To reduce food waste and help feed hungry Americans, the USDA will spend an estimated $400 million to reimburse dairy organizations for donating products to food banks, said Deputy Agriculture Secretary Jewel Bronaugh on Wednesday. The donation program was the second component of pandemic relief to dairy farmers that would total $2 billion this year.
“When there is surplus milk production, we encourage the milk to be donated rather than dumped,” said Bronaugh during a teleconference. Senate Agriculture chairwoman Debbie Stabenow said, “This program really is a win-win.”
Dairy consumption fell, pulling down the farm-gate price for milk, when the pandemic hit the United States last year, and it’s still recovering. At the same time, food stamp enrollment surged and food banks were swamped by demand. Food insecurity rates remain elevated. Some dairy farmers were forced to pour milk down the drain last year because restaurants and schools stopped buying it during the shutdown.
Anti-hunger group Feeding America, a network of food banks and pantries, said the donation program “has the potential to connect millions of additional pounds of dairy donations through food banks to the people we serve.”
The donation program, authorized in a December 2020 coronavirus package, will cover donations retroactive to Jan. 1, 2020. It would reimburse purchase, processing and transportation costs for donated products up to the equivalent of the value of fresh milk in Dade County, Florida. Under the Federal Milk Marketing Order system, handlers must pay a minimum price for milk, depending on its use. Dade County has the highest fresh milk (Class I) price in the country. Using the Dade County price “will allow for Class I handlers to obtain some reimbursement for manufacturing and transportation,” said the USDA in the regulation governing the program.
The National Milk Producers Federation said the donation program would reimburse farmers, cooperatives, and other dairy organizations for the full cost of raw milk used to make dairy products.
Still to come, said Bronaugh, were a USDA infusion of $580 million for Supplemental Dairy Margin coverage for small- and medium-sized farms and an adjustment to the feed-cost formula that helps determine payments through the Dairy Margin Coverage subsidy. The Dairy Margin program issues payments when the gap between feed costs and revenue from milk sales is too narrow.
The change in the feed formula, to reflect the cost of high-quality alfalfa, would take effect in September and be a permanent part of the dairy program. Like the donation program, it would be retroactive to January 2020. It would trigger payments of $800 million over 10 years, according to the USDA.
Last week, the USDA said it would pay an estimated $350 million in pandemic aid to dairy farmers to offset lower milk prices caused by market abnormalities during the second half of 2020. The payments would benefit small farms the most.
The homepage for the Dairy Donation Program is available here.