USDA milk donation program for dairy processors

by Tamara Scully

Amidst the COVID-19 pandemic, dairy farmers are facing the hardship and heartbreak of seeing their milk dumped into manure pits and onto fields as processors are caught with excess supplies. Food service demand for fluid milk and milk products has plummeted amid mass closures of schools, restaurants and corporate cafeterias. The International Dairy Foods Association and the National Milk Producers Federation estimate that supply currently outpaces demand by about 10%.

What is most disturbing is that the dumping of bulk tanks is occurring even as retail consumers can’t find milk on grocery store shelves. Adapting production lines, packaging and distribution supply chains to accommodate the change from wholesale milk orders to retail units would take time and money, and consumers don’t consume the same amount of dairy products at home as they do when they eat out. With a drop in demand for finished dairy products, fluid milk processors are also seeing those orders cancelled, further increasing the supply of fluid milk. The spring increase in milk production at the farm level only adds to the conundrum.

But what about diverting the supply to food banks, homeless shelters, group homes or other programs which are trying to safely feed, house and care for those who need assistance? That is one part of the COVID-19 mitigation proposal drafted by the IDFA and the NMPF, which calls for consumer donations of dairy products to food banks, and calls upon the federal government to eliminate restrictions which limit the inclusion of milk and dairy products across all USDA food and feeding programs.

Fluid milk donations

Even before the current crisis, the USDA had a milk donation program, allowing processors to receive partial compensation for costs associated with fluid milk donations to nonprofit organizations. The USDA’s Milk Donation Reimbursement Program, created in the 2018 Farm Bill, “encourages the donation of Grade A fluid milk products,” Emily DeBord, of USDA’s Dairy Promotion, Research and Planning Division, said.

The program’s goal is to decrease food waste and to provide nutritious food to low income individuals while allowing dairy processors to receive some monetary compensation for their donated product. All fluid milk must be produced and processed in the U.S. in order to meet eligibility requirements.

Nine million dollars was authorized for reimbursement for fiscal year 2019, with $5 million for each subsequent year for a total of five years. They have not met those reimbursement limits, and partnerships are being solicited. Money not used in one year does roll over to the next year.

Donation partnerships

The Milk Donation Reimbursement Program (MDRP) requires that eligible dairy processors partner with public or private nonprofit food distributors, who will receive the milk and be responsible for distributing it to the communities they serve. The partners must explain and quantify their plan for distribution in their application, which can be found on the MDRP website, DeBord explained.

The program is retroactively allowing donations from eligible processors to eligible nonprofits to be considered for reimbursement. The partners must file for acceptance into the MDRP, and then submit claims retroactively. Proof of past donations, such as a bill or receipt, will be required.

Applications for fiscal years 2019 and 2020 will be accepted until Oct. 30. Claims for reimbursement for those fiscal years will be accepted through Dec. 31.

Dairy processors must be fully regulated by the Federal Milk Marketing Order (FMMO). Reimbursement for donated fluid milk is limited to the difference between the plant’s Class I milk price and the lowest classified price for the month during which the milk was donated. Organic milk is eligible also, but will receive the same price reimbursement as conventional milk.

The program requires that donated milk have a minimum of a 12-day shelf-life. The milk must be in FDA-compliant packaging with all applicable plant and date coding. Any type, flavor or group of milk can be donated, in any packaging size.

Processors can work with multiple nonprofit groups; however, each partnership requires submission of its own plan for approval. Once partnerships are approved, MDRP reimbursement claims can be submitted for payment, which is made via USDA’s Agricultural Marketing Service.

Submitting plans for approval requires an estimated amount of milk which will be donated throughout the year; the tax eligibility number for the nonprofit distributor; information on how and to whom the organization will distribute the milk; and information on the processing plant and the location of each partner. Processors must request a rate of reimbursement (up to 100% of the eligible amount under the regulations). No reimbursement can be given if any payment was received for the milk – it must be a donation.

“You will be asked to request a rate of reimbursement, up to 100%. Under this program, you are asked to indicate if you would like 100% of your eligible expense reimbursed, or a lower number,” DeBord said.

COVID-19

Due to the disruption caused by COVID-19, and its impact on fluid milk processors, approved MDRP partnership plans can be adjusted as needed to reflect the needs of the current crisis. In addition, those processors with school milk contracts which are no longer going to be fulfilled are able to donate that product for reimbursement.

“USDA recognizes this will impact fluid milk processors who have school milk contracts, and will not have milk sales to school feeding programs for an extended amount of time,” DeBord said.

If finding an appropriate nonprofit or dairy processor is a barrier to participating in the program, dairy organizations such as the IDFA or the MDRP may be able to assist in finding likely organizations with which to partner, although the MDRP does not normally track these organizations or perform matches. Processing plants which are partially regulated under the FMMO may be able to participate in the MDRP on a limited basis, DeBord said, and should inquire.

As the COVID-19 pandemic continues, Ag Secretary Sonny Perdue announced recently that the USDA will be purchasing as much meat and milk as possible. While that comes as welcome news, dairy processors are encouraged to utilize the MDRP program – in good times and bad – to donate surplus product to those most in need.

For complete information see ams.usda.gov/services/milk-donation-reimbursement-program.

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