News for Dairy Co-ops - March 7, 2014

Volume 72. No. 3

Newsletter Stories

All Eyes on Farm Bill’s Margin Protection Implementation

With the new farm bill having been signed into law (left), attention has shifted to how the Agriculture Department will implement the groundbreaking margin insurance program for dairy farmers.

The program—the most significant rewrite of federal dairy policy in a generation—refocuses the dairy safety net from propping up prices, to protecting margins. In that way, it will help address the volatility of both milk prices and feed costs, which have become a major problem in recent years.

By limiting how much production growth can be covered under margin insurance, the new program will also help address imbalances in supply and demand.

The farm bill requires the Agriculture Department to officially establish the Margin Protection Program by September 1. NMPF staff held preliminary meetings in February with USDA staff on implementation.

NMPF will be working closely with USDA’s Farm Service Agency staff to ensure implementation is as effective and farmer-friendly as possible. In the meantime, the MILC program remains in effect through the first part of 2014, although milk prices are expected to be high enough so that it won’t generate any payments.

A detailed explanation of all the farm bill dairy provisions is available online. In addition, NMPF is refashioning its Future for Dairy website into a hub for information on the margin insurance program and its implementation.

*Photo credit to Michigan Milk Producers Association.

Media Hypes Rise in Farm Milk Price, Stoking Consumer Angst

A rash of news stories in February has focused on the potential impact of rising farm-level milk prices, stoking fears of record-high consumer prices for dairy foods.

NMPF has provided important context to the issue, reminding the media that farm prices are just now climbing back to where they were in 2007-2008, before the Great Recession devastated dairy markets.

Also, of course, dairy farmers don’t have any control over retail milk prices, which vary widely from store to store. And farmers still get only about 35 cents of every dollar the consumer spends on milk and dairy products.

Farm prices are rising because increased global demand for dairy products is being met in part with U.S. exports, which are now more than 15 percent of total U.S. production. As a result, the supply of milk in this country is not keeping up with demand.

Last year, milk production rose just four-tenths of one percent, as feed costs, weather, and past low prices combined to keep a lid on farmers’ ability to expand output. Even with the recent price rise, however, dairy food inflation has lagged behind both the general inflation rate and the rise in all food costs for a decade.

Agriculture Groups Continue Push for Immigration Reform in Congress

NMPF continues to push immigration reform efforts on Capitol Hill. Recently, the organization co-hosted a briefing for congressional offices with other agricultural organizations, and the Partnership for a New American Economy, to highlight agriculture’s struggle with the nation’s current immigration system. Among the speakers was a dairy farmer who spoke about the challenges he faces with securing workers and the inadequacies of the H-2A visa program for the dairy industry.

In the coming weeks, NMPF will focus its efforts on continued outreach to House members, particularly those in the Republican majority whose support will be necessary for immigration reform’s success.

CWT Assists with 37.2 Million Pounds of Export Sales in First Two Months of 2014

In the first two months of 2014, Cooperatives Working Together (CWT) provided export assistance on 108 sales of cheese, 39 butter sales, and six whole milk powder sales.

Of 364 assistance requests received, CWT will provide assistance on 26.1 million pounds of Cheddar, Gouda, and Monterey Jack cheeses, 10.4 million pounds of 82% milk fat butter, and 698,895 pounds of whole milk powder. The products will go to 19 different countries and will be delivered through August 2014.

The milk equivalent on a milk fat basis of these sales is 475.3 million pounds of milk. Combined with the 2013 CWT-assisted sales scheduled to ship in the first six months of 2014, the total milk equivalent is equal to 25% of USDA’s projected increase in total milk marketings for all of 2014.

February a Month of Frustration on Trade Issues

February was an active month for NMPF on some frustrating trade issues. It opened with Russia blocking entry of a shipment of Chobani yogurt meant for U.S. athletes at the Sochi Olympics, which called attention to the years-long Russian ban on the entry of U.S. dairy products. And it ended with NMPF joining the U.S. Dairy Export Council (USDEC) in chiding Canada and Japan for dragging their feet in the Trans-Pacific Partnership (TPP) negotiations.

The Russian yogurt blockade was the latest manifestation of a three-year-old embargo of U.S. dairy products that has U.S. interests increasingly angry. A large shipment of Sochi-bound Chobani yogurt was refused entry, even though the company was a major sponsor of the U.S. Olympic team.

“Russia has turned a cold shoulder to many U.S. businesses trying to ship dairy products,” said NMPF President and CEO Jim Mulhern. “That’s despite three years of our trying to prove their safety.” Russia closed its market to U.S. dairy products in 2010 by changing what it required on a health certificate that accompanies dairy products imported into Russia and its Customs Union partners.

In the Trans-Pacific Partnership negotiations, Canada and Japan have resisted allowing additional imports U.S. dairy products. After the latest round of talks, NMPF and USDEC issued a statement saying the United States should not allow the process to drag on indefinitely.

“It’s time to finish the Trans-Pacific Partnership negotiations, including resolving the agricultural trade issues,” said USDEC President Tom Suber. “The principle of creating comprehensive market access is too important to this and future trade agreements. Therefore, if Japan and Canada are not committed to this goal, we need to move forward without them.”

NMPF’s Mulhern added that U.S. interests are ready to eliminate all tariffs on dairy products from both countries provided that Japan and Canada do the same. “If they are not willing to offer realistic market access to the United States, Japan and Canada are not serious about being part of TPP,” he said.

EU Expanding Dairy Trade Barriers by Restricting Common Food Names

Through its membership in the Consortium for Common Food Names (CCFN), NMPF met last month with U.S. Trade Representative Ambassador Michael Froman and USDA Secretary Tom Vilsack to help convey dairy producers’ strong concerns about the continued expansion of barriers to commonly named dairy products. A number of companies and associations, representing both dairy producers and processors, conveyed a unified industry position in opposition to the EU’s efforts to limit U.S. competition by confiscating common food names. The fly-in meetings also included discussions the U.S. Patent & Trademark Office and with Congressional staff.

The EU has been actively using its free trade agreements to seek to block U.S. companies from using many common product names (e.g., romano, muenster, parmesan, feta, and more). It executes this goal by terming those generic terms “geographical indications” (GIs) and claiming that only certain European producers should be authorized to use them. The EU has been clear that it sees the Transatlantic Trade and Investment Partnership (TTIP) as a way to put those restrictions in place in the U.S. market itself – thereby impacting not just U.S. exports, but also domestic sales. The meetings with leading U.S. government officials were intended to provide NMPF and other industry leaders with an opportunity to underscore the U.S. industry’s strong opposition to the EU’s latest in a long series of protectionist strategies.

Information Alert for Dairy Exporters to China

The Food and Drug Administration announced this week that companies currently exporting to China or seeking to do so in the near future must register their dairy and infant formula storage facilities with FDA to be included on the list of establishments eligible for export to China. Members may recall that last month NMPF provided notice that FDA was encouraging all companies interested in shipping to China to register their plants with FDA. This latest clarification from FDA is in addition to that earlier notice.

The deadline to include plant and storage facilities on FDA’s list and avoid the possibility of disruption in exports to China is Friday, March 14th. Any requests FDA receives after that date will not be on the initial list transmitted by FDA to China but would be provided subsequently at a later stage.

In order to register your storage facility, please email Esther Lazar an attachment on company letterhead with the following information:

  1. Business name and address.
  2. Name, telephone number, and email (if available) of contact person.
  3. List of products presently stored that may be shipped to China and those intended to be stored and shipped.
  4. Name and address of the storage facility for each product.
  5. Name of any federal, state, or local governmental agencies that inspect the facility, along with the government assigned Facility Establishment Identifier (FEI) number and date of last inspection.
  6. Copy of last inspection notice and, if other than an FDA inspection, copy of last inspection report.

FDA Reports Continued Decline in Drug Residues in U.S. Milk

Only one out of 7,200 milk tankers tested positive for antibiotic residues last year, according to the National Milk Drug Residue Database 2013 report, released last month by the Food and Drug Administration. The new report showed that the decade-long decline in bulk milk samples testing positive for residues is continuing. Of the approximately 3.2 million milk pickup tankers tested, only 445 (or 0.014%) yielded a positive – down from 0.017% in 2012. This is the seventh year in a row that the percentage of positive tankers has declined.

Additionally, not a single sample of the 40,435 consumer-packaged pasteurized milk products tested positive for animal drug residues. Data from four of the last five years have not yielded a single positive result for pasteurized products.

Meanwhile, NMPF continues to monitor the progress of the FDA-CVM raw milk sampling assignment. A final report is expected soon.

Potential Nutrition Facts Panel Changes Both Good and Bad for Dairy

The Food and Drug Administration’s long-awaited proposal to revamp the Nutrition Facts panel on packaged foods, released last month, includes both pluses and minuses for dairy.

NMPF applauded the added label focus on two key nutrients in milk, potassium and vitamin D, saying they “will help consumers better understand the important role that dairy plays in a healthy diet.”

But NMPF President and CEO Jim Mulhern also said plans to list “added sugars” on the panel – based on recommendations that Americans reduce their intake of calories from added sugar – need clarification. “We look forward to working with the FDA to address this issue,” Mulhern said.

According to the FDA, the Nutrition Facts changes reflect new dietary recommendations, consensus reports and national survey data, including the 2010 Dietary Guidelines for Americans, recommendations from the Institute of Medicine, and intake data from the National Health and Nutrition Examination Survey. The FDA also considered comments from the public.

Other proposed changes would update serving-size requirements to better align with how much people really eat and present calorie and nutrition information for some products for the whole package, in addition to per serving. Serving sizes for ice cream will increase, but will decrease for yogurt. The new label also features a fresh design to highlight key nutritional concepts that are important in addressing public health problems like obesity and heart disease.

Mulhern said NMPF is open to improvements that will help consumers make informed choices. “We applaud highlighting potassium and vitamin D – two nutrients most Americans are not consuming enough of,” he said. Vitamin D is important in bone health and potassium is beneficial in lowering blood pressure. The panel already highlights two other key dairy nutrients, calcium, and protein.

The changes would affect all packaged foods except meat, poultry and processed egg products, which are regulated by the U.S. Department of Agriculture.

NMPF Thanks USDA for Yogurt Decision in Final WIC Regulations

NMPF thanked the Agriculture Department last week for allowing states to substitute some yogurt for milk in the federal government’s Women, Infants and Children (WIC) nutrition program.

The dairy industry had pushed for the change for those who are lactose intolerant or who might not drink milk for other reasons. Only low-fat and nonfat yogurt will be allowed except for very young children.

“Like milk, yogurt is an excellent source of protein, calcium and other nutrients,” said NMPF Vice President for Nutrition Beth Briczinski. “And it’s preferred by some over milk. That’s why the Institute of Medicine, as well as the dairy industry, had recommended allowing yogurt as a substitute for milk in the WIC food packages several years ago.”

USDA initially rejected that recommendation, citing concerns over cost. However, in final regulations to be issued formally next week, USDA is reversing that decision. States will now be allowed to authorize WIC recipients to purchase up to a quart of yogurt monthly as a substitute for one quart of milk.

“This is a common-sense decision that gives states more flexibility to meet the needs of WIC participants,” Briczinski said. “Yogurt is convenient, popular and comparable to milk nutritionally. WIC participants should have the option to purchase yogurt instead of milk, especially if they have difficulty digesting milk.”

The Special Supplemental Nutrition Program for Women, Infants and Children is designed to improve the health of low-income pregnant women, new mothers, infants and young children. Milk and other dairy products figure prominently in the WIC food packages and account for nearly a third of all purchases under the program.

Dragun Corporation Helps Dairy Operations with Complex Environmental Issues

The Dragun Corporation (highlighted in this issue’s Associate Member Focus), in its 25-year history of environmental assessment and remediation, has worked with dairy producers on a variety of complex environmental issues. For example, when groups opposed the approval of permit applications for dairy farms because of concerns that manure might threaten water supplies, Dragun used sound science and site-specific data to provide reliable opinions on the subject. When a producer was going to develop a CAFO, but was uncertain about a long-term water supply, Dragun tested the groundwater yield and chemistry using state-of-the-science methods to provide reliable data to assist with the producer’s decision. Dragun uses science and engineering to be resolute when state and federal regulatory agencies suggest unreasonable monitoring or remedies. If the issue goes to court, Dragun has a long track record of providing well-reasoned litigation support on a variety of environmental issues.

Dragun has also worked with dairy cooperatives, processing plants, and NMPF to provide environmental consulting support. When a new milk processing plant was being developed, Dragun was asked by the co-op to work on their behalf to negotiate with regulators the approval of several environmental permits. When a co-op was conducting merger and acquisitions of processing plants, Dragun was asked to conduct environmental due diligence on properties to be purchased. Dragun has worked with NMPF on their environmental task force, lending particular expertise in scientific and environmental engineering disciplines. Dragun also developed the SPCC template that is found on the NMPF website.

CEO’S CORNER


Jim Mulhern
NMPF President & CEO
Associate Member Focus: 

Solving complex environmental issues is the heart of Dragun Corporation. For over 25 years, Dragun Corporation has provided world-class environmental consulting expertise and an innovative approach to site assessment and environmental remediation. Dragun Corporation has built a solid reputation with clients across North America and around the globe. Businesses and municipalities, large and small, count on Dragun Corporation to stay environmentally compliant, save money, and avoid unnecessary remediation and litigation.

Dragun Corporation always delivers the most comprehensive advice designed to mitigate the business risks of complex environmental issues, while delivering practical, innovative solutions that limit liability and provide solid results. Dragun has clients in 45 countries.

For more information, contact Alan Hahn, Business Development Manager, at 248-932-0228, Extension 134, or visit their website at www.dragun.com. You can also learn more about them in the article at the bottom of this issue.