National Milk Producers Federation

In a December 4, 2009 letter to Agriculture Secretary Tom Vilsack, NMPF asked the agency to implement the mandatory product inventory reporting program required by a law passed nearly a decade ago. The request to USDA was prompted by the revelation that the USDA’s National Agricultural Statistics Service made unexpected revisions to its estimate of cheese inventories, raising concerns that market prices may have been depressed by inaccurate data.

NMPF’s analysis was that the reporting errors didn’t have a significant impact on farm-level prices, but the episode again raised concerns about the inadequacy of the current reporting system, which relies on unaudited and voluntary surveys, despite a decade-old statute calling for mandatory dairy product inventory reporting.

NMPF’s letter urged the USDA to direct the Agricultural Marketing Service to undertake the mandatory dairy product inventory reporting program required by law, using the full electronic reporting program for prices and inventories that is authorized by the same statute.

In comments made last month to USDA, NMPF praised USDA’s recommended decision to limit the producer-handler exemption to smaller plants as a substantial improvement over the status quo, and praised the agency for sticking to their new congressionally-mandated timelines.

However, NMPF urged USDA to add criteria for producer-handlers, including unique labeling and independent ownership requirements, that could help prevent the multiplication of exempted producer-handlers within a larger operation. In addition, NMPF pointed out flawed language in USDA’s draft that would make the limit ineffective by allowing producer-handlers to have unlimited sales of packaged milk to other plants.

NMPF’s comments were submitted on December 21, in response to the recommended decision published by USDA’s Agricultural Marketing Service in the October 21 Federal Register. This decision would only allow producer-handlers with less than three million pounds of route sales of packaged fluid milk to qualify for the current exemption from pricing and pooling requirements under the Federal Order. NMPF and the International Dairy Foods Association (IDFA) had initiated last year’s hearing by petitioning for the elimination of the producer-handler provisions, and the expansion of the exempt plant definition to allow smaller plants to maintain their exemption. NMPF had also proposed grandfathering producer-handler plants with less than three million pounds of sales, and with the marketing and ownership conditions that NMPF now urges USDA to reconsider for the general producer-handler exemption.

Links to most of the documents from the hearing can be found on the USDA website at www.ams.usda.gov/dairy. If you have questions about NMPF’s position, call Roger Cryan at the NMPF office.

USDA has issued checks for nearly all of the $290 million that Congress provided for direct payments to dairy farmers. The $290 million was divided among, roughly, all the MILC-eligible milk produced from February through July of 2009. That came out to about 64¢ per cwt. on milk from that time period, or 32¢ per cwt. after USDA doubled the volume to estimate an annual production total. This works out to a maximum payment of about $19,200 on annual volume capped at six million pounds (or three million pounds for February through July production), and a payment of about $11,000 for the average licensed dairy herd of 170 cows.

New producers, producers who have not been paid, and producers who believe there is an error in their payment should contact USDA’s Danielle Cooke in Washington, D.C., at Danielle.Cooke@wdc.usda.gov. They may be required to submit a request for DELAP by January 19. For more information, see USDA’s REVISED fact sheet on the DELAP (http://www.fsa.usda.gov/Internet/FSA_File/delap09.pdf).

With 2010 promising to provide continued challenges to the U.S. dairy industry, such as milk price volatility, increased costs, increases in government regulations, and marketplace pressures, NMPF announced today a reorganization of its staff to achieve the best possible results in the year ahead.

"This reorganization will strengthen NMPF's expertise in all areas vital to its member cooperatives," noted NMPF President & CEO Jerry Kozak. "It will ensure that the structure of the organization will be commensurate with future priorities."

Staffing changes include the appointment of Jaime Castaneda to Senior Vice President, Strategic Initiatives & Trade Policy. In this role, Castaneda will be responsible for the development of NMPF's strategic direction on public policy, including the current work of the NMPF Strategic Planning Task Force, and continue as the lead person for immigration reform. In addition, he will continue to lead efforts on all matters related to trade policy and international relations. Castaneda will be supported in the latter role by Shawna Morris, who has been promoted to the position of Vice President, Trade Policy.

Congressional relations and other government relations activities will now be led by Dana Brooks, who has been promoted to Vice President, Government Relations. Brooks will be assisted in NMPF’s day-to-day advocacy efforts on Capitol Hill by Mary Knigge, Manager of Government Relations. Knigge will also continue her role as staff liaison with the Young Cooperators’ Program.

Jim Tillison will assume the position of Senior Vice President, Marketing and Economic Research, and continue to serve as the Chief Operating Officer of the Cooperatives Working Together (CWT) Program. He will supervise economic and market research efforts, including all matters related to Federal Milk Marketing Orders. Tillison will be supported in these activities by Peter Vitaliano, Vice President, Economic Policy & Market Research, and Roger Cryan, Vice President, Milk Marketing & Economics. With respect to CWT, Khadija Gibson-White will provide on-going support as the CWT Program Assistant.

NMPF's communications and public relations efforts will remain under the direction of Chris Galen, Senior Vice President, Communications. Galen will be supported by Sarah Olson, who has been promoted to Manager of Communications.

Executive Vice President Tom Balmer will continue to supervise administrative functions, in addition to serving as Executive Director of the National Ice Cream Mix Association (NICMA). He will be supported in this position by Gail Mobley, Director of Finance and Administration. Balmer will also have direct oversight of NMPF's scientific and regulatory efforts, which are led by Jamie Jonker, Vice President of Scientific & Regulatory Affairs. Betsy Flores will continue in her position as Director of Regulatory Affairs. Her principal responsibilities include management of animal health and welfare efforts through the National Dairy FARM Program.

In order to bolster NMPF’s capabilities regarding scientific and technical issues, NMPF is also hiring Dr. Beth Briczinski as the Director of Dairy Foods & Nutrition. Briczinski will begin her duties on February 1st. She comes from the University of Wisconsin, where she served on the staff of the Food Science Department. Briczinski received her PhD in Food Science from Pennsylvania State University where she specialized in dairy foods research.

Anuja Miner, Senior Director for Executive Office & Member Relations, will continue her role in managing the Executive Office and all matters pertaining to the NMPF Officers and Board of Directors. Miner also has the primary responsibility for membership recruitment, the associate member program, and the American Butter Institute (ABI).

U.S. dairy producers and exporters urged the government to exclude any dairy-related changes in the trade relationship between the United States and New Zealand as part of a new free trade agreement between the countries.

In a letter sent to U.S. Trade Representative Ron Kirk, NMPF and the U.S. Dairy Export Council (USDEC) reaffirmed their commitment to seek full exclusion of trade in dairy products between the United States and New Zealand under the Trans-Pacific Partnership (TPP) Free Trade Agreement, because of the New Zealand dairy industry’s unique structure and excessive degree of control over dairy markets globally and in the United States.

Kirk notified Congress in December that President Obama intended to enter into negotiations of a regional Asia-Pacific trade agreement, known as the TPP, which would create a new free trade pact that would include seven other nations: Australia, Chile, Singapore, Peru, Brunei, Vietnam and New Zealand. The United States already has trade agreements with these countries, except for New Zealand, Vietnam, and Brunei.

New Zealand is the world’s largest dairy exporter, and benefits tremendously from the virtual dairy monopoly that currently exists there, whereby one company controls more than 90% of the country’s milk production.

“NMPF and USDEC firmly believe in the value of balanced trade agreements in reducing and ultimately eliminating [global] trade distortions,” the two organizations wrote. “This is why we have strongly supported the vast majority of FTAs pursued by the United States over the years, and it is why we also support the three FTAs currently pending congressional approval...as this Administration focuses on growing our competitiveness in Asia, we urge USTR to focus strongly on the agreement already in hand: the U.S.-South Korea FTA.”

The House of Representatives passed the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Bill of 2009 (HR 4154) by a vote of 225-to-200 on December 3, 2009. The legislation would have permanently extended the current exemption for estates up to $3.5 million per individual and $7 million for married couples and set a maximum rate of 45 percent on estates above this threshold. In addition, the measure would repeal the enactment of carryover basis rules that would require many heirs to pay additional taxes on built-in gains of property inherited starting in 2010.

The tax rate was not indexed for inflation and could affect more families each year. Based on historical inflation data, the value of the estate tax exemption could be cut in half with every passing generation.

The Senate failed to pass any estate tax measures, thereby allowing for permanent repeal of estate taxes for 2010 only. The Senate is expected to take up a tax package quickly upon return in January.

Congress is expected to pass an extension of 2009 rates for one year retroactive from January 1, 2010, prior to a bigger tax reform package being debated with additional changes to the estate tax.

NMPF will continue to support the highest exemption levels possible while maintaining the stepped-up basis. It is essential that Congress additionally deal with the unique problems that farmers and forest owners face with generational family transition.

Cooperatives Working Together (CWT) has been in the process of wrapping up its third herd retirement of 2009. Farm audits were completed in late November, and over 80% of the selected dairies have been paid. All dairies should be paid by the end of January 2010.

Meanwhile, NMPF’s Strategic Planning Task Force CWT Subcommittee will meet January 11th to continue the process of developing new CWT program options going forward.

Visit the CWT website for more information about the program: www.cwt.coop.

James P. “Tom” Camerlo, past Chairman of NMPF, passed away on December 3, 2009, after a courageous battle with cancer. Tom was truly a unique and special individual who profoundly impacted not only everyone at National Milk but the entire dairy industry – more than any individual in our history. Tom, who committed a lifetime of service to the global dairy industry, was known as the World’s Dairy Ambassador. His leadership skills were always on display, whether it was for NMPF, DFA, or the many organizations he represented during his many years of service.

Tom was the essence of friendship and fellowship whose warmth and infectious personality brought everyone together for the common good of the industry. Tom provided years of expertise and leadership to the dairy industry in the broader arenas of dairy trade, farm policy, cooperative marketing, and dairy product promotion.

He also provided leadership at the local level by being active with the Florence Elks, Lion Club, Chamber of Commerce, and St. Benedict’s Catholic Church. He also served on the board of the K-12 Foundation for Education and Destination ImagiNation. Tom’s leadership was rewarded by being named World Dairy Expo’s Dairyman of the Year in 2003. He also received the National Council of Farmer Cooperative’s National Cooperative Statesman Award in 1999; and in 1996 the Soil Conservation Service presented him the Conservationist of the Year Award. Tom was inducted into the Colorado Agriculture Hall of Fame in 2001.

Tom was also devoted to his family which included his wife Barbara and four grown children, Tommy, Jimmy, Patty, and Brooke.

A scholarship to honor Tom’s legacy – the James P. “Tom” Camerlo, Jr. Memorial Scholarship – has been established at Colorado State University, his alma mater. Contributions in Tom’s name can be sent to the Colorado State University Foundation at P.O. Box 1870, Fort Collins, CO 80522. Checks should mention the James P. “Tom” Camerlo, Jr. Memorial Scholarship in the memo line.