National Milk Producers Federation Chief Economist Peter Vitaliano says current corona virus-created gloom over dairy prices as expressed in futures markets may turn out be overstated in the end, but that the pain felt by producers over the next few months will be real, as lower prices make their way into milk checks paid to farmers for their milk.
“These are unusual circumstances that I’m not sure the futures have figured them out yet,” Vitaliano says in an NMPF podcast released today. Because milk in stores now was purchased at earlier, higher prices, “producers are not seeing this in their milk checks yet,” he said. “That’s going to come over the next several months, because the forecasts are all indicating that we’re going to be to be hitting the trough in May and June.”
Vitaliano also said that a USDA aid package for dairy farmers would be most effective if “they would pretty much follow” recommendations NMPF made in a letter to Agriculture Secretary Sonny Perdue last week. NMPF in its letter called for:
- Additional dairy-product purchases, which will help Americans in need during what may be a period of very high demand at food banks;
- Compensation for milk disposal, a real possibility as logistical challenges on the farm and at manufacturing plants may create severe disruptions; and
- Re-opening signup for participation in the Dairy Margin Coverage (DMC) program, the main safety net for dairy farmers, especially small and medium-sized producers. DMC participation declined in 2020 because of forecasts for higher prices that have been radically revised in light of corona virus.