NMPF and the U.S. Dairy Export Council (USDEC) welcomed the announcement last month that the U.S. and European Union (EU) will launch trade negotiations. The U.S. and EU stated that the planned Transatlantic Trade and Investment Partnership is intended to be a comprehensive agreement that addresses a broad range of bilateral trade and investment matters, including regulatory issues.

“NMPF believes that considerable potential exists for greater U.S. dairy exports to the EU, if the Transatlantic agreement effectively tackles not only market access issues but also the many nontariff barriers that have made it challenging for the United States to make more headway into the European dairy market,” said Jerry Kozak, president and CEO of NMPF.

“The U.S. dairy industry is now a major exporter globally. Despite this fact and the large size of the European dairy market, U.S. dairy exports to the EU have lagged and totaled only $88 million last year,” said Tom Suber, president of USDEC. “This is not because we can’t compete there, but because of the many tariff and regulatory hurdles facing our exporters seeking to enter the EU. The EU currently enjoys a dairy trade surplus with the United States of $1.2 billion. This is at a time when the United States is exporting $5.2 billion in dairy products around the world. We believe the Transatlantic agreement can do a lot to drive more reciprocal dairy trade between the United States and EU.”

In prior submissions to the Administration about U.S.-EU trade, NMPF and USDEC have noted that U.S. exports to the EU are hindered by significant tariffs, as well as sizable regulatory barriers such as requirements unrelated to food safety with respect to somatic cell count limits for imported dairy products, tariff-rate quota administration details, cumbersome mandates related to certificate dating, bans on the use of generic food names and other requirements. As a result, U.S. dairy sales last year to all 27 EU member states—home to over 500 million people—just barely edged out those to Singapore, a country well known for its commitment to free trade, yet home to just over 5 million people.

NMPF and USDEC also reiterated the need to ensure that any discussions on the use of common food names and geographical indications (GIs) be aimed at uprooting the rapidly expanding EU effort to erect de facto barriers to trade against U.S. products through granting GIs to many common food names.

Congressional legislation allowing states to increase the weights of trucks used on their interstate roads has the endorsement of NMPF, along with hundreds of other associations and companies.

Reps. Reid Ribble (R-WI) and Mike Michaud (D-ME) introduced the “Safe and Efficient Transportation Act (H.R. 612),” known as SETA, on Feb. 14. The legislation allows an increase to 97,000 pounds on interstates, provided that trucks which utilize the higher weight limit add an additional sixth axle in order to maintain the same stopping distance and weight distribution as trucks currently operating on interstate highways.

NMPF has been circulating a letter in support of the bill, and has signed on to another letter being circulated by the National Cattleman’s Beef Association with signatures from other agricultural organizations.

“This bill is one way Congress can help permit the industry to increase its efficiency, thereby keeping down one key cost in transporting milk and dairy products,” said Jerry Kozak, NMPF President and CEO, in a letter to Congress.

While the bill has received a large amount of bipartisan support, serious opposition remains to giving states the option to increase their truck weights on interstate highways. The SETA legislation failed to make it into the two-year authorization of highway funding passed last July. Instead, a study was commissioned to review the possible safety implications of such a change. The highway bill will expire on Sept. 30, 2014, and SETA will be likely to be a key point of debate in the reauthorization effort.

Dairy farmers continued in 2012 to improve their already stellar track record of keeping antibiotic residues out of the milk supply, with the most recent national survey finding that only 0.017% of all bulk milk tankers, or 1 in 6,000 loads, showed any sign of an animal antibiotic drug residue. On-farm vigilance in following drug withdrawal times has led to a steady decline in antibiotic residue, falling from an already low level of 0.061% in 2002, a decline of nearly 75% in the last decade.

These figures are based on information reported to the Food and Drug Administration’s National Milk Drug Residue Data Base by state regulatory agencies under the National Conference on Interstate Milk Shipments (NCIMS). Data are reported on the extent of the national testing activities, the analytical methods used, the kind and extent of the animal drug residues identified, and the amount of contaminated milk that was removed from the human food supply.

All milk loads are tested for antibiotics, and any tanker which tests positive for a drug residue is rejected before entering a dairy plant and does not enter the market for human consumption. The full report is available online.

The most recent national government survey looking for pesticide residues in foods found virtually no positive levels in milk, and none that exceeded government tolerance levels.

The U.S. Department of Agriculture (USDA) conducts an annual Pesticide Data Program annual survey to test various food commodities for pesticide residues. Each year, USDA and the Environmental Protection Agency jointly determine which commodities to test. In 2011, the USDA collected 743 whole milk samples in ten of the largest states, mostly at the retail level.

Overall, only five of the milk samples showed any presence of pesticide residue, and all were lower than Environmental Protection Agency-established tolerances for those compounds.

In February, Cooperatives Working Together (CWT) helped member cooperatives make 85 foreign sales of cheese, butter, and whole milk powder totaling 22.8 million pounds of product.

The 43 cheese sales assisted by CWT totaled 10.8 million pounds of cheddar, Gouda, and Monterey Jack cheese. The 40 butter sales amounted to 11.9 million pounds of product, while two sales of whole milk powder totaling 130,073 pounds were made as well.

This brought total CWT-assisted sales in 2013 to 30.1 million pounds of cheese, 21.6 million pounds of butter, and 218,258 pounds of whole milk powder. The milk equivalent of this amount was 749.1 million pounds, or the annual production of 35,600 cows.

CWT is a significant factor in exports of U.S. dairy products, accounting for 83% of American-type cheese exports and 18% of all cheese exports in 2012. CWT export assistance also accounted for 62% of all U.S. butter exports.

NMPF continues to work with other national and state farm groups on reforms to America’s immigration policies that would allow for the future flow of workers on dairy farms and the opportunity for existing workers that may lack legal documentation to continue working on dairy farms.

NMPF, a founding member of the Agriculture Workforce Coalition (AWC), sent a letter to House and Senate leadership last week calling for support of immigration legislation that addresses agriculture’s unique labor needs. The letter was delivered as the House Judiciary Subcommittee on Immigration & Border Security held a hearing last Tuesday focused on the need for a new agricultural guest worker program.

The Senate and House may pursue separate legislative paths to immigration reform, and NMPF is talking with leaders in both chambers to ensure that whatever decisions are made will address the unique needs of dairy farms.

Congress’ failure to pass a farm bill last year is proving costly. New preliminary cost estimates from the Congressional Budget Office (CBO) have revised upward the price tag of the farm bills that moved through the House and Senate last year. The bills still show budget savings over current farm programs – saving billions of dollars over a ten-year period – but the projected savings have been reduced by new economic projections.

CBO estimates that the Dairy Security Act (DSA), which was part of both the Senate-approved and the House Agriculture Committee-approved farm bills, will still provide a cost-effective safety net for America’s dairy farmers, but the new revisions project the program would cost slightly more than last year’s projection. CBO also reduced its “baseline” calculation of what current dairy programs would cost over the next five years if they were extended. Last year, CBO said current dairy law would cost $248 million during the 2013-17 period. Despite their new projection showing lower dairy market prices than in last year’s estimate, CBO’s new preliminary five year estimate of current dairy law fell from $248 to $161 million. Information released by CBO with the new estimates does not explain how current programs could be projected to cost less when the same projections indicate future lower milk prices.

Even with the new preliminary estimate, the dairy plan of margin protection and market stabilization represents less than one-twentieth of one percent of the cost of the overall farm bill. That is by far the lowest cost of any of the major farm commodities covered in the farm bill.

CBO now calculates that enacting the Senate-passed bill would bring total U.S. Department of Agriculture spending from 2014 to 2023 to $963 billion. The House bill would cost $950 billion over the same period. The Supplemental Nutrition Assistance Program, or food stamps, makes up roughly 80 percent of the legislation’s cost.

The U.S. Department of Agriculture recently reported that America’s dairy farmers produced a record 200 billion pounds of milk in 2012. Depending on your perspective, that’s both a problem, and an opportunity.

Increased milk production – and 2012’s total was up 2.1% from the 196 billion pounds produced in 2011 – is in most respects a good thing. It indicates that our industry is growing, not declining. Not all sectors of agriculture can say that. The problem that can arise from added production is reflected in the iron law of supply and demand. If there’s not enough demand for that new milk production, farmers’ milk prices will fall. That’s what happened in the first part of last year, until milk production slowed somewhat and demand caught up. New supplies of any commodity have to match up reasonably well with demand. If there’s an imbalance, prices can crater (or skyrocket, if the issue is supply not keeping up with demand).

The real driver of increased demand in the past decade has been the international market. While demand in the U.S. is growing 1.2% per year, sales of U.S. products to foreign markets are booming, rising from 5.1% of production in 2002, to 13.2% of production last year, on a total solids basis.

But this surge didn’t just happen. And it won’t continue to happen, absent the full and continued deployment of all the tools needed to keep the momentum going.

First of all, our increased export sales are the result of favorable trade policies, particularly the North American Free Trade Agreement (NAFTA). Mexico is our number one market, and continues to grow. Canada, even though it’s a protected market, is still our number two customer. Other free trade agreements in Latin America and the Pacific Rim have helped the cause, as has the overall trend towards more Westernized diets in the developing world. That’s one reason why NMPF is so heavily invested in creating favorable trade deals across the Pacific, and now, potentially, across the Atlantic with the European Union.

Another factor in increased foreign sales is the marketing expertise and intelligence provided by the U.S. Dairy Export Council (USDEC). The creation and sustenance of USDEC was always a long-term play by the U.S. dairy sector as it prepared for a globalized 21st century. Those seeds, planted in the 1990s, are now really bearing fruit, as the U.S. dairy industry capitalizes on opportunities it didn’t have a generation ago.

And one of the biggest factors behind this growth is another investment that farmers are making, in Cooperatives Working Together (CWT). Since its formation 10 years ago this spring, CWT has played a vital role in boosting U.S. dairy sales by helping assist its members in closing export deals. Last year, as a record volume of milk came from U.S. farms, CWT was essential in making certain at least some of that milk found a home in foreign markets.

Last year, CWT assisted in selling nearly 125 million pounds of American–style cheeses, 73 million pounds of butter, plus 128,000 pounds of anhydrous milkfat and 172,000 pounds of whole milk powder. To put those figures into perspective, cheese sold as a result of CWT assistance represented 83% of all American-style cheese exported, and even more importantly, 18% of all cheese exported. Since American–style cheese like cheddar is the product that most influences dairy producer prices in Federal Order calculations, these increased sales benefit all CWT contributors. Similarly, CWT-assisted butter sales were 62% of all the butter exported from the U.S. last year.

Many of America’s dairy farmers are rightly proud that they are participating in the world market like never before. But those sales don’t just happen; they result from a variety of forces, both short- and long-term, to help U.S. vendors capture market share, often wrestled away from competitors who are entrenched and tough businessmen.

As it starts its 11th year of operation, CWT continues to play a key role in minimizing inventories for butter and cheese products, thus fostering a more stable producer milk price. This is especially valuable at a time when no significant federal safety net exists for farmers. The next ten years will offer more opportunity for export sales, and more volatility in global pricing. We need tools like CWT to help take advantage of the first, and protect against the second.