Northeast Organic Dairy Producers Alliance appreciates USDA for their Assistance to Organic Dairy Farmers and has some suggestions to Develop the Program.
NODPA welcomes the announcement by the USDA on January 23, 2023 of a new assistance program for organic dairy farmers, after a disastrous 2022 with unprecedented increase in costs and a low Pay Price. We thank the USDA FSA leadership and staff who have dedicated their time to honoring the commitment made by Congress with report language in their Omnibus Bill in December 2022. We appreciate that this is the first time that USDA has been asked to find a program for organic dairy that can meet the legal requirements of how the different programs have been structured by Congress and benefit the needs of the targeted community of the most affected organic dairy farmers that are suffering from a stable, low pay price and an unprecedented increase in inputs.
A Gross Revenue program that works in very many disaster programs does not work for organic dairy. Pay price and gross revenue have remained unprofitably low since 2018 so there is no change in gross revenue to evaluate. However, a lot of change in net income has occurred. We agree with USDA FSA that they should not use that model for the Organic Dairy Marketing Assistance Program (ODMAP).
As USDA FSA says in their press release: ‘Details about the Organic Dairy Marketing Assistance Program will be available and updated at www.farmers.gov as more details are released in a Notice of Funds Availability later this year.’
We are committed to working with USDA to develop a program that benefits the small to mid-size organic dairy. The draft of the program they have published does not meet that requirement.
In order to assess the effectiveness of the program, we need clarity on the definition of “national estimates of marketing costs”. The farmers that need help are the small to mid-size operations (from 50 to 300 organic milking cows). A herd of 300 organic milking cows averaging 15,000 lbs. of milk annually will market approximately 5 million pounds of milk a year. The majority of organic dairy herds are wholesaling their product directly from the farm. They do have some minimal direct marketings costs (coop handling dues, certification expense, CWT program, State and Federal milk promotion dairy check-offs, producer organization dues) and they have one large marketing cost, milk hauling from the farm to the processor. This cost will vary with the buyer and with the size of the farm. With some producers who sell to a broker, the producer would have to cover all the hauling costs as part of marketing their milk; some producers cover a percentage of the cost, some have a stop charge and some pay nothing but the cost is reflected in the pay price package. This hauling charge is taken out of the milk check directly and without the ability to market their milk by hauling it to the processor, it would sit at the farm.
If USDA can gather the data about marketing costs per cwt (the press release says payment to the producer will be based on a “national per hundredweight payment”) then every organic dairy producer will be able to claim up to “first five million pounds of anticipated production” from Aurora’s 21,400 cow herds (in fact they have 8 farms) to a 20 cow herd. The larger operation will receive more dollars than the smaller operations, who are in the most need, if the payment is based on each farm’s production.
This process will not benefit the small to mid-size operation unless there is a high $ per cwt with a cash cap of, for example, $40,000 per certified organic dairy operation. The average size of organic dairy herds is 78 milking cows.
A more equitable way would be to give each organic dairy farm $40,000 towards the marketing costs of their milk in 2023. The most recent USDA organic survey report in 2021 gave the number of organic dairy farms as 2,528 and those that reported income from sales as 2023. If you divide $100 million by $40,000 it would cover 2,500 farms. Assuming some of the larger operations would not apply for the payment, there would be enough to cover all the farms that did apply.
