Edward Gallagher, head of risk management for Dairy Farmers of America, represented NMPF at a July 25 meeting of the Commodity Futures Trading Commission (CFTC)’s Agricultural Advisory Committee.

The five-hour meeting was the first for the panel in two years. The committee met at CFTC’s Washington headquarters to discuss implementation of the Dodd-Frank Wall Street reform law and other issues.

Gallagher raised several issues of concern to dairy farmers, including the need to exempt forward contracts from rules covering options trading, and relief for farmers from having to buy new financial entity identification numbers, known as Legal Entity Identifiers or LEIs, annually.

Gallagher said the CFTC staff was sympathetic on forward contracting and that former CFTC Commissioner Michael Dunn, who also attended the meeting, picked up on his concerns over LEI purchases.

Gallagher added that CFTC Chairman Gary Gensler participated in the entire meeting and wanted to learn more about issues affecting farmers. “I was very much impressed with his interest in our issues,” Gallagher said. “I believe he is really trying to limit Dodd-Frank’s impact on farmers.”

A coalition of more than 70 members of Congress recently sent a letter to U.S. Department of Agriculture Secretary Tom Vilsack and U.S. Trade Representative Michael Froman urging them to put a high priority on achieving a positive outcome for the U.S. dairy industry in the final Trans-Pacific Partnership (TPP) trade agreement. The negotiations have been ongoing for the past several years.

The members of Congress were appreciative of the opportunities the TPP agreement would create for the U.S. dairy industry. However, they also voiced concern regarding market access with Canada and Japan, and market concentration with New Zealand, and stressed that those issues would need to be addressed in any final agreement.

The Consortium for Common Food Names (CCFN) condemned the European Union’s decision last month to delay implementation of its Free Trade Agreements (FTAs) with both Costa Rica and El Salvador – a move the EU made to pressure its trading partners to approve certain geographical indication (GI) applications that had been filed in those Central American markets.

“This heavy-handed action by the European Union amounts to nothing more than extortion and clearly demonstrates that the provisions in its FTA with Central America that call for independent internal review of GI applications are simply intended to be pro forma approvals of EU GIs,” explained Jaime Castaneda, CCFN Executive Director. “This is despite the negative effect that confiscation and monopolization of well-known terms such as ‘parmesan’, ‘provolone’, ‘fontina’, ‘gorgonzola’ and others would impose on the local companies that had already been producing these products in those markets for many years, as well as the harmful impacts on other trading partners using these common food names.”

The FTA between the EU and Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) included provisions that required a list of GIs (including many common food names) to be evaluated by each country prior to approval. In keeping with this obligation as well as with its pre-existing obligations to other trading partners, Costa Rica and El Salvador published several of these applications for comment by interested parties, as is standard procedure with requests for new GIs or trademarks.

CCFN called on the EU’s trading partners to resist the EU’s efforts to force them to prohibit usage of common food names, and called for continued unrestricted usage of these terms of importance to many food producers around the world.

Even while most members of Congress are getting ready to head back home for a long August recess, it’s getting to be crunch time in Washington where the Farm Bill is concerned. Leaders in the House and Senate will be conferring in the coming weeks, both formally and informally, about how to iron out the differences between the farm bill versions that passed earlier this summer. Dairy policy will be one noticeable point of contention. The choice about which way to go will come down to whether lawmakers want to move forward, or repeat the unfortunate past.

Both the Senate and House farm bills replace the long-standing programs that processors have advocated eliminating: the MILC direct payment program, the price support program, and the Dairy Export Incentive Program. With NMPF’s endorsement, these programs are not going to be resurrected with a new farm bill.

In place of these ineffective programs, both the Senate and House bills establish a form of margin insurance, allowing farmers to use risk management tools to protect themselves against low milk prices, high feed costs, or the combination. The Senate’s bill couples margin insurance with market stabilization; the House does not. So, the critical question is whether margin insurance, on its own, will be a sustainable, affordable dairy policy. History tells us the answer is no.

Some still involved in the dairy business today will recall the history lesson that I’m imparting. In the late 1970s, Congress and the U.S. Department of Agriculture boosted the level of the price support program significantly. By 1980, it was hard to lose money milking cows. Production exploded in response. Absent any means to mitigate milk output, a white sea spilled forth, for which there was no commercial market. By the mid-1980s, the USDA was buying 14% of the nation’s milk output.

And the cost of this well-intentioned but misguided dairy program was astronomical. From 1977-79, price support costs averaged $247 million per year. By 1981-83, program costs averaged $2.2 billion…nearly 10 times higher. It took a series of efforts, including the use of a diversion program, a national promotion checkoff, and a whole herd buyout, to get costs under control.

Thus, the debate this summer over whether to use market stabilization to disincentivize milk production when margins are poor, as featured in the Senate’s Dairy Security Act, is not merely an academic exercise. We’ve seen this show before. The wrong market signals – or in the case of the House bill’s Goodlatte-Scott program, no signals at all – will have costly and far-reaching consequences.

In addition to added costs to taxpayers, farmers would suffer painful, prolonged periods of low margins. Making matters worse, farmer-owned cooperatives would face a huge logistical and economic burden balancing the market, in the face of a chronic oversupply of milk from those taking advantage of a government-sponsored, 1970s-style production boondoggle.

We’ll know more after Labor Day about how the question will be answered regarding which path Congress will choose. It’s been said that those who forget history are condemned to repeat it. Most in Congress are unfamiliar with the past 35 years of dairy program history. Shame on those of us, who have better memories, if we don’t remember and share history’s lessons at this crucial point in time.

Stress Importance of Trade in Safe Foods

The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) applauded U.S. Vice President Joe Biden’s remarks during a speech yesterday in India calling for expanded trade between India and the United States. The vice president also pointed to the need to negotiate and work through barriers to market access, among other trade priorities.

“For far too long, a wide range of U.S. dairy products have been effectively locked out of the Indian market without sound scientific justification,” said Tom Suber, president of USDEC. “U.S. dairy products are sold in over 100 markets around the world and are well known for their high level of food safety. We look forward to renewed discussions with India on how to remove inappropriate barriers to market access for safe products.”

Jim Mulhern, chief operating officer of NMPF, agreed and adds, “As we focus on tearing down unwarranted trade barriers so that our industry can continue to grow, it is equally important to ensure that we also maintain a strong focus on food safety and product integrity. U.S. dairy products have an excellent track record in this area while India’s own government has found serious problems with a majority of its dairy products.”

In early 2012, NMPF called the U.S. Food and Drug Administration’s attention to a study conducted by the Indian Food Safety and Standards Authority that found that 68% of milk samples analyzed did not meet Indian standards. “Given these alarming findings, we believed it was important for FDA to determine if adulterated dairy products in India were entering the U.S. market,” Mulhern stated. “We are gratified that FDA agreed that concern is warranted and this summer put in place an import alert on certain dairy products from India.” The FDA import alert calls for the detention of specified dairy products from certain Indian exporters and requires further documentation to ensure that the products are complying with U.S. regulations designed to protect food safety.

“U.S. dairy exporters believe that trade between the United States and India can be mutually beneficial, particularly as India struggles to consistently meet its growing domestic dairy demand,” adds Suber. “As the U.S. and India reengage in talks aimed at improving bilateral trade, we must ensure that a focus on the importance of safe and accurately labeled food remains at the core of discussions on agricultural trade.”

 

The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance the well-being of dairy producers and the cooperatives they own. The members of NMPF’s 30 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 32,000 dairy producers on Capitol Hill and with government agencies.

 

The U.S. Dairy Export Council (USDEC) is a non-profit, independent membership organization that represents the global trade interests of U.S. dairy producers, proprietary processors and cooperatives, ingredient suppliers and export traders. Its mission is to enhance U.S. global competitiveness and assist the U.S. industry to increase its global dairy ingredient sales and exports of U.S. dairy products. USDEC accomplishes this through programs in market development that build global demand for U.S. dairy products, resolve market access barriers and advance industry trade policy goals. USDEC is supported by staff across the United States and overseas in Mexico, South America, Asia, Middle East and Europe.

From Jerry Kozak, President and CEO, NMPF:

“The farm bill passed today by the House of Representatives is seriously flawed, in that it contains the Goodlatte-Scott dairy amendment, as well as a repeal of permanent agricultural law.  Neither of these measures serves the best long-term interests of dairy farmers. The Senate, by contrast, overwhelmingly passed the complete Dairy Security Act, which the National Milk Producers Federation and nearly all dairy farmers enthusiastically supported.

“Nevertheless, today’s action means that there is still hope that a new farm bill can be passed in 2013. Without any progress toward a Senate-House conference committee, we were looking at yet another one-year extension of current programs, which is unacceptable. Today’s vote means that agricultural leaders now can work on improving the House bill and developing better dairy policy than what exists now, and what is contained in this House bill.

“The bill today is not the end of the process, but rather a means to a better end that we will continue working with lawmakers to achieve. NMPF appreciates all the efforts put forth by Chairman Frank Lucas (R-OK) and Ranking Member Collin Peterson (D-MN) to try to move a 5-year farm bill through the House of Representatives by bipartisan means last month. We are committed to working with these two champions for agriculture through the conference process in the coming weeks. We urge the conference committee to include the Dairy Security Act.”

 

The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance the well-being of dairy producers and the cooperatives they own. The members of NMPF’s 30 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 32,000 dairy producers on Capitol Hill and with government agencies. Visit www.nmpf.org for more information.

At its June meeting, the NMPF Scholarship Committee selected three graduate students to receive scholarships as part of the 2013 NMPF National Dairy Leadership Scholarship Program. These students are currently conducting research in areas that will benefit dairy cooperatives and producers.

The 2013 Hintz Memorial Scholarship, given to the top scholarship candidate, was awarded to Kristen Glosson, a M.S. candidate in Animal Science & Nutrition at North Carolina State University. Her research project examines supplementing a pasteurized milk balancer product to two feeding levels of pasteurized whole milk on the health and growth of dairy calves.

A scholarship was also awarded to Clayton Stoffel, M.S. candidate in Dairy Cattle Nutrition at the University of Wisconsin-Madison, for his research on the effects of different fatty acid profiles on milk fat depression in dairy cattle fed diets below 4% fat. Yun Yu, M.S. candidate in Food Science at the Pennsylvania State University, was awarded a scholarship for her research on a novel clean-in-place approach of electrolyzed water for dairy processing equipment.

The scholarship committee was impressed with the quality of applications and thanked all of the students who applied for the 2013 program. All eligible students are encouraged to apply again next year.

Visit the NMPF website to learn more about the scholarship program.

As negotiations continue on a Trans-Pacific Partnership (TPP) trade agreement linking the U.S. with a number of major countries, NMPF is in the process of building support in the House of Representatives for a letter to the U.S. Department of Agriculture (USDA) and the U.S. Trade Representative (USTR).

The letter stresses the importance of a positive dairy outcome in the TPP talks and is similar to a letter already sent from the Senate to the two federal agencies working on the negotiations. The key requests include:

• Fully opening the Canadian and Japanese dairy markets to U.S. products, given the considerable potential in both countries for significantly higher U.S. dairy exports;
• Meaningful reform in New Zealand to address the harm that its policy of encouraging near-monopolistic market concentration has had on our exporters;
• Enforceable TPP sanitary and phytosanitary provisions that build upon existing international standards in order to uphold strong, science-based U.S. food, animal and plant standards, while reducing the unjustified barriers facing U.S. agricultural exports.

The lead authors of the letter are the eight co-chairs of the House Dairy Farmer Caucus.  The letter will be sent later this month to USDA and USTR.

At the same time, the Consortium for Common Food Names (CCFN) is currently working with Central American companies and governments to register opposition to several European Geographic Indications applications for cheese. The U.S. ships a wide variety of cheese to these countries, and NMPF and the CCFN want to ensure that American exporters can continue to do so, in the face of efforts by the European Union to restrict the sales of common cheeses to only those produced in Europe.

New U.S. Department of Agriculture (USDA) rules affecting foods sold in schools will ensure that nutrient–rich dairy products will continue to be offered to the nation’s students in a variety of forms and settings.

Last month, the USDA released its “Smart Snacks in Schools” nutrition standards, affecting the calorie, fat, sodium and sugar content of foods that are offered apart from the school lunch line. These “competitive” foods may be offered in vending machines or other a la carte settings. The snack regulations are similar to overall nutritional rules applied last year to school lunches and breakfasts by the adoption of the Healthy, Hunger-Free Kids Act of 2010.

“The nutrients in dairy foods are an important answer to the question of how we can improve the diets and health of young people. The rules released today will ensure that milk, cheese and yogurt are offered beyond the school lunch line in places where they can contribute to healthy eating,” said Jim Mulhern, Chief Operating Officer of NMPF.

Under the new regulations, competitive foods must meet all the rule’s nutrient standards and either have as the first ingredient one of the major food groups, including dairy; or, until June 30, 2016, contain 10 percent of the Daily Value of a nutrient of public health concern (e.g. calcium, potassium, vitamin D or dietary fiber). Dairy foods are a key source of three of these nutrients of concern: calcium, potassium and vitamin D.

The regulation’s nutrient standards affect the following products:

• Low-fat and fat-free unflavored milk, and fat-free flavored milk, can be offered at all grade levels, with 8 ounce portions for elementary schools, and 12 ounces in middle and high school grades;
• Reduced-fat cheeses (including part-skim mozzarella) are exempt from fat standards, but must meet sodium standards of 230mg through June 30, 2016 and then 200 mg after July 1, 2016;
• Yogurt is subject to a sugar limit (35% by weight) that should facilitate dairy consumption;
• Entrees, such as pizza, that are offered in the National School Lunch Program are exempt from the standards when offered in the same or smaller portion size and available on the day the entrée is served and the following day;
• Caloric soft drinks are not allowed, and sports drinks cannot exceed 40 calories (and are only available in high school).

NMPF has released a newly-revised animal care reference manual, containing the guidelines that comprise the core of the National Dairy FARM (Farmers Assuring Responsible Management) Program. The new manual can be found online at www.nationaldairyfarm.com.

The FARM Program was created four years ago to establish a national, voluntary dairy animal care program to bring consistency and uniformity to the practices used on America’s dairy farms. The original reference manual was used to guide animal care practices on farms that have enrolled in the program since 2009; this new manual will now be provided to those both currently enrolled, and those who will become part of the program going forward.

“This new manual reflects the continuous improvement process that is a hallmark of the FARM program,” said Jim Mulhern, Chief Operating Officer of NMPF. “It contains important revisions from the first manual, and it reflects both evolving management practices on the farm, as well as expectations for animal care from the entire dairy value chain.”

A variety of industry stakeholders provided input into the revision process, Mulhern said, and the end result includes findings from the third-party verification process that began in 2011. Among the improvements in the new manual is the overall checklist used to evaluate farms has been streamlined from 77 questions to 48, “simplifying the process for farmers, and more effectively capturing the pertinent information that animal care experts believe is relevant to proper dairy animal care,” Mulhern said.

To order hard copies of the FARM Animal Care Reference Manual or the FARM Quick Reference User Guide, fill out the order form that can be found on the FARM website. The new guidelines will be implemented in the on-farm evaluation process later this summer.

The National Dairy FARM program currently has participant farms producing 70% of the nation’s milk supply, through 52 cooperatives and proprietary processors. More than 8,000 on-farm evaluations have been completed.

In June, Cooperatives Working Together (CWT) received 95 requests from member cooperatives to assist with exports of cheese and butter. After careful analysis of each request, CWT accepted 37 of those requests, based on the level of assistance that was economically justified.

This resulted in members selling 7.72 million pounds of cheese, and 665,796 pounds of 82% milkfat content butter to countries in Asia, the Middle East, and North Africa.

For the first six month of 2013, CWT has assisted 10 member cooperatives in selling 66.9 million pounds of Cheddar, Gouda, and Monterey Jack cheese, as well as 52.4 million pounds of 82% butter, 44,092 pounds of anhydrous milk fat, and 218,258 pounds of whole milk powder. All of the product will be delivered in 2013.

Year-to-date, the milk equivalent on a milkfat basis of CWT-assisted exports was 1.76 billion pounds.

In other CWT news, the CWT Committee voted on June 11th to increase the dairy producer contribution to CWT from 2¢ to 4¢ per hundredweight, effective July 1, 2013. New membership agreements have been sent to CWT’s current members and are also available on the CWT website – www.cwt.coop – under the Membership tab.

In an ongoing effort to revitalize and build awareness of the dairy industry’s iconic REAL® Seal, NMPF has introduced a cartoon character modeled after the logo.

“The REAL® Seal has been around for nearly 40 years,” said Jim Mulhern, Chief Operating Officer of NMPF. “This character is intended to bring the importance of looking for REAL® dairy products and foods made with REAL® dairy products to life.”

The first order of business is choosing a name for the character, which will be done through an online challenge.

“We want kids to learn how to differentiate real dairy products and foods made with real American dairy products from the vegetable- and nut-based pretenders,” said Mulhern. “To highlight this important distinction, we are launching a campaign to name the character.”

Names may be submitted through the REAL® Seal website: www.realseal.com. All entries must be received by August 31, 2013.  The top three names entered will be posted in September on the REAL® Seal Facebook page (www.facebook.com/realsealdairy) and subject to a vote. The name with the most votes will be declared the winner.