NMPF and the U.S. Dairy Export Council kicked off a new initiative in January to equip a select group of dairy producers and cooperative/manufacturing staff with the tools necessary to enhance grassroots communication on dairy trade issues to policymakers and the media.

The Dairy Trade Envoys Class of 2021, the first of its kind, includes 28 dairy farmers and industry staff who will help educate federal and state government officials and the media on the importance of U.S. dairy exports and dairy’s stance on various trade policy issues. Undertaking in-depth seminars on the facts of dairy trade, key policy issues, barriers facing U.S. dairy exports, and communicating with the government and the media, the Envoys will expand dairy’s voice and inform sound government trade policies and programs that support U.S. dairy exports.

Jim Mulhern, president and CEO of NMPF, welcomed the Class of 2021 on Jan. 19, telling the the group it’s engaged in a “critical effort to create a chorus of voices across the country speaking in unison to provide a very strong message at every level” regarding the value of dairy exports and dairy’s needs in the trade policy sphere.

NMPF staff in January met with the USTR team tackling Canada’s administration of dairy Tariff-Rate Quotas (TRQs) while continuing Congressional outreach to ensure that the new administration and Congress continue the critical task of holding Canada accountable to its commitments under the U.S.-Mexico-Canada Agreement.

After sustained engagement from NMPF and USDEC, the USTR announced Dec. 9 it would initiate official consultations with Canada on its failure to fully implement provisions of USMCA dairy tariff rate quotas. The consultations are the first official step to try to resolve unwarranted restrictions Canada is using to administer its dairy TRQs established by the new Agreement. As USTR noted in its announcement, Canada’s dairy TRQ allocation measures appear to violate several provisions of the USMCA, including its mechanism to set aside and reserve a portion of the quota to processors. USTR also stated that Canada is not providing “fair” and “equitable” procedures and methods for administering its TRQs.

Unless a mutually agreeable solution can be found with Canada through the consultation process, the next step in addressing Canada’s disregard for its USMCA commitments would be for the U.S. to initiate USMCA’s formal dispute settlement procedures.  A dispute settlement case could take a year or more to run its course, making it all the more important to proceed swiftly at this early stage.

The USTR decision came after months of groundwork by NMPF, working closely together with the U.S. Dairy Export Council, with both the administration and Congress. NMPF will continue its work, as further enforcement may be necessary to effectively address Canada’s unfair dairy policies.

NMPF in January joined with a large coalition of U.S. food and agricultural organizations in urging the Senate Finance Committee to confirm Katherine Tai as the new U.S. Trade Representative in light of her strong qualifications and familiarity with the core areas of USTR’s work that are so critical to U.S. food and agricultural exports. The Senate Finance Committee, which must approve her nomination, had not yet scheduled a date for that hearing as the month concluded.

Before Tai’s hearing but after her nomination, NMPF’s CEO Jim Mulhern had the opportunity to raise U.S. dairy farmers’ interests with Tai at a meeting she held with U.S. agriculture trade association CEOs. A summary of that meeting was issued by the Biden team. Mulhern underscored the importance of exports to America’s dairy sector and the need for both strong enforcement of existing details as well as new agreements to best support sales worldwide of the wide variety of products made with U.S. milk.

The monthly margin under the Dairy Margin Coverage (DMC) program dropped by $3.09 per cwt in November to $8.78 per cwt in December, mostly driven by lower milk prices, generating payments to producers under the USDA’s flagship risk-management program.

The all-milk price declined by $2.80 per cwt for the month, mostly because of a substantially lower December cheese price. The DMC margin was further lowered by a $0.29 per cwt boost in the feed cost added to it. On a per hundredweight of milk basis, the higher feed cost consisted of cost increases of 19 cents, 7 cents and 3 cents for corn, soybean meal, and alfalfa hay, respectively.

The December margin will generate a payment of $0.72 per cwt for $9.50 per cwt coverage that month; for the year, average DMC payments were $0.73 per cwt per month.

Current futures prices indicate that the monthly all-milk price in 2021 won’t rise above the December level until late summer, while corn and soybean meal prices will remain above December levels at least that long. That means monthly DMC payments will remain above the 2020 average for many months to come.

The National Milk Producers Federation on Jan. 11 called for changes to the so-called Class I fluid milk price mover to recover losses dairy producers have faced from the extreme price disruptions caused by the coronavirus pandemic, part of a suite of policies essential to advancing the well-being of dairy farmers and the entire industry in response to challenges brought to light by the COVID-19 pandemic.

“We are seeking consensus across the dairy industry for changes to the Class I mover that remedy economic damage to dairy farmers who have disproportionately suffered as a result of this pandemic,” said Jim Mulhern, President and CEO of NMPF, after a meeting of NMPF’s Executive Committee that discussed policy approaches. “The intent behind the current mover was a revenue-neutral solution to the concerns of fluid milk processors about hedging their price risk. With that balance severely upended due to the pandemic, a modified approach is necessary. We need a solution that provides more equity and balance between farmers and processors.”

The current Class I mover used to price fluid milk in federal milk marketing orders took effect in 2019. It applies a $0.74/cwt adjuster to the monthly average of Class III and IV prices. That replaced the previous Class I formula, which was based on either the Class III or IV price each month, whichever was higher – an approach that worked for farmers but made it more difficult for fluid milk handlers to hedge milk prices using the futures market. The 2019 change was intended to be revenue-neutral and was widely supported across dairy when it was implemented. But the significant gap between Class III and IV prices that has developed during the pandemic has exposed dairy farmers to asymmetrical losses not experienced by processors.

Dairy farmers may lose roughly $800 million in revenues under the current Class I mover, making its re-examination necessary.

The Executive Committee also supported a motion directing the organization to explore, with other industry stakeholders, updates to the pricing formula that better protect dairy producers. The committee also discussed other dairy-pricing improvements as part of an ongoing in-depth NMPF examination of important issues related to Federal Milk Marketing Orders. NMPF leadership directed staff to convene NMPF’s Cheese Pricing Task Force to further refine proposals involving both public and private sector organizations that could help address ongoing imbalances in the pricing of block and barrel cheese.

“These issues are challenging and complex, but also crucial to face if we are to best promote prosperity among dairy farmers, their cooperatives, and the entire industry,” Mulhern said.

It would be very difficult to exaggerate the extent of the challenges that the dairy industry, and the nation, has faced in the past year – and those challenges are far from over. But it’s also true that the promise of 2021 shouldn’t be underestimated. A new Congress and a new administration are getting to work. With bipartisanship perhaps more important than ever, it’s crucial that policymakers share a genuine desire to get beyond present difficulties and hit the ground running.

At the National Milk Producers Federation, that’s exactly what we are doing.

Our spirit of getting things done ranges across efforts in advancing legislation, regulatory policies, trade initiatives, and on-farm best practices. Here’s a glimpse of just a few things we’re working on.

In the new Congress, we’ll of course seek to advance dairy’s needs within COVID-19 relief legislation. Even as the stimulus passed late last year begins implementation, more assistance has been proposed. We will examine the need for additional resources as the legislative process unfolds.

Child nutrition programs are up for reauthorization, offering a chance to maintain and expand dairy options in school meals and build upon the strong reaffirmation of dairy’s nutritional value in the latest Dietary Guidelines for Americans. That recognition creates potential opportunities to improve school milk offerings, and the emphasis on nutrition also helps us with the anticipated re-introduction of the Dairy PRIDE Act, which would make FDA clear up consumer confusion over the nutritional content of dairy versus plant-based products.

Agricultural labor is already on Congress’s mind, with the new Biden administration’s plan to be active on broader immigration reform. All of agriculture continues to need legislation that provides permanent legal status for current workers, and dairy needs a guest worker program that meets its unique needs as a year-round perishable product, a high volume of which comes from operations that use immigrant labor.

Climate-related legislation is another near-certainty. That will give dairy the opportunity to advance the goals of the Net Zero Initiative that NMPF and partners launched in 2019 to reduce the sector’s carbon emissions to net zero by 2050 and improve water quality. Infrastructure or tax legislation may provide helpful vehicles for changes such as an Investment Tax Credit for nutrient separation technologies that would address water quality challenges, or to incorporate bipartisan legislation introduced last year that would remove barriers to farmer participation in environmental markets.

And all of this sets the stage for the 2023 Farm Bill, which may see field hearings and stakeholder discussions as soon as next year. That will entail a review of the Dairy Margin Coverage program and other risk management tools.

While we seek advances in Congress, we will also be working with the new administration to make sure that gains from the past four years are secured and that dairy continues to advance, domestically and internationally. Tops among trade concerns will be enforcing the US-Mexico-Canada agreement, particularly regarding Canadian dairy policies and Mexican technical standards and the treatment of common cheese names.

Restoring export growth to China through full implementation of the Phase 1 U.S.-China trade agreement and ending market-damaging retaliatory tariffs on U.S. dairy exports to China will also be important. The U.S. additionally needs to reenter the Trans-Pacific Partnership, and/or negotiate comprehensive, market-opening trade agreements with key Asian markets such as Japan, Vietnam, Philippines, as well as the UK, Kenya, and many others.

NMPF, along with its partner the U.S. Dairy Export Council, will continue to encourage science-based guidelines in multilateral organizations, including Codex, FAO, WHO and the United Nations. U.S. officials will also need to address long-entrenched regulatory barriers in the European Union while countering EU Geographical Indication (GI) policies that infringe on U.S. companies’ use of common food names in markets around the world.

Domestically, the regulatory front will be active. Dairy may need to defend gains made through the Navigable Waters Rule, which last year provided common-sense solutions to waterways regulation but may be under threat. Potential rules regarding PFAS chemicals will continue to pose challenges, as will calls to include dairy farms in the FDA’s Intentional Adulteration rule, needlessly adding more red tape to farmers’ lives. All of these efforts in Washington and worldwide touch the farms owned by producers in NMPF member cooperatives – and on the farm itself, we’re also striving for effective support.

While the USDA potentially approves manufacturing for the first Food and Mouth Disease vaccine in the U.S. and implements requirements to enhance the national FMD vaccine bank, a USDA grant makes NMPF the leader in efforts to bring enhanced biosecurity and the government’s Secure Milk Supply Plan into the National Dairy Farmers Assuring Responsible Management (FARM) Program.

In protecting against Bovine Tuberculosis, NMPF is also leading a multi-stakeholder task force with USDA to develop best practices to minimize animal-to-human and human-to animal-transmission.

And with FDA beginning to phase out remaining over-the-counter antibiotics for livestock production, NMPF and FARM will remain a resource for best practices of how to manage the new environment. Opportunities abound to create a more environmentally and economically sustainable dairy industry as well: The Biden Climate Change initiative may create opportunities for carbon credit trading for farms, and that initiative could advance water quality trading as well. Meanwhile, FARM Environmental Stewardship this year is adding resources to support industry goals and continuing to promote high-caliber human resources and safety management for on-farm practices.

All these initiatives add up to an incredible array of efforts, ranging from global trade to local farms. But these are incredible times. By moving forward with clarity and dedication, we can make them better. While we will certainly face many challenges in the year ahead, dairy’s gains also promise to be many in 2021. We look forward to achieving that promise.

Governing in 2021 is difficult, with a narrowly divided Congress and a new administration facing significant challenges, said Paul Bleiberg, NMPF’s senior vice president for government relations, in an NMPF podcast. Still, policy progress for dairy is possible, especially given the sector’s reputation for bipartisan cooperation, he said.

“The atmosphere on Capitol Hill is unlike anything I’ve ever witnessed before,” Bleiberg said. “There’s significant mistrust between the two parties right now. There’s a great deal of skepticism about what can be accomplished working together, and yet at the same time, a new administration trying to find its footing really during unprecedented times.”

“It’s possible that time heals a lot of things, and over the course of the next few weeks, people will get down to work,” Bleiberg said. “I think you’re starting to see a sense for that, but it starts off very heated.”

Bleiberg also discusses dairy’s policy gains in 2020 and how the government is already implementing coronavirus programs related to dairy approved in December, in the full podcast here. You can also find the podcast on Apple Podcasts, Spotify,  SoundCloud and iHeart Radio. Broadcast outlets may use the MP3 file. Please attribute information to NMPF.