Dairy Calculations

Due to the multi-year trade disruptions between the U.S. and China, U.S. dairy exports to the country fell by 13% in 2018, and through May of 2019 dairy exports are down 36% from prior-year levels. To assist farmers producing a variety of commodities, including dairy, the administration recently announced details of a second Market Facilitation Program, i.e., trade-related direct payments to producers, including county-level payment rates for field and cover crops as well as per-unit payment rates for specialty crops, hogs and dairy producers (USDA Announces Details Behind the New Trade Aid Package). Direct payment assistance to dairy farmers was announced at 20 cents per hundredweight, with total payments capped at $250,000 per farm operation or legal entity.

Payments to dairy farmers will be based on their Farm Service Agency milk production history – a component of the Dairy Margin Coverage program originally established in the 2014 farm bill (Reviewing Dairy Margin Coverage). Based on FSA DMC enrollment data, total production history in the U.S. represents 185 billion pounds of milk, which suggests that if all three tranches of trade aid payments are made, dairy farmers will receive approximately $351 million to $371 million in benefits – potentially more than double what they received in the first round of trade aid payments in 2018 (Trade Aid Round One: A State Perspective and Mapping $8.5 Billion in Trade Assistance). If all payments are made, the $351 million to $371 million in dairy-related payments will represent 2.4% to 2.6% of all 2019 market facilitation program payments; in 2018 dairy received 2.1% of all trade assistance dollars.