October Ag Insight

BY JIM ERICKSON

Dairy product mix, farmer strategies change significantly

The dairy industry product mix has changed in what may seem like surprising ways over the years but especially during the past two decades, according to a study by the U.S. Department of Agriculture’s Economic Research Service (ERS). Among other things:

• The average percentages of both milk fat and skim solids in farm milk (cows’ milk from dairy farms) have risen. In 2000, U.S. farm milk contained 3.68% milk fat and 8.72% skim solids on average. By 2020, the milkfat percentage had grown to 3.95%, and the skim-solids percentage had increased to 8.94%. For skim solids, content increased gradually from 2000 to 2020, while milk-fat content began rising in 2011, after remaining relatively steady from 2000 to 2010.

• Cheese is the dairy product category accounting for the largest percentage of the U.S. milk-fat supply, and that percentage has been growing.

• Fluid beverage milk is the dairy product category accounting for the largest percentage of the U.S. skim-solids supply, but that percentage has been declining.

• In response to an increase in demand for products with high milk-fat content, dairy farmers have selected breeds, adjusted feeds and made use of improved genetics to increase milk fat produced by dairy cows.

The average milk-fat content of fluid milk varied over the 20-year period, reflecting shifting consumer attitudes toward dietary trends for this dairy product. Fluid milk’s fat content averaged 2.01% in 2000 and fell gradually, reaching a low for the 20-year period of 1.83% in 2012.

The decline was due to falling sales volumes of whole milk and rising sales volumes of lower fat milks. However, since then consumers began to look at milk fat more favorably, whole milk sales increased and sales of lower fat milk varieties decreased.

In 2019, the total supply of skim solids available for dairy processing and manufacturing was 19.5 billion pounds, 33% more than in 2000. Fluid milk accounts for the largest portion of skim-solids use, but that allocation has been declining over time. If this trend continues, cheese may overtake fluid milk as the largest use of skim solids within the next few years.

Funding available for multistate specialty crop program

The U.S. Department of Agriculture (USDA) has announced that $10 million is available for competitive grant funding in the Specialty Crop Multi-State Program (SCMP).

“This program is an important resource to strengthen the competitiveness of our nation’s specialty crop industry,” said Bruce Summers, administrator of US- DA’s Agricultural Marketing Service, which manages SCMP. “By working across state lines, grant recipients can share resources and collaboratively address challenges for specific crops.”

Grants are awarded to state departments of agriculture to fund collaborative, multistate projects that address food safety, plant pests and disease, research, crop-specific common issues, and marketing and promotion for specialty crops including fruits and vegetables, tree nuts, dried fruits, and horticulture and nursery crops, including floriculture.

State departments must partner with organizations located in at least two different states to qualify. Partner organizations include specialty crop producer associations and groups, state agencies, tribal governments, universities, nonprofits, and other stakeholder groups and organizations.

Funding will be available for awarded projects in the spring of 2022 with a period of performance of 36 months. Matching funds are not required. In addition to screening proposals and submitting applications to AMS, participating state departments of agriculture will:

• Assume administrative responsibility for any application they submit that is selected for funding.

• Establish subgrants and/or contracts with the multistate partners to complete the project.

Applications must be received on or before Dec. 6, 2021.

Study shows poverty’s extent, impact

A recent study of poverty in this nation identified 310 counties – 10% of all U.S. counties – with high and persistent levels of poverty in 2019. Of those, 86% or 267 counties were rural (nonmetro). Moreover, those rural counties were concentrated in historically poor areas of the Mississippi Delta, Appalachia, the Black Belt and the southern border regions, as well as on Native American lands.

The study’s author, Tracey Farrigan of USDA’s Economic Research Service, notes that living in high and persistent poverty areas presents barriers to well-being for poor and nonpoor residents alike. Those barriers include limiting access to medical services, healthy and affordable food, quality education, broadband and civic engagement opportunities.

The longer poverty persists in an area, the more likely it will be that the community may not have adequate support services, private sector disinvestment may take place, social programs may suffer, and the existence of effective social and safety networks may decline.

The double exposure phenomenon – the combination of individual poverty and a persistently high poverty rate where the individual resides – can perpetuate poverty from one generation to the next. Opportunities for upward mobility in poor areas are often limited by lack of jobs that pay a living wage, high rates of joblessness, lower high school graduation rates and a host of interconnected social issues (such as crime and teen pregnancy).

Rural residents who identify as Black or African American and American Indian or Alaska Native were particularly vulnerable to the double exposure phenomenon. Nearly half the rural poor within these groups resided in high and persistent poverty counties in 2019.

By comparison, 20% of rural poor Hispanics and 12% of rural non-Hispanic Whites resided in those counties.

SNAP online purchasing grows in popularity

A pilot program enabling participants in the Supplemental Nutrition Assistance Program (SNAP) to purchase groceries online from authorized, participating retailers has grown quickly in popularity, but still accounts for only a small percentage of overall benefits redeemed.

Mandated by the 2014 Farm Bill, the pilot program was intended to test the feasibility of safe and secure online SNAP benefit redemptions.

Online transactions are subject to the same requirements as in-person transactions. Benefits can be spent only on food at home and cannot be used for additional expenses tied to online grocery shopping, such as tips or fees.

Online SNAP grocery purchases can be delivered or picked up on-site like other online grocery purchases.

USDA’s Food and Nutrition Service (FNS) originally selected eight states to participate in the online purchasing pilot in coordination with selected retailers and state agencies. The pilot initially launched in New York State in April 2019.

As access to the pilot expanded during 2020, so did use of online SNAP purchasing. In February 2020, the earliest month for which data are available, households redeemed less than $3 million in SNAP benefits online, accounting for less than 0.1% of all benefits redeemed that month.

This value grew especially rapidly through June 2020, when online SNAP and pandemic-electronic benefit transfer (P-EBT) redemptions totaled $154 million, or 1.6% of total redemptions. Online redemptions grew each subsequent month through December 2020 to $246 million – 86 times the value in February.

In addition to expanding access to the pilot, this growth reflects other factors such as changing demand for online grocery purchasing caused by the pandemic. However, despite this rapid growth, online redemptions still made up just 3% of the total $8.1 billion in benefits redeemed in December 2020.

Cost sharing available for organic certification expenses

Organic producers and handlers can now apply for USDA funds to assist with the cost of receiving or maintaining organic certification. Applications for the Organic Certification Cost Share Program (OC- CSP) are due Nov. 1, 2021.

“Many farmers have told us that cost was a barrier to their ability to get an organic certification,” said Zach Ducheneaux, administrator of USDA’s Farm Service Agency (FSA). “By assisting with the costs, this program can help organic farmers get their certification, along with the benefits that come with it.”

OCCSP provides cost-share assistance to producers and handlers of agricultural products for the costs of obtaining or maintaining organic certification under the USDA’s National Organic Program. Eligible producers include any certified producers or handlers who have paid organic certification fees to a US- DA-accredited certifying agent during 2021 and any subsequent program year.

Producers can be reimbursed for expenses made between Oct. 1, 2020, and Sept. 30, 2021, including application fees, inspection costs, fees related to equivalency agreement and arrangement requirements, travel expenses for inspectors, user fees, sales assessments and postage.

For 2021, OCCSP will reimburse 50% of a certified operation’s allowable certification costs, up to a maximum of $500 for each of the following categories (or “scopes”):

• Crops.

• Wild crops.

• Livestock.

• Processing/handling.

• State organic program fees. Farmers and ranchers may apply through an FSA county office or a participating state agency.

Cost sharing will be complemented by an additional $20 million for organic and transitioning producers through the Pandemic Assistance for Producers initiative. More information on that funding will be available soon.

Those wanting more information about the organic certification cost share should visit the OCCSP webpage, usda.gov/organic or contact their local USDA Service Center.