Dairy farmers can begin applying for direct payments for losses they incurred due to the coronavirus pandemic on May 26 through USDA’s Coronavirus Food Assistance Program.
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Total payouts for declines in milk prices are expected to approach $3.5 billion.

Applications will be taken by the Farm Service Agency. Farmers have until Aug. 28 to file.

“In general, dairy farmers who produced milk in the first quarter of 2020 are eligible for payments,” Alan Bjerga, senior vice president of communications for National Milk Producers Federation, said on Friday.

There are always individual exceptions, such as if a farmer has been disqualified because of lack of compliance with certain regulations or previous commitments, he said.

NMPF put out details on the program on May 20.

The assistance applies to losses during the first and second quarters of 2020, for which dairy farmers will receive a single payment based on two calculations.

The first is calculated from a farmer’s certified milk production for the first quarter multiplied by $4.71 per hundredweight of milk. The second is based on a 1.4% increase in first quarter production to account for seasonally higher milk production in the second quarter.

Overall, the payment amounts to $6.20 per hundredweight for production January through March, according to NMPF’s calculations.

The payment is based on 80% of losses in the first quarter and 25% of losses in the second quarter.

USDA will make an initial payment of 80% of the benefit to get payments out quickly and ensure overall program payments don’t exceed the $16 billion funding limit.

NMPF also outlined eligibility requirements.

Eligible producers must have suffered at least a 5% price decline due to COVID-19.

Farmers using risk-management tools, such as the Dairy Margin Coverage program, Livestock Gross Margin, Dairy Revenue Protection or forward contracting are eligible.

Participating in the Small Business Administration’s Paycheck Protection Program or Economic Injury Disaster Loan program does not impact eligibility.

The assistance also covers any milk dumped during January, February or March.

Payments are limited to a total of $250,000 per person or legal entity for all eligible commodities. Dairy farmers are also eligible for payments on cull cows, steers and feed crops.

Corporate entities — including limited liability companies and limited partnerships — can receive up to $750,000 based on the number of shareholders, limited to three. The applicant must self certify the shareholders provided at least 400 hours of active personal labor or personal management with respect to production in 2019.

There are also limitations on income.

A person or entity is ineligible if the average adjusted gross income — using an average for the 2016, 2017 and 2018 tax years — exceeds $900,000 unless at least 75% of the average adjusted gross income is derived from farming, ranching or forestry.

For joint ventures and general partnerships, that provision will be applied to each eligible member.

Farm Service Agency has streamlined the application process to not require an acreage report at the time of application, and a USDA farm number might not be immediately needed, NMPF stated.

ASB hiked its expectations for Fonterra’s milk price to farmers to the top of the co-operative’s range, saying declining milk production will push payments to a record high this season.

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