss and using USDA’s formula for assistance, payments would work out to $1.40 per hundredweight, a little shy of 12 times the 12 cents per hundredweight paid to producers in the first round of assistance, Peter Vitaliano, NMPF vice president of economic policy and market research, said.
“We’re not calling for USDA to match dollar for dollar, but there’s really a yawning gap,” Bjerga said.
Assistance should be closer to the damage, he said.
Lynne McBride, executive director of California Dairy Campaign, said 12 cents per hundredweight on half of the country’s milk production is only 6 cents per hundredweight.
“It doesn’t even come close” to the losses producers are suffering, she said.
“We just don’t have a safety net anymore in the U.S. when milk prices drop,” she said.
And that leads to a need for supply management, she said.
“More dairy farmers are looking at this than ever before,” she said.
CDC is pushing for inventory management in federal farm policy, but it is also critical that trade mitigation assistance be tied to some sort of supply management to bring inventory in line with markets, she said.