WASHINGTON– Today, Representatives Jahana Hayes (CT-05) and Joe Courtney (CT-02) welcomed the U.S. Department of Agriculture’s (USDA) announcement of details for the new Pandemic Market Volatility Assistance Program (PMVAP) for dairy farmers. The new program will provide $350 million in pandemic relief payments to dairy farmers who received a lower value for their products due to market abnormalities caused by the pandemic, and is part of a larger package that includes permanent improvements to the Dairy Margin Coverage safety net program. Reps. Courtney and Hayes voted to authorize funding for the new program in December 2020 through H.R. 133.
The USDA Pandemic Market Volatility Assistance Program will specifically help reimburse dairy farmers for losses brought on by the Trump Administration’s Farmers to Families Food Box Program (FFFBP), which is no longer operating. Although the previous administration’s FFFBP made certain dairy product purchases that were important, it weighted purchases in such a way that had a devastating impact on the average prices for Class I skim milk in the second half of 2020. In July, Reps. Hayes and Courtney wrote to President Joe Biden urging him to ensure American dairy farmers are reimbursed for the millions of dollars lost in Class I skim milk revenue as a result of the FFFBP—click here to read more.
"The news of the Pandemic Market Volatility Assistance Program by the USDA is monumental and much needed for dairy farmers throughout Connecticut. The structure of this program will target small dairy farmers who have been severely impacted by the pandemic, drought, excessive rain, disrupted sales flow, and supply chain issues. Additionally, the permanent improvements to the Dairy Margin Coverage safety net program will ensure realistic feed costs are reflected in payments to family dairies, and will strengthen the program as we head into the next Farm Bill. Connecticut farmers will be grateful for this news, and I commend the USDA and Secretary Vilsack for their hard work," said Congresswoman Hayes.
“America’s dairy farmers took a big hit during COVID-19, and we need to keep our foot on the gas to make sure assistance keeps making it out the door and onto their farms,” said Rep. Courtney. “The new Pandemic Market Volatility Assistance Program is going to put relief straight into the pockets of eastern Connecticut dairy farmers to help make up for the steep drop-off in milk prices they saw in late 2020—a financial loss driven in part by the pandemic, and in part by some decisions made by the previous Administration. I’ve stayed in close touch with farming families and have been out to visit many of our local farms this summer and throughout the past year—there’s no question they need this federal support, and my office will be ready to help our local dairy farmers access it.”
Background on the Pandemic Market Volatility Assistance Program
The Class I “mover,” which is used to compute the base Class I (fluid milk) skim milk price under the Federal Milk Marketing Order system, was modified in 2019—instead of being based on the higher of the Class III or Class IV price each month, it would now be structured as the monthly average of the Class III and Class IV prices, with a $0.74/cwt. adjustment. The historical record from January 2000 through August 2017 indicated this would be revenue-neutral for dairy armers.
However, under the Trump Administration’s FFFBP, that wasn’t the case. The previous administration heavily weighted its dairy product purchases towards cheese (Class III), and contributed to a wide divergence in the monthly Class III and Class IV prices, making the average of the two significantly lower than the higher of the two. As a result, Class I skim milk prices averaged $3.56/cwt. lower during the second half of 2020 than they would have under the previous mover. As a result, dairy producers in all regions of the country suffered more than $725 in net losses since the current mover was put in place. In July, Rep. Courtney and Rep. Hayes joined twenty-three other Members of Congress in writing to President Biden to ensure dairy farmers were reimbursed for those losses. Click here to read their letter.
Under the PMVAP, USDA will provide approximately $350 million in payments to reimburse qualified dairy farmers for 80% of the revenue difference per-month based on an annual production of up to 5 million pounds of milk marketed and on fluid milk sales from July through December 2020. The payment rate will vary by region based on the actual losses on pooled milk related to price volatility. USDA will make payments through agreements with independent handlers and cooperatives. USDA payments will:
- Provide assistance to dairy farmers who received a lower value for pooled milk due to fluid milk market abnormalities caused by the pandemic and ensuing Federal policies.
- Be distributed to dairy farmers on the same basis the handler made July – December 2020 payments to dairy farmers.
- Be made through agreements between USDA and individual handlers or cooperatives whose dairy farmer suppliers are eligible to receive payments.
- Be made to dairy farmers with an eligible 2020 Adjusted Gross Income. To be eligible for payments, a person or legal entity must have an average adjusted gross income of less than $900,000 for tax years 2016, 2017, and 2018. However, if 75 percent of their adjusted gross income comes from farming, ranching, or forestry-related activities, the AGI limit of $900,000 does not apply and the person or legal
Click here to read more.
Congresswoman Jahana Hayes sits on the Committees on Education & Labor and Agriculture and proudly represents Connecticut’s 5th District. She was a public school teacher in Connecticut for more than 15 years and was recognized in 2016 as the National Teacher of the Year.