The U.S. Department of Agriculture announced last week that it will spend all of the $60 million it was given by Congress on the purchase of consumer-ready cheeses, as NMPF had urged the Department to do. The FY 2010 Agriculture Appropriations bill, passed by Congress this summer and signed into law by the President in October, included $60 million for the purchase of dairy products; NMPF urged all the purchases to be for cheese, as it will have the maximum benefit for producer prices.

The USDA said that it will procure cheddar and mozzarella cheese for delivery between March 16 and December 31, 2010. The products will be distributed through the Emergency Food Assistance Program. Solicitation is expected to be available on or after December 29, 2009, and will be available electronically on USDA's website.

There is no word yet on how USDA will distribute the other $290 million in dairy aid in the form of direct payments to producers. However, the Farm Service Agency (FSA) has instructed its state and county offices to collect all production data for February through July 2009, including production over the original MILC cap, in anticipation of the payment distribution process.

Cooperatives Working Together (CWT) has generated a return on investment of $1.54 per hundredweight so far in 2009, according to an independent economic analysis of the voluntary dairy farmer-funded and managed self-help program.

That evaluation was released at the 2009 NMPF Annual Meeting in Grapevine, TX, by Dr. Scott Brown of the University of Missouri, a nationally-known farm policy expert who is regularly called on by the U.S. Congress to assess agricultural economic issues.

Brown evaluated the impact of CWT’s two completed herd retirements in 2009, along with the lingering effect of the two conducted in 2008, as well as the herd retirement in 2007. He also noted positive contributions to price because of the bred heifer option that CWT has offered in recent years, along with CWT’s Export Assistance program, which while dormant this year, was active in 2007 and 2008.

Brown’s analysis showed that the combined effect of CWT’s cow-removal programs, as well as its export assistance program, helped raise farm-level milk prices by $1.54 per hundredweight this year, and added $2.4 billion to farm-level milk receipts in a year when dairy income is expected to shrink by more than $10 billion because of the global recession.

Dairy producers now have online access to key components of the new National Dairy FARM Program: Farmers Assuring Responsible Management. That announcement was made November 12, 2009, during NMPF's Annual Meeting in Grapevine, TX, where producers and industry leaders from across the country were introduced to the on-farm animal well-being program.

Created by NMPF, with support from Dairy Management Inc., the National Dairy FARM Program is a voluntary, nationwide program designed to bring consistency and uniformity to animal care through education, on-farm evaluations and objective third-party verification.

The program was formally launched October 1st during a news conference at the World Dairy Expo in Madison, WI. The session at NMPF’s Annual Meeting allowed dairy industry leaders to learn more about the program, and about the Animal Care Manual and Animal Care Quick Reference User Guide, now available online at www.nationaldairyfarm.com/animal-care-resources.html.

To participate in the National Dairy FARM Program, producers, co-ops, processors, and state and regional dairy producer organizations can contact NMPF. On-farm evaluations will begin in 2010; third-party verification will follow in 2011. Additional National Dairy FARM Program modules designed to assure the quality, safety, and wholesomeness of dairy products will be introduced in the future.

For more information on the National Dairy FARM Program, contact Betsy Flores at (703) 243-6111 or visitwww.nationaldairyfarm.com.

NMPF held its 93rd Annual Meeting November 10 – 12 in Grapevine, TX, which was attended by more than 900 people. Highlights of the meeting included presentations by USDA Under Secretary Jim Miller; Domino’s Pizza CEO Dave Brandon; Bain Consulting’s Clinton Anderson; and NFL TV analyst Daryl Johnston.

The 2009 Championship Cheese contest winner was a Cabot Sharp Cheddar from Agri-Mark’s Middlebury, VT, plant.

Many of the presentations, including the joint address to NMPF’s membership by Chairman Randy Mooney and President & CEO Jerry Kozak, are available on the NMPF website. The website also features a video presentation of NMPF’s key activities in 2009.

At last month’s NMPF Annual Meeting in Grapevine, TX, USDA Under Secretary Jim Miller reiterated the Department’s strong support for dairy farmers, and asked for suggestions for the use of nearly 60 million pounds of surplus nonfat dry milk purchased by the Commodity Credit Corporation earlier this year under the price support program.

In response, NMPF has urged USDA to work with the Department of Defense to ship those stocks to Afghanistan for processing into school milk at a new plant outside Kabul. In this way, U.S. powder stocks would support the fledgling Afghan dairy processing industry, help establish outlets for Afghan farmers, and develop markets for U.S. exports.

More importantly, U.S. commanders on the ground in Afghanistan have identified education as a “number one priority” in promoting Afghanistan’s peaceful development. Under this program, surplus dry milk stocks will also provide important nutrition for Afghan children and encourage many parents to send their children to school who would not otherwise do so, providing critical support to America’s troops in the country.

NMPF President & CEO Jerry Kozak said of the initiative: “We believe this is the best possible use for this surplus powder, on many levels.”

If you have questions, please call Roger Cryan or Dana Brooks in the NMPF office.

NMPF has joined forces with 90 other agricultural groups to urge estate tax reform in a letter to House of Representatives Speaker Nancy Pelosi and Minority Leader John Boehner. The letter expressed support for the Family Farm Preservation and Conservation Estate Tax Act, H.R. 3524, sponsored by Congressman Mike Thompson (D-CA). This bill would exclude farm assets from estate taxes for as long as the property remains as a family agricultural operation.

The current estate tax exemption is set to expire in 2010, leaving family farms and ranches vulnerable to excessive taxes in the case of a change in ownership of an estate. Agricultural organizations like NMPF are seeking Congressional assistance in providing relief to preserve these family farms and ranches.

Farm equity has more than doubled in recent years, primarily due to increased value of farm real estate – value that does nothing for agricultural production. By 2011, 1 in 10 farm estates would owe the tax. NMPF will continue to support the highest exemption levels possible while maintaining the stepped-up basis, and believes it is essential that Congress additionally deal with the unique problems that farmers and forest owners face with generational family transition.

On November 4, 2009, Senators Stabenow (MI), Harkin (IA), Baucus (MT), Casey (PA), Klobuchar (MN), Brown (OH), Begich (AK), and Shaheen (NH) introduced S. 2729 – the Clean Energy Partnerships Act. This bill establishes important provisions for agriculture in the offset portion of the Climate Change bill, which was approved by the Senate Environment Committee last month without the ag offset amendment.

NMPF feels very strongly that additional legislation must protect the dairy industry from those who would rather pursue a strictly regulatory approach to managing methane emissions from livestock operations. To mandate greenhouse gas reductions could cause catastrophic financial losses within the dairy sector. S.2729 provides many of those provisions, and provides opportunities for agriculture to benefit from the legislation.

Although the Senate Environment and Public Works Committee passed S. 1733, the Clean Energy Jobs and American Power Act, NMPF was disappointed to see the lack of provisions for agriculture. That is why it is critical that the agriculture offsets piece was introduced.

NMPF sent a letter in support of the work on the Clean Energy Partnerships Act and will continue to engage and work on this process.

At this time the Senate is not expected to again consider climate change legislation until the spring of 2010. However, with the international negotiations taking place this December in Copenhagen, there will likely be additional discussions starting early next year.

As part of an effort to help keep chocolate milk in school lunch programs, NMPF member coops have been joining the "Raise your Hand for Chocolate Milk" campaign. At the campaign's website, www.raiseyourhand4milk.com, supporters can sign a petition to promote chocolate milk for the country's school children.

NMPF’s long-term objective of limiting the pricing advantage enjoyed by the largest farms that bottle their own milk was realized with an October 21 decision by the U.S. Department of Agriculture (USDA) to close the loophole for the largest such bottlers.

In a decision published in the Federal Register, the USDA recommended that the producer-handler definitions in all Federal Milk Marketing Orders be amended so that only farms with bottled milk sales of three million pounds or less per month remain exempt from the pooling and pricing provisions. Producer-handlers with sales more than that will be treated the same as other bottling operations not owned by farmers, and will have to share their Class I proceeds with other farmers in their respective Federal Order Regions. The recommended decision will be open to public comment for 60 days.

“Once it is finalized, this ruling will accomplish what NMPF sought in its initial petition: to stop about a half-dozen large producer-handlers from cherry-picking Class I milk sales at the expense of other producers in Federal Order pools, and to discourage other handlers from growing through the use of this unfair exemption,” said Jerry Kozak, President and CEO of NMPF. “These largest operations should no longer enjoy a regulatory loophole intended for smaller players. Once you’re bottling three million pounds of milk monthly, you’re a large plant, and should contribute to the marketing pools just like any other large Class I handler.”

Under present rules, a milk bottler of any size can avoid paying into the Federal Order pools in its market if it produces all of its own milk. This regulatory exemption provides a large pricing advantage, and reduces average pay prices for other producers who lose out on shared Class I revenue.

In addition to ending the exemption for farm-owned bottlers, the decision would also tighten the requirements in the Arizona and Pacific Northwest Federal Order markets, which previously had limited producer-handlers to three million pounds of sales in each market. The USDA website has extensive information on the issue. USDA’s decision supports NMPF’s position and frequently cites NMPF’s testimony in its conclusions.

At a Senate Agriculture Committee hearing last week examining possible responses to the current dairy economic situation, Nebraska dairy farmer and NMPF board member Doug Nuttelman told lawmakers that NMPF is working on a series of approaches to help address milk pricing in the longer term.

Nuttelman, a farmer from Stromsburg, Neb., who also serves as a board member for Dairy Farmers of America (DFA), described to the committee the unprecedented financial stress on farmers caused by historically high input costs and low milk prices. While prices at the farm level are beginning to recover, they are still not projected to reach break-even levels until early next year. Nuttelman said that the existing federal safety nets for dairy farmers, the dairy product price support program and the Milk Income Loss Contract program, have not made up for the billions in lost revenue so far in 2009. In addition, the Federal Milk Marketing Order program has not effectively helped stabilize prices.

Even though Congress, USDA, and the Cooperatives Working Together (CWT) program have individually taken steps to help the industry recover, Nuttelman explained that the underlying problems that caused the dairy crisis still must be addressed.

He went on to outline NMPF's "Foundation for the Future," a long-term strategic plan put together by NMPF’s member dairy producer cooperatives. The plan is designed to positively impact the various factors influencing dairy supply and demand, and is intended to foster a climate of growth for the industry, while protecting dairy farmers. It involves the following elements:

1. New Risk Management Tools, in the form of a dairy producer income protection program, operating similar to a revenue insurance program. The purpose is to help dairy farmers survive financially difficult times by paying them an insurance indemnity (payout) when losses occur in their dairy operations.
2. Revamping the Federal Price Support Program, by reallocating government resources away from existing safety nets and revising them to direct resources more effectively.
3. Federal Milk Marketing Order (FMMO) Reform, examining the best way to mend the present system, taking into consideration the various concerns by different regions of the country, as well as the different roles that the cooperatives play in balancing supply and demand in the United States. Specifically, Nuttelman pointed to the need to rectify the present system’s “make allowance” provisions, which creates a winners and losers scenario.
4. A New Beginning for the CWT Program, looking at how to build on the proven track record of this dairy producer self-help program. In particular, CWT needs to involve more of the industry in funding it, and it must consider other means of reducing supply in the future.

Nuttelman urged the committee to thoughtfully consider recommendations to reform or reshape dairy policy in the future. The text for Nuttelman’s testimony is available here.