This week, NMPF released its 2010 Activities and Accomplishments Report, which chronicles the organization’s various achievements throughout the past year. The new report highlights important issues ranging from economic policy, government relations, food safety, nutrition, animal health, and standards and labeling. It also reflects on the NMPF membership, featuring the board of directors, member cooperatives, and Young Cooperators. The report is available on the NMPF website.
Author: dcadmin
Dairy Groups Applaud U.S. Government Action to Resolve NAFTA Trucking Dispute with Mexico
The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) applauded today the announcement by President Barack Obama and President Felipe Calderon of Mexico that both countries have an understanding on the path to resolving the cross-border trucking dispute.
In response to the long-standing lack of U.S. compliance with its trucking obligations to Mexico under NAFTA, Mexico has been legally levying tariffs on a variety of U.S. exports since March 2009. In August 2010, Mexico added a new retaliation list that included many U.S. cheeses. The U.S. dairy industry appreciates the work between the U.S. and Mexico governments to craft a satisfactory resolution. Furthermore, NMPF and USDEC are looking forward to a swift process by the Department of Transportation to complete a final agreement. Mexico has announced that once a final agreement has been reached, Mexico will suspend its retaliatory tariffs on dairy products by 50 percent and will suspend the remaining 50 percent when the first Mexican carrier is approved to cross the border.
“We commend the efforts by the U.S. and Mexican government to work together to seek a final resolution to this old dispute. These are encouraging developments for U.S. exporters of dairy products that today have to pay a higher rate to enter Mexico,” said Tom Suber, president of USDEC. “Mexico is our largest market and we want to ensure that we remain the number one source of dairy products.”
“World markets, and in particular Mexico, are essential to helping grow sales opportunities for our farmers. This agreement is welcome news since it would help re-open doors for our dairy products at a time when rebuilding markets for U.S. milk is critical to the well-being of our dairy producer community,” said Jerry Kozak, President and CEO of NMPF.
NMPF and USDEC stressed the importance of maintaining the U.S. and Mexico agreement intact and urged members of Congress to support this agreement. It is imperative that members of Congress support the efforts of the Obama Administration in resolving the Mexico trucking dispute once and for all.
The U.S. Dairy Export Council (USDEC) is a non-profit, independent membership organization that represents the export trade interest of U.S. milk producers, proprietary processors, dairy cooperatives, and export traders. Its mission is to enhance international demand for U.S. dairy products and assist the industry to increase the volume and value of exports. USDEC accomplishes this through market development programs that build overseas demand for U.S. dairy products, resolving market access barriers and advancing the industry’s trade policy goals. USDEC activities are supported by staff in Mexico, Japan, South Korea, China, Taiwan, Hong Kong, Southeast Asia, South America, Middle East and Europe. Website: www.usdec.org.
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 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.
NMPF Analysis Shows IDFA-Funded Informa Study Miscalculated Impact of Foundation for the Future Program
New Analyses from NMPF, FAPRI Show Program Would Have Increased Dairy Farmer Revenue
ARLINGTON, VA – The Informa Economics review of the National Milk Producer Federation’s Foundation for the Future dairy proposal was extremely limited in its scope and failed to take into consideration how producers would have cut their milk production in response to a reduction in their milk checks, according to a new analysis by NMPF issued today.
The NMPF analysis of the processor-funded Informa study shows that under the Dairy Market Stabilization program, dairy farmers would have received at least $3 billion more revenue had the stabilization program been in place in 2009. That finding is corroborated by a separate, new analysis done by the Dr. Scott Brown at the University of Missouri’s Food and Agricultural Policy Research Institute.
NMPF has proposed a series of new programs for the U.S. dairy industry as part of its Foundation for the Future dairy policy package, including the Dairy Market Stabilization Program (DMSP). That program is designed to reduce dramatic swings in market conditions that ultimately result in negative margins, such as those experienced by dairy farmers in 2009. The DMSP is activated only when margins become compressed, due to low milk prices or high feed costs. When they do, the program reduces the amount that farmers are paid, to encourage them to temporarily reduce their milk marketings. That, in turn, results in increased producer margins. The money collected under the DMSP is to be used to stimulate demand, through product purchases.
Last month, Informa Economics issued a report, commissioned by the International Dairy Foods Association, asserting that the Dairy Market Stabilization program, had it been in place in between 2000 and 2009, would have reduced farmers’ pay prices by $626 million (with $390 million of that total in 2009 alone). However, the Informa study made no attempt to estimate how producers would have altered their milk output, or how cheese purchases would have helped producer incomes, had the program been active during that period. Had it done so, it would have found that the DMSP program would ultimately have increased total farm revenue, according to NMPF.
“The purpose of the Informa study was transparent. Its sole intent was to pit producer against producer, in region by region, by focusing on the differences in the total dollar reductions producers in various states would have experienced,” said Jerry Kozak, President and CEO of NMPF. “But the Dairy Market Stabilization Program treats all producers equitably; they are all subject to the same required production reduction percentages.”
In addition, the Informa report was incredibly one-dimensional, in that “it didn’t make any effort to acknowledge that when pricing signals are bad, farmers react fairly quickly,” said Kozak. “Real-world experience tells us that farmers respond to incentives and penalties, like all rational economic actors. If they know they’ll get paid less for their milk in the next month or two, they’ll act accordingly. But you won’t find any acknowledgment of that reality in the Informa study.”
In fact, the Informa report briefly admits that “it’s likely that farmers…will try to limit production” during months when the program is active, but then the report says that “it’s nearly impossible to say exactly what the impact on milk production will be.” In essence, it only applied the structure of the DMSP plan on activities that had already occurred, without any modeling of how people would have responded, according to Kozak.
In order to present a dynamic model of how the Market Stabilization program would actually affect milk production, NMPF’s Vice President for Economic Policy, Dr. Peter Vitaliano, estimated the behavior of dairy producers during the months when the program would have been triggered in the past two years. NMPF’s own econometric analysis shows that had the DMSP program been in place in 2009, the average U.S. all-milk price would have been $1.90/cwt. higher during 2009, raising farm revenue by $3 billion.
NMPF’s assessment is corroborated by an independent analysis of the entire Foundation for the Future program, prepared Dr. Scott Brown, of the Food and Agricultural Policy Research Institute at the University of Missouri. His report, located on the FAPRI website, found that producers would have received an increase of $3.4 billion in cash receipts as the DMSP program would have kicked in during 2009, reducing milk output and ultimately bolstering prices.
NMPF’s analysis also points to a real-world experience where farmers did respond to advance incentives urging them to reduce milk output: three years ago in California, when the state’s largest cooperatives instituted limits on the amount of milk a farmer could send to market each month. That production-limiting plan had the immediate effect of reducing the state’s milk production in 2008 and 2009, while production in other states without that plan tended to rise.
That’s why the Informa analysis found that penalties on growing milk output were relatively smaller in California compared to other states – because producers in the largest dairy state already had been given the signal to cut production. All of the other states cited by Informa as incurring the largest penalties in 2009 are on that list simply because they are the largest dairy-producing states, according to NMPF.
“As the California example vividly demonstrates, dairy producers will react strongly to economic signals that milk they produce, in excess of a given volume, has a lower value,” Kozak said. Such a response would mean that farmers, if the DMSP plan were in effect, would not be penalized for producing excess milk because they would reduce their output. Thus, the estimate of hundreds of millions of dollars in penalties is highly suspect, because farmers would seek to avoid the penalties by shipping less milk.
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 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.
Keeping the Frogs in the Bucket
Last month marked the centennial of Ronald Reagan’s birth. As with all such commemorations of historic figures, there was no shortage of documentaries, articles, and blog postings about what made his leadership style, and his career – both as governor, and then president – so successful.
After all the opining, the one thing that becomes apparent was President Reagan’s great ability to be tactically flexible, and strategically principled, in the pursuit of a few major goals, such as tax reform, defeating the USSR, and changing how government operates. Put a simpler way, Reagan knew what he wanted, focused on the ultimate goal, bent but didn’t break, and didn’t sweat the small stuff.
Such an approach has served many companies, industries, and other managers very well in the pursuit of their objectives. It’s an important lesson, as the dairy industry heads into a crucial juncture in the public policy arena.
After more than a year of deliberation, we are poised to make significant changes in federal dairy policy – changes that will improve the safety net for farmers, offer simple yet effective risk management tools, bring greater certainty and clarity to milk pricing, better manage supply with demand, and provide us the opportunity to reach the fastest-growing markets for milk, both domestic and international.
All of these improvements are contained in
Foundation for the Future, the series of sweeping revisions that is the product of nearly two years of hard work and input by dairy farmers and cooperatives from across the country. Congress has begun the process of taking these concepts, and writing them into legislation that someday soon will be introduced on Capitol Hill and passed into law.We are near the culmination of a process that rightly has entailed a great deal of conciliation, give-and-take, and not agonizing over the small stuff. As is always the case with the construction of a multi-faceted and complex vehicle, concessions had to be made, and compromises reached. The goal was never going to be, and never should be, perfection. Even if everyone in the dairy sector could agree what perfection looks like, no one achieves it; it’s a mirage that may look deceptively simple, but usually becomes maddeningly evasive upon further inspection.
So we’re near that point, but we’re also at another point: where as the final details become clearer, and as people are asked to be flexible, they get cold feet. Or put another way, they get jumpy, like frogs in a bucket.
Thus, our task ahead in 2011 is to keep our eyes on the ultimate prize – dairy policy reform that benefits everyone. And in so doing, we need to keep all the frogs – or at least as many as is feasible – in the bucket that is dairy reform.
It’s natural and inevitable that as the opportunity approaches for concrete change in decades-old policies, some people will get jumpy. Regardless of how badly-needed any change is, change always asks people to take a leap of faith into uncharted waters. It’s human nature to prefer the comforts of the known, rather than confront the questions about the unknown.
But we need to keep our focus on the things we need from tomorrow’s dairy policy that today’s policy can never offer. The rise (again) in feed costs, even though it’s been accompanied by rising milk prices, demonstrates that dairy producer profitability cannot be measured any longer simply by the milk price. We need a policy that considers, and protects, margins. That’s what Foundation for the Future offers.
We’re at the point where some have questioned how such margins can be precisely quantified, for their region, or even their specific farm. The point to keep in mind is that our approach has to be national, it has to apply to farms of all sizes – without any limitations – and it has to focus on the big picture. The same applies for all of the other changes contained in Foundation for the Future. To worry about the small stuff risks paralysis by analysis, and the demise of everything that so many have worked for in recent years.
My official title at NMPF is President and CEO, but truth in labeling would generate a title more along the lines of “Frog Bucket Carrier.” President Reagan understood the need to keep all the frogs in the bucket in order to get the job done. That’s the job here, as well.
Progress Continues on Foundation for the Future
With the new Congress beginning to get situated for a busy year ahead in Washington, NMPF is continuing to promote the need for a major change in dairy policy, one that reflects the specifics of its Foundation for the Future program.
NMPF staff members have held productive meetings with the new Republican Chairman of the House Agriculture Committee, Frank Lucas of Oklahoma, who has indicated a desire to address dairy policy this year. The Agriculture committee’s top Democratic, Collin Peterson of Minnesota, has likewise expressed interest in working with NMPF toward a new dairy policy.
NMPF is working to put into legislative form the specifics of the Foundation for the Future program, so that members of Congress can then have the legislation evaluated for its costs and economic impact. In addition, NMPF is currently preparing a detailed rebuttal of the recent dairy processor-funded critique of the potential impact on dairy farmers of Foundation for the Future.
CWT Export Assistance Beyond 2010
In 2010, the Cooperatives Working Together (CWT) Export Assistance program assisted member cooperatives in making export sales of Cheddar, Monterey Jack, and Gouda cheese totaling 77.6 million pounds. The sales were made to 27 countries on four continents. Asia and the Middle East accounted for 76% of the cheese sales. Two-thirds of the cheese was shipped in 2010, with one-third to be shipped in the first six months of 2011.
Assistance for butter and anhydrous milk fat totaled 33 million pounds, during the one month these products were eligible for export assistance. Assistance was halted when the butter price hit $2.10 a pound. These products went to nine countries on three continents, with half shipped in 2010, and the other half scheduled to ship in the first quarter of 2011.
The impact of this assistance was significant. Dr. Scott Brown of the University of Missouri and the Food & Agricultural Policy Research Institute (FAPRI) estimated that these sales actually shipped in 2010 added nearly $400 million of revenue, an average of 18¢ per hundredweight, to producers’ milk checks.
The world market is growing at the rate of eight times faster than the U.S. market. In 2011, dairy exports are on a pace to absorb 15% of producers’ milk solids. To insure that happens, and that U.S. dairy farmers continue to reap the financial rewards of the industry as being a consistent, reliable supplier of dairy products, the Export Assistance program will be the focus of CWT’s efforts in 2011 and 2012. To make that effort as effective as possible, CWT is asking producers, through their cooperatives or as individuals, to pledge to invest 2¢ per hundredweight in CWT for the next two years. Membership information is available atwww.cwt.coop/about/about_membership.html.
FDA Delays Testing Compliance Program for Milk Residues
Last December, the Food and Drug Administration (FDA) Center for Veterinary Medicine informed the dairy industry that it would begin a new milk residue testing compliance program for producers who had a dairy cull cow tissue residue violation during the previous three years. Initially scheduled to begin in January, the FDA compliance project has been placed on hold, while FDA seeks additional stakeholder input. Industry, NCIMS, and State regulators have raised significant concerns about the scope, logistics, and marketplace disruption potential of the FDA compliance project as originally formulated.
The FDA intends to move forward with a compliance project; however, the approach will be different from the one previously announced because FDA now understands the many concerns expressed by stakeholders. FDA has committed to address industry concerns, and is continuing dialogue with stakeholders. NMPF believes that any FDA compliance project must be scaled appropriately to minimize marketplace disruption. FDA continues to affirm the safety of milk, stating, “FDA has not previously held the view, nor does it now hold a view, that the nation’s milk supply is unsafe due to animal drug residues.”
Please contact Jamie Jonker, Beth Briczinski, or Betsy Flores for additional information.
USDA Releases 2010 Dietary Guidelines for Americans
On January 31, the new 2010 Dietary Guidelines for Americans (DGA) were released by the United States Department of Agriculture and the United States Department of Health and Human Services. The guidelines continue to encourage 3 daily servings of low-fat or fat-free milk and milk products for adults and children nine years and older. For children ages 4-8, the recommendation was increased from 2 to 2.5 servings, and for children ages 2-3, the recommendation remained at 2 servings.
Overall, the DGA recommendations were positive for dairy. The DGA emphasized the importance of establishing good milk drinking habits at a young age, as those who consume milk at an early age are more likely to do so as adults. According to the DGA, current evidence shows intake of milk and milk products is linked to improved bone health, especially in children and adolescents, and is associated with a reduced risk of cardiovascular disease, type 2 diabetes, and lower blood pressure in adults. The dairy foods group contributes many nutrients that are important for good health and is the number one food source of three of the four nutrients the DGA identified as lacking in the American diet – calcium, vitamin D, and potassium.
The joint dairy industry statement and the 2010 Dietary Guidelines for Americans policy document are available online.
House Ag Committee Announces New Member Roster
Republican Chairman Frank Lucas (OK) and Democrat Ranking Member Collin Peterson (MN) recently released the member list of the 112th House Agriculture Committee. The members of the House who will serve on the committee are as follows:
| Republicans | Democrats |
| OK-3 Frank D. Lucas | MN-7 Collin Peterson |
| VA-6 Bob Goodlatte | PA-17 Tim Holden |
| IL-15 Tim Johnson | NC-7 Mike McIntyre |
| IA-5 Steve King | IA-3 Leonard Boswell |
| TX-19 Randy Neugebauer | CA-43 Joe Baca |
| TX-11 Michael Conaway | CA-18 Dennis Cardoza |
| NE-1 Jeff Fortenberry | GA-13 David Scott |
| OH-2 Jean Schmidt | TX-28 Henry Cuellar |
| PA-5 Glenn Thompson | CA-20 Jim Costa |
| FL-16 Tom Rooney | MN-1 Timothy Walz |
| AR-1 Rick Crawford | OR-5 Kurt Schrader |
| TN-4 Scott DesJarlais | NC-8 Larry Kissell |
| NC-2 Renee Ellmers | NY-23 Bill Owens |
| TN-8 Stephen Fincher | ME-1 Chellie Pingree |
| OH-18 Bob Gibbs | CT-2 Joe Courtney |
| NY-20 Chris Gibson | VT-At Large Peter Welch |
| MO-4 Vicky Hartzler | OH-11 Marcia Fudge |
| KS-1 Tim Huelskamp | NMI-Delegate Gregorio Sablan |
| IL-14 Randy Hultgren | AL-7 Terri Sewell |
| WI-8 Reid Ribble | MA-3 James McGovern |
| AL-2 Martha Roby | |
| IL-17 Bobby Schilling | |
| GA-8 Austin Scott | |
| FL-2 Steve Southerland | |
| IN-3 Marlin Stutzman | |
| CO-3 Scott Tipton |
The Livestock, Dairy and Poultry Subcommittee will be chaired by Rep. Tom Rooney (FL) with Ranking Member Rep. Dennis Cardoza (CA). John Goldberg (Majority) and Mary Knigge (Minority) will be the committee staffers assigned to this subcommittee.
Of the 46 Republicans and Democrats on the Committee, 26 are new to the committee, and of those 26, 17 are freshman members. This is a great opportunity for new member education. NMPF looks forward to working with all members of the committee in the future.
Obama Discusses Reforming the Regulatory Process
In an op-ed column published Jan. 18th in the Wall Street Journal (WSJ), President Obama laid out a directive to his administration to examine the system of regulatory actions and the impact it has had on the nation’s economy. According to the column, his plan “requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive.” Along with the WSJ piece, the President also released an executive order and two memos further laying out his new strategy.
As committee rosters for the House of Representatives are being finalized, the new GOP chairmen have already started their hearings to investigate the regulatory system of the Obama Administration. Over the coming weeks, expect to see a variety of Cabinet members making visits to Capitol Hill, including Environmental Protection Agency (EPA) Administrator Lisa Jackson, Secretary of Agriculture Tom Vilsack, and Secretary of Health and Human Services Kathleen Sebelius, just to name a few.
Meanwhile, Senators are assembling their lists of current regulations harming their constituencies. Sen. Saxby Chambliss (R-Ga.), joined by incoming Senate Agriculture Committee Ranking Member Pat Roberts (R-Kan.), sent a letter to Office of Information and Regulatory Affairs Administrator Cass Sunstein listing out many of the destructive regulations in place, or in the works, at USDA and EPA. These include: Clean Air Act initiatives, Clean Water Act strategies and rulemakings, GIPSA changes, and biotechnology decisions, amongst many others.
NMPF staff will be working closely with the Administration and Congress to identify the troublesome regulations and work to find solutions for improvement or elimination.
Dairy Groups Urge Passage of Three FTAs to Grow Jobs in U.S.
NMPF and the U.S. Dairy Export Council (USDEC) submitted comments to the House Committee on Ways and Means as part of a hearing held last month on the pending Free Trade Agreements (FTAs) with Colombia, Panama and South Korea. The focus of the hearing was to examine the job creating potential of the three trade agreements.
NMPF and USDEC voiced support for all three FTAs and urged swift congressional passage of each. However, remarks from NMPF and USDEC centered heavily on the tremendous export potential posed by the Korea-U.S. FTA.
“The anticipated growth in our exports of cheese, whey, skim milk powder, and other dairy products will help bolster milk prices for America’s dairy farms, and help to support additional jobs in the dairy processing and transportation sectors,” said Jerry Kozak, President and CEO of NMPF. “In fact, we estimate that such an increase in U.S. dairy exports would mean as many as 10,000 additional U.S. jobs, on and off the farm.
The dairy organizations also expressed hope that the FTAs with Colombia and Panama would also be approved, citing the anticipated $50 million annual average increase in net benefits to the U.S. dairy industry upon passage of both trade agreements. NMPF and USDEC stressed that the estimates pertaining to the FTAs assume the United States is able to make full use of the new market access opportunities negotiated for in each of these agreements.
Dairy Groups Welcome U.S. Government’s First Step Towards Resolution on NAFTA Trucking Dispute
At the beginning of the new year, NMPF and the U.S. Dairy Export Council (USDEC) welcomed the Department of Transportation’s release of an “initial concept document” intended to allow for a long–haul, cross-border Mexican trucking program that prioritizes safety, while complying with the U.S. trade obligations to Mexico under the North American Free Trade Agreement (NAFTA). The concept document is aimed at rectifying a trade spat between the two countries that is hurting the U.S. dairy sector, among others.
In response to long-standing lack of U.S. compliance with its trucking obligations to Mexico under NAFTA, Mexico has been legally levying tariffs on a variety of U.S. exports since March 2009. Since August 2010, that retaliation list has included many U.S. cheeses.
“We see this announcement as a positive first step towards resolution of this long-running dispute,” said Tom Suber, USDEC president. “Since August, exports of the targeted cheeses to Mexico have plunged by 66% through November of last year. It is good that the United States recognized the heavy toll that retaliation is having on the many impacted sectors, such as America’s dairy industry, and has proposed to begin to move forward with working with Mexico to find a way to address this issue.”
Jerry Kozak, President and CEO of NMPF, concurred, adding, “Mexico is by far our largest export market and therefore absorbs sizable quantities of the milk U.S. dairy farmers produce. It is encouraging to see the U.S. initiate a path towards a permanent resolution of this transportation issue that has been negatively impacting the dairy industry, which has been caught in the resulting cross-fire of this dispute.”
