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Dairy economist says USDA right not to penalize producers using risk management in CFAP formula

A dairy economist says the Coronavirus Food Assistance Program will help dairy producers, but like other commodities, it doesn’t cover everything.

Marin Bozic with the University of Minnesota says, “This is what producers need to know. The CFAP payments will be $6.20 per hundredweight multiplied by the production in the first quarter of 2020 with dumped milk included, but it appears forward-contracted milk excluded.”

Bozic tells Brownfield the CFAP calculations do not and should not affect producers who use risk management programs like Dairy Margin Coverage or LGM because it would send the wrong message to producers.

And, when it comes to the nearly 40% of milk not covered by a risk management program, Bozic tells Brownfield he understands why. “Frankly, some of them did not hedge in 2020 just because they really needed every penny out of 2020 to make it through after so many years of low prices.”

Bozic says producers applying for the CFAP aid should prepare their first-quarter production documents before meeting with the Farm Service Agency to apply and to ask them how the payment caps impact their farm.