The margin for June under the Dairy Margin Coverage program will be $8.63 per cwt, $0.37 per cwt lower than a month earlier, as rising feed costs negated any economic gains created by a higher milk price. The falling margin will generate a June DMC payment of $0.87 per cwt for producers who purchase coverage at the DMC maximum level of $9.50 per cwt for up to 5 million pounds of production history. Thus far, margins under maximum DMC coverage would generate a payment for every month of 2019.

The All-Milk Price in June was up by 10 cents a hundredweight over May, but the June feed cost calculation was $0.47 per hundredweight higher than a month earlier, as the effects of this year’s weather disruptions in the heart of the country began to take effect began to hit feed prices. On a per hundredweight of milk basis, the calculated feed cost for June rose 38 cents from May because of higher corn prices and 20 cents due to a higher soybean meal price, offsetting a decline of 11 cents in the average alfalfa hay price.

The June feed cost would have been 16 cents a hundredweight of milk lower, raising the June margin and lowering DMC payments by the same amount, had the dairy quality alfalfa pay price not been added into the calculation.

As of July 29, USDA’s DMC Decision Tool, which can be accessed online, projected the margins shown below. These calculations would generate payments averaging $0.51 per cwt., net of sequestration, for all of 2019 to producers who sign up for $9.50 per cwt coverage on up to 5 million pounds of production history. Coverage at this level costs $0.15 per cwt for a one-year signup, or $0.1125 for the year, if signing up for five years.  Producers have until September 20^th for 2019 enrollment.

NMPF’s DMC information page on its website offers a variety of educational resources to help farmers make better use of the program.

In welcome news for dairy producers, the U.S. Department of Agriculture met its projected timeline of beginning payments under the Dairy Margin Coverage program by early July.  NMPF thanked Agriculture Secretary Sonny Perdue for meeting its stated goal.

“DMC aid represents significant improvement from previous programs, and with dairy farmers facing a fifth year of low prices, receiving better assistance in a timely fashion is a matter of survival for some family farms,” said Jim Mulhern, president and CEO of the NMPF.  “The DMC program doesn’t replace a healthy market, but it is a crucial safety net in turbulent times.  All dairy producers should strongly consider enrolling, and to look closely at coverage at the $9.50 maximum level.”

More than one-third of all U.S. dairy farms have signed up for DMC since it was rolled out June 17, according to USDA.  Enrollment will continue through Sept. 20, and coverage is retroactive to Jan. 1.  NMPF has a resources page on DMC and other dairy assistance programs on its website.

Milk producers will do better the second time around than they did in the first round of Market Facilitation Program payments, which the U.S. Department of Agriculture announced July 25.

The trade-mitigation payments are the key component of the $16 billion aid package the White House has offered, intending to compensate agricultural producers for lost and diminished export markets resulting from the trade policy wars.

MFP payments will be made in up to three tranches, with the second and third tranches to be determined as market conditions and trade opportunities dictate. For dairy farmers, the payment rate is $0.20/cwt., compared to a $0.12 rate used in 2018. The first tranche will include 50% of the total payment, which for dairy farmers should mean an initial rate of $0.20/cwt. on half of their production history.  The other 50% will be divided between the following two tranches. If conditions warrant, the second and third payments will be made in November and January 2020. USDA will begin issuing the first payments in mid-to-late August.

The higher rate for dairy is a welcome development and reflects NMPF efforts both last year and this one to convince the administration that losses suffered by dairy farmers have been greater than the compensation provided to them.

While an improvement over the first MFP payments, NMPF still expressed concerns over details of the new program and will work with USDA to implement the initiative in as pro-farmer a way as possible. NMPF opposed USDA’s continued use of dairy farms’ outdated production history in assessing payments and will continue working with the agency and allies in Congress to push the USDA to update that data.

“We appreciate the efforts of USDA and the White House to assist farmers who have suffered significant losses due to retaliatory tariffs,” NMPF President and CEO Jim Mulhern said. “Dairy producers have so far lost more than $2.3 billion in revenues since tariff escalation began in earnest one year ago. USDA’s new approach raises the level of aid to dairy farmers from last year’s program, a step in the right direction. We also urge the department to revise the outdated production history information used to calculate payments, because these old production numbers lessen the effectiveness of the program.”

In addition to the direct payments, USDA will spend$1.4 billion to buy commodities and redistribute them to food banks, school cafeterias and other nutrition programs, including $68 million of milk. Another $100 million is earmarked for food and farm groups, including the U.S. Dairy Export Council, to develop new export markets. MFP signup at local FSA offices will run from Monday, July 29 through Friday, December 6, 2019.

The second round of government assistance for farmers, and the inability of the aid package to replace the near-term losses for dairy, shows the need for resolution to the trade wars, Mulhern said.

“Today’s announcement underscores that dairy farmers need to rely on trade, not aid, to prosper in a global marketplace,” he said. “Resolving the current trade impasse with China and aggressively expanding ties with other trading partners also is essential to make these aid packages unnecessary. We are also working with the administration and Congress to pass USMCA, which would immediately create new opportunities for U.S. dairy.”

Economic recoveries don’t happen overnight.

But we are starting to see enough hopeful signs to become more confident that, despite continued trade turbulence, better times may be near. While not exactly a boom, the second half of 2019 may provide producers with the best milk prices they’ve seen in half-a-decade – and with that, a chance to repair battered bottom lines while we work for policies that maintain the recovery and benefit dairy in the months and years to come.

Here’s the good news.

According to CME forecasts, dairy prices in the second half of this year may be the highest since the record-setting year of 2014. In contrast to this year’s first half, when the average milk price was $17.45 per hundredweight, second-half prices may average $19.22 per hundredweight. That’s more than $1.50 per hundredweight above any annual average since 2014, a clear improvement for producers.

Two main trends are driving higher prices: one that’s as old as dairy economics, the other one something that’s more important each year. First, dairy-product demand has been outpacing growth in supply. Increases in U.S. milk production have nearly ground to a halt after several years of expansion. Meanwhile, cheese and milk-powder demand is increasing enough to offset declines in other categories, raising the overall need for dairy products.

Second – and this is a testament to the quality of U.S. dairy and the competitiveness of its producers – exports continue to be strong by historical standards, despite severe losses in sales to China and, until recently, significant disadvantages placed upon us in Mexico, our largest market. Total U.S. dairy exports in May were valued at $539.1 million, the highest for that month in four years, thanks to rising cheese exports and world prices. U.S. dairy export volume is on track for its third-best year ever, trailing only 2018 and 2014. All this occurred despite a two-thirds drop in sales of milk powders, cheese, butterfat, whey products, and lactose to China.

To be sure, the export situation remains difficult. Overseas sales of every significant dairy product but cheese are down so far this year, and as a share of U.S. dairy production, exports thus far have fallen three full percentage points below the levels of 2018. But stronger world prices, particularly for dry milk ingredients, help strengthen domestic prices, even when exports are down. That remains good news for U.S. producers – but it also points us toward the work we need to do as markets slowly recover in the second half of this year.

It’s clear that, if U.S. dairy access to overseas markets were expanded, even more of our production could be shipped abroad, increasing the benefit to producers of greater demand for our products. We continue to press, with the White House and lawmakers in Congress, on the need to restore trade with China and aggressively pursue other markets through trade negotiations with Japan, and a greater focus on new trade agreements around the world. We need the administration to support initiatives that seek to boost U.S. dairy-market share in emerging regions and develop new markets, so that domestic producers aren’t shut out of growing global demand.

Maximization of Dairy Margin Coverage program benefits also remains important as an extra boost for farmers who  will not be made whole by a recovery that’s more than a mirage, but still not a boom. It’s a positive development that more than one-quarter of all U.S. dairies have already signed up for coverage, but we will keep pushing  for maximum signup before it concludes Sept. 20. With aid levels already known for the first six months of the year, joining DMC is a no-brainer – but we are available to help with decisions such as whether to lock in coverage for five years at a lower premium or go year to year, as well as explain more technical details of the program.

And, as always, we need to devote time to make sure that positive momentum in consumer demand and world markets is furthered by making sure the marketplace is fair for dairy and dairy producers. That means heading off regulations that impose burdensome business costs. It also means encouraging new rules (or at the very least, enforcement of existing ones) that ensure that milk is called milk and imposters are called something else. These initiatives can sometimes pale next to an immediate financial crisis, but they create the longer-term market conditions that help milk thrive in the years to come.

Higher prices create a rising tide for all of dairy. For all our efforts we will be the first to acknowledge that federal aid is no substitute for a vibrant market that puts more money in a farmer’s pocket.  That’s why we’re working for a stronger marketplace, and for putting farmers in a better position to adapt to it and to shape it.

After five years, it will be gratifying to see distress lessen for producers. That will only make us stronger as we tackle the next set of challenges.

We invite you to participate in our Twitter #dairychat next Wednesday, August 7 from 1:00 – 2:00 PM EST. Our goals for the chat are to solicit input from our followers, engage co-ops and farmer members on a variety of topics and increase awareness about the work of our organization.

There are six questions that will be scheduled to go out every 10 minutes. Please tag your answers with Q1, Q2, Q3, etc. and use the hashtag “#dairychat” and make sure your profile is public so we can find your tweets. Here are the questions:

• Q1 (1:00 PM): What do you perceive as being the biggest challenge for U.S. dairy farmers today? #dairychat
• Q2 (1:10 PM): Where do you go to learn about what’s happening in the dairy industry? #dairychat
• Q3 (1:20 PM): What is the most effective way to engage lawmakers? #dairychat
• Q4 (1:30 PM): When you have a policy-related question or issue, where is the first place you turn? #dairychat
• Q5 (1:40 PM): What platforms do you use to share your dairy story? Which one do you find is most effective? #dairychat
• Q6 (1:50 PM):What message about dairy farming do you want lawmakers to hear? #dairychat

If you plan to participate, please RSVP here so we can monitor and amplify your tweets!

Last month, U.S. Department of Agriculture (USDA) and the Department of Homeland Security signed a Memorandum of Agreement that formally outlines how the departments will transfer ownership and operational responsibility for the National Bio and Agro-Defense Facility (NBAF) from DHS’ Science and Technology Directorate to USDA. When completed, NBAF will be a biosafety level-4 laboratory in Manhattan, Kansas – the only large-animal BSL 4 lab in the United States’ mainland- for the study of diseases that threaten both U.S. agriculture and public health. The state-of-the-art NBAF facility will replace the aging Plum Island Animal Disease Center in New York. USDA also released a document outlining USDA’s strategic vision for NBAF summarizing how NBAF will serve as a national biosecurity asset to protect human and animal health, food safety and the ag economy.

Under the terms of the memorandum, DHS retains responsibility for completing construction and commissioning of the $1.25 billion facility, while USDA will assume responsibility for all operational planning and eventual operation of the facility. DHS’ efforts are on schedule and on budget to complete construction in December 2020 and to complete commissioning in May 2021, when ownership of NBAF will be formally transferred to USDA. USDA does not currently have an operational and maintenance budget for the NBAF facility, so new funds will need to be authorized and budgeted to ensure it becomes the world-class animal disease research center that has been envisioned.

Contact: Jamie Jonker

NMPF President & CEO Jim Mulhern met on June 27 with USDA Undersecretary Greg Ibach and other USDA staff to discuss
modernization of the National Tuberculosis Eradication Program. The TB eradication program, started in 1917, was last updated 2005, making its rules less applicable to current TB risks or the transformation of the U.S. dairy industry over the last 15 years.

In a wide-ranging discussion, Mulhern and Ibach touched upon several areas that will influence and necessitate modernization of the TB eradication program, including the white tail deer reservoir in Michigan, worker to animal TB transmission, and TB diagnostics. Traditionally, the TB eradication program has focused on whole-herd buyouts when TB has been discovered, however due to producer interest, more complex animal movements, and increasing average herd size, an effective Test and Remove Protocol which is easy to implement is needed as part of the modernization of the TB eradication.

Mulhern reiterated to USDA the dairy industry’s commitment to continue to be partner in the TB eradication program. The NMPF Animal Health and Wellbeing Committee has established a TB Task Force to identify dairy industry priorities and to work with USDA on modernizing the TB eradication program.

Contact: Jamie Jonker

In May, Jamie Jonker (NMPF) and Nick Gardner (USDEC) joined the U.S. delegation to the 87th World Assembly of the World Organization of Animal Health (OIE) held in Paris. The OIE is recognized by the World Trade Organization for setting science-based standards to help manage animal diseases and improve animal health and welfare. These standards can be adopted by countries into national regulations.

NMPF is closely monitoring several issues of interest raised at the meeting. Among them are the formation of a new antimicrobial resistance (AMR) working group that will begin working over the next year and updates on global outbreaks of animal diseases that could impact U.S. dairy exports, including foot and mouth disease, African swine fever and lumpy skin disease. Animal welfare was also discussed, although sections specific to dairy production were completed with NMPF input several years ago.

NMPF worked closely with other U.S. animal organizations and international partners including the International Dairy Federation (IDF) during the meeting to ensure visibility of the potential impacts of OIE policies on AMR and the state of these  disease outbreaks on trade in dairy products. The 87th World Assembly of the World Organization of Animal Health Final Report is available online. This work was made possible through support of the U.S. Dairy Export Council.

Contact: Jamie Jonker

NMPF is encouraging its members to familiarize themselves with the Per- and Polyfluoralkyl (PFAS) issue, the subject of a website launched by the Food and Drug Administration at the beginning of the month. With two U.S. dairies among publicly reported examples of PFAS-contaminated areas, the dairy community will need to be better-educated on PFAS, as well as their real and perceived risks, as the substances gain government and media attention in the coming months.

PFAS contamination has become a rising concern among municipalities, military installations and businesses that may have high levels of the substances in their drinking water and soil. The FDA site explains what the substances are and the issues surrounding it. PFAS encompasses nearly 5,000 synthetic chemicals that stay in the environment for potentially thousands of years – they’re sometimes referred to as “forever chemicals.” Typically used in non-stick products because of their impermeability to grease, water and oil, PFAS chemicals are also found in stain and water-resistant fabrics and carpeting,
cleaning products, paints, and fire-fighting foams.

PFAS can be found in food primarily through environmental contamination, including the use of contaminated water and soil to grow food for human or animal consumption. While health impacts have not been substantiated, the FDA is working to better understand the potential dietary exposures by sampling for contamination and reviewing the current authorized uses of PFAS in food contact applications.

Amounts of PFAS exceeding the Environmental Protection Agency health advisory limit have been found on two U.S.
dairies. One of the farms, located in New Mexico, was contaminated because of the use of firefighting foams containing PFAS on the Air Force base nearby. Water samples from the surrounding area were found to be 35 times greater than the advised limit. The second farm, located in Maine, was spreading sewage sludge which contained PFAS on to their fields. Neither farm is currently able to ship their milk, and further testing on dairy farms suggests the presence of exceedingly high PFAS levels may be isolated instances.

The Senate was the first to pass PFAS legislation as part of the National Defense Authorization Act which includes provisions regarding PFAS contamination. These include 1) authorizing the U.S. Geological Survey to develop advanced testing methods to detect and catalog PFAS in the environment, 2) allowing the Department of Defense to acquire PFAS-contaminated land surrounding airbases and to provide compensation to the land owners, 3) authorizing the Department of Defense to engage in remediation to clean-up ground water and 4) to provide water to the agricultural operations impacted.

The House legislation passed as well and includes giving the Department of Defense the ability to provide water to impacted agricultural operations, adds funding for the Centers for Disease Control’s nationwide PFAS health survey and similarly to the Senate bill, adds funding for the U.S. Geological Survey to conduct sampling for PFAS contamination. NMPF will be working hard to make sure all provisions from the Senate legislation are included in the final Bill.

In addition, NMPF has been working closely with the FDA, EPA, state officials, and IDFA to stay on top of the issue, emphasizing that it is a drinking water issue and to advocate on behalf of dairy farmers.

Contact: Clay Detlefsen

In response to the Citizen Petition on fake milk products filed by NMPF, the FDA has opened a docket for comments to be
submitted. NMPF urges stakeholders to submit comments here to ensure that the agency continues to hear why this is such an important issue. This docket closes August 20th and the FDA is suspected to make a ruling regarding plant-based foods labeling by early next year.

Details of the Petition:
The petition argues that the use of standardized dairy terms such as “milk,” “yogurt,” “cheese,” “ice cream” and “butter” on
non-dairy plant-based substitutes “falsely implies that the non-dairy substitutes are equivalent to and interchangeable with
standardized dairy foods.” It also lays out a road map for what these plant-based products could be labeled as if they wanted to continue to use dairy terms on their packages, and details why this isn’t a first amendment issue.

Contact: Clay Detlefsen

The dairy-labeling docket closed at the end of January with a total of just over 14,000 comments being filed. The docket, which was opened to “better understand how consumers use these plant-based products and how they understand terms such as, for example, ‘milk’ or ‘yogurt’ when included in the names of plant-based products, and if they understand the difference between plant-based products and dairy products including the basic nature, characteristics, ingredients and nutritional content.

The docket contained a wide array of comments ranging from people in support of properly labeling plant-based foods to people who were outraged the docket was even opened.

Many of the comments against the proper use of dairy terms were rants from plant-based consumers that appear to have misinterpreted what the docket was asking, with many making statements along the lines that “they are not so stupid they can’t understand that soy or almond doesn’t come from an animal. Duh,” which is not related to the issues of nutritional confusion the FDA is examining.

On the other side of comments, a pediatrician from upstate New York with no ties to the dairy industry wrote-in because of her concern with parents not understanding the nutritional difference between cow’s milk and plant-based products. Her comment stated: “It is nutritionally different and deceptively marketed to parents trying to be healthy. I was horrified to find one set of parents feeding hemp milk to a small baby. I had another baby with a serious lifelong medical problem being given a wobbly start on a vegan diet.” You can find her full comment here.

The American Academy of Pediatrics (AAP) felt similarly and stated: “Pediatricians report using the term ‘milk’ in the labeling of dairy-free alternatives has caused parental confusion, leading to the purchase of products that they assume contain traditional dairy ingredients and, thereby, unintentionally causing harmful nutritional deficiencies in their children.” You can find the full comments from the AAP here.

NMPF would like to thank everyone that submitted a comment. In response to this docket, we have requested a meeting with FDA to emphasize the findings in this docket and the importance of this matter for consumers’ health.

Contact: Clay Detlefsen