COVID-19 is impacting the entire economy and marketplace, including the milk market. We’ll be providing weekly updates with milk futures prices and other market updates to help keep you as knowledgeable as possible during this time. View the entire list of weekly updates.
Class III and IV milk futures have continued to deteriorate compared to last Thursday’s closing prices. Average Class III price fell an additional $0.37 for the next 12 months to $14.41. Average Class IV price for the next 12 months fell an additional $0.09 to $12.50.
The Center continues to receive a lot of questions about dumped milk and how dairy farmers will be compensated for that dumped milk. John Newton with the American Farm Bureau Federation does a great job explaining how dumped milk is priced and pooled on its Federal Milk Marketing Order. Read more.
There has been no additional information provided as to how USDA plans to use the funds provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. $23.5 billion dollars from the CARES Act has been allocated specifically for use by the USDA to provide economic relief to agriculture.
There is one program created by the CARES Act that is available now: the Paycheck Protection Program (PPP). The PPP is a low-interest loan the dairy farmers can apply for and receive the lesser of 2.5 times the average monthly payroll incurred during calendar year 2019 or $10 million. The loan can be used to cover payroll-related expenses including salary, wages, tips, employee benefits, and state and local taxes assessed on compensation. In addition to payroll costs, the PPP loan funds can be used to pay for qualified operating expenses such as interest on mortgage payments, rent or lease payments, and utilities. There are several appealing factors about this program. The loan has a two-year term with only 1% interest. Payments can be deferred for the first six months, and partial to full loan forgiveness is possible depending on how the funds are used. Additionally, there is no personal guarantee needed to receive the loan nor any collateral required. Dairies with no regular payroll, which may describe a lot of Pennsylvania dairies, are also eligible for PPP loans. All dairies are encouraged to contact their agriculture lender for more detailed information or to apply. Applications for PPP loans are available now until June 30, 2020.