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Under Original Version Of CFAP, Upstate Dairy Farmers Could Receive Federal Relief To Make Up For Losses From Meat Produced From Their Breeding Animals; However – With Arbitrary And Unnecessary Guideline Changes – CFAP 2 Leaves Out Reimbursements For Breeding Animal Losses 

Senators Say New, Complicated Qualifications Threaten Livelihood Of Upstate Dairy Farmers, Who Already Took Millions In Losses At The Beginning Of The Pandemic When They Were Forced To Dump Hundreds Of Millions Of Pounds In Product

Schumer, Gillibrand To USDA: NY Dairy Farmers Are Watching Profits Dry Up; Reverse Guidelines And Get Them Federal Relief Before It’s Too “Lait”

Continuing their fierce advocacy for New York’s dairy farmers throughout the COVID-19 crisis, U.S. Senate Minority Leader Charles E. Schumer and U.S. Senator Kirsten Gillibrand today called for the U.S. Department of Agriculture (USDA) to reverse course on new classifications that exclude eligibility for meat produced from breeding animals for reimbursement under the Coronavirus Food Assistance Program (CFAP) 2.

“New York’s dairy farmers are the lifeblood of the Upstate economy and have already been squeezed by the economic effects of the COVID-19 crisis,” said Senator Schumer. “For some of our dairy farmers, receiving federal relief could mean the difference between keeping their farms and losing their livelihoods. For the sake of our farmers who have already experienced huge losses this year, USDA must reverse course on their decision to exclude meat produced from breeding animals from qualifying for the coronavirus relief program, CFAP 2 reimbursement and remove unnecessary roadblocks to getting dairy farmers the critical federal assistance they need ASAP.”

“Across New York state, dairy farmers are struggling to make ends meet because of the devastating economic impact of COVID-19,” said Senator Gillibrand. “The USDA must reverse course on this arbitrary decision to exclude breeding animals from CFAP 2 which does nothing but punish dairy farmers in our state who were are already operating on thin margins before the coronavirus pandemic. I will continue working to ensure that our federal relief programs work for New York farmers.”

Schumer and Gillibrand explained that while milk is the primary income for dairy farms, they often are diversified operations with significant revenue coming from the meat of cows as they are retired from milking. Under the first version of CFAP, farmers could claim reimbursement and federal assistance for losses from meat production, no matter the purpose for which their livestock was raised, but under the latest version of CFAP, farmers can only claim for losses from meat production for livestock specifically raised for slaughter. The change now excludes breeding animals, which means New York’s dairy farmers are now unable to claim reimbursement for losses from meat produced from their dairy cows, potentially devastating the entire state’s dairy industry that already suffered millions of dollars in losses at the beginning of the COVID-19 pandemic when disrupted supply chains and dried up restaurant demand forced farmers to dump hundreds of millions of pounds of milk.

Schumer and Gillibrand noted that Congress recently approved an early refill of the USDA’s Commodity Credit Corporation borrowing authority to provide the agency with sufficient resources to reverse their decision and re-include meat sourced from breeding animals in their allowances for CFAP 2 reimbursement. The senators also suggested should USDA determine that breeding animals are typically worth less per head than other livestock, the agency could simply establish a separate per head rate, rather than excluding dairy cows and other breeding animals altogether.

Additionally, Schumer and Gillibrand argued that the CFAP 2 change arbitrarily excludes and significantly disadvantages farmers who have chosen to specialize in breeding and raise no animals specifically for the purposes of slaughter. The senators said that under the current classifications, those specialized farms would not qualify for federal reimbursement, all but dooming some of them as the pandemic reduces demand.

Schumer added, “Not only does the exclusion in CFAP 2 unfairly penalize dairy farmers who are already operating on razor-thin margins, but it also unnecessarily complicates the process of receiving federal assistance. The one-size-fits-all approach unfortunately does not fit in this case, and USDA must be more flexible to streamline the delivery of vital dollars that will help our farms brave this health and economic crisis.”

Schumer and Gillibrand explained that under the new, CFAP 2 qualifications that exclude breeding animals, farmers and/or USDA field staff are required to define the ‘intended use’ of each animal, a process that is overly complicated, difficult, and slows down the approval of reimbursements to farmers, some of whom are on the brink of financial devastation.

Schumer revealed earlier this year that due to reduced demand at the outbreak of COVID-19 in the U.S., some dairy co-ops were forced to direct farmers to dump their milk, indicating a huge loss in revenue for New York agriculture as milk is New York’s #1 agricultural product. During the first month of the crisis, in March, dairy farmers statewide were forced to dump between 25 million and 35 million pounds of milk. New York’s dairy farmers are expected to lose anywhere between $1 million and $1.2 million in the aftermath of COVID-19.

Senator Schumer and Senator Gillibrand’s letter, sent along with 13 other senators, to U.S. Department of Agriculture Secretary Sonny Perdue appears below:

Dear Secretary Perdue,

We are concerned that USDA’s new Coronavirus Food Assistance Program (CFAP 2) will unfairly disadvantage dairy and other livestock producers. Specifically, USDA made a significant change between the first version of CFAP and the new version that has unfairly excluded the value of the meat produced from breeding animals. This change will affect the livestock industry and be particularly harmful to dairy farmers that often operate at extremely tight margins. The decision is even more troubling considering that USDA clearly has sufficient resources to cover these losses. Additionally, it is less complicated for both USDA and farmers to cover all livestock and avoid confusion about what animals are covered or excluded.

Even before the coronavirus pandemic, dairy farms have struggled with prolonged market uncertainty, unfair trade practices, and the Administration’s chaotic trade policies. Unfortunately many farms, especially smaller operations, have had no choice but to sell their cows and exit the dairy business. While the value of the milk is the primary income stream for dairy farms, they are by nature diversified with significant income coming from the meat of cows as they are retired from milking and any crop production that exceeds the feed needs of their own animals. Considering the dairy industry’s traditionally tight margins, USDA’s decision to shift course and arbitrarily exclude dairy farm losses related to meat production is a significant blow.

We urge USDA to reverse this arbitrary decision and make breeding animals eligible for CFAP 2 like they were under the original relief program. It would not be difficult to estimate an average rate that dairy cows are removed from milking and sent to the meat supply.  Should USDA determine that breeding animals are typically worth less per head than other cattle, a separate per head rate could also be established instead of completely excluding dairy cows and other breeding animals.

With respect to dairy losses due to the pandemic, we continue to encourage USDA to provide assistance to farmers that had to dispose of milk due to the pandemic’s shock to the normal food supply. We also encourage USDA to be flexible and work with the dairy industry, as there may be different scenarios depending on how cooperatives and farmers managed the temporary surplus. A one-size-fits-all approach may unfairly exclude some losses.

While we are particularly concerned with barriers preventing dairy farms from accessing this critical assistance, the exclusion of breeding animals in the other segments will also create unnecessary inequities.  In particular, some farmers have sought out opportunities to specialize and are arbitrarily excluded by the USDA decision.  For example, some farms have focused on developing superior genetics and supplying animals to other farmers that breed them and produce the animals that go directly for meat or wool production. These producers will clearly be experiencing pandemic related losses as the farmers they supply have had to reduce purchases, but the breeding animal decision by USDA completely excludes any assistance for these specialized farms.

Finally, in addition to the unfairness of excluding losses from certain segments of meat production, USDA’s decision to not cover all animals unnecessarily complicates the sign-up process for Farm Service Agency field staff and farmers. Setting a fair payment rate for all animals, including breeding animals, would largely avoid the difficult job of trying to define the ‘intended use’ of each calf, lamb, piglet or kid born and expecting farmers or USDA field staff to validate those determinations.  

Thank you for considering our request for USDA to reverse the decision to exclude breeding animals like dairy cows from CFAP 2.  Congress recently provided the requested early refill of the Commodity Credit Corporation borrowing authority in the Continuing Resolution enacted on September 30, providing USDA with sufficient resources to correct this unfair decision.