After months of negotiations, the U.S. Congress recently passed a second COVID-19 relief bill totaling an estimated $900 billion. The bill must still be signed by the President. Of the $900 billion in total funds, the stimulus bill allocates an estimated $13 billion, or 1.4% of total spending, to agricultural programs. Throughout the second COVID-19 relief bill, financial assistance is provided to livestock, poultry, dairy, specialty crop, non-specialty crop and biofuel producers. The stimulus bill will impact the dairy industry through a variety of different means including direct payments, new food purchases, dairy product donations, changes made to the dairy margin coverage program and recourse loans. Direct Payments Within the second COVID-19 relief bill, direct payments will be provided to cattle producers, contract livestock and poultry growers, dairy farms and producers who were forced to euthanize livestock or poultry due to processing plant disruptions. The amount of funds in direct payments that will be allocated to dairy producers remains unclear. The Secretary of Agriculture may take into account price differentiation factors for each commodity that is provided direct support payments, including specialized varieties, local markets and farm practices including certified organic farms. From a dairy perspective, it is not clear whether the differentiation factors include adjustments to payments for those producers with Class III and Class IV exposure. New Food Purchases The second COVID-19 relief bill provides no less than $1.5 billion in funds for the Secretary of Agriculture to purchase food and agricultural products to distribute to individuals in need via nonprofit organizations. Food and agricultural products eligible to be purchased include fresh produce, dairy and meat and seafood products. A preliminary review of actions necessary to improve COVID-19 related food purchasing will be conducted before new contacts are awarded, although such review must be completed no later than 30 days after the date of enactment. Total spending authorization of $4 billion was granted for the Farmers to Families Food Box Program that was created in Apr ’20 and was extended through the end of 2020. Dairy Donation Program The second COVID-19 relief bill also provides $400 million for the implementation of a Dairy Donation Program, designed to provide dairy products to food-insecure households and minimize food waste. The Dairy Donation Program was modeled after the 2018 Farm Bill Milk Donation Reimbursement Program and allows for eligible dairy processors to partner with nonprofit organizations to distribute food to low-income individuals. Within the Dairy Donation Program, payments may be eligible for milk previously processed and donated during 2020. While the Milk Donation Reimbursement Program contained within the 2018 Farm Bill was funded at approximately $5 million per year and covered only fluid milk product donations, the Dairy Donation Program covers all dairy products. The reimbursements will offset a portion of the raw milk cost used to manufacture the donated dairy products in addition to processing costs of the donated products. Donations eligible for reimbursement will be selected in an attempt to maintain orderly marketing of milk by reducing volatility and maintaining traditional price relationships between classes of milk or stabilizing on-farm milk prices. The Dairy Donation Program will be established and administered no later than 60 days after the date of the bill enactment. Supplemental Dairy Margin Coverage The second COVID-19 relief bill will also provide supplemental dairy margin coverage (DMC) payments via increased milk production history baselines. The bill allows dairy producers to update their DMC milk production history baselines and receive a supplemental DMC payment on a portion of any increased milk production up to five million pounds, annually. 75% of the difference between 2019 actual marketings and the established production history currently used within DMC (2011, 2012 and 2013 marketings) is eligible for supplemental payments, up to the five million pound limit. The DMC Tier I production limit remains at five million pounds of milk, annually, and the milk production history adjustments allow for increases in annual milk production only up to the five million pound cap. Because of this, the change will benefit only relatively small and midsized dairies. In addition, the supplemental DMC payments are only available for producers who have already signed up for the 2021 DMC program. Enrollment for the 2021 DMC program ended Dec 11^th. The adjusted milk production baseline is effective Jan ’21 through the life of the current farm bill but is not retroactive to 2020. Producers who sign up for DMC in subsequent years will also be allowed this option for higher milk production coverage. The USDA has 45 days to initiate the DMC provisions within the second COVID-19 relief bill. Recourse Loans Finally, the second COVID-19 relief bill allows the Secretary of Agriculture to make recourse loans available to dairy product processors, packagers, or merchandisers impacted by COVID-19. Terms and amounts of recourse loan funding including within the second COVID-19 relief bill remain unclear.