NMPF Senior Vice President for Communications Alan Bjerga discusses positive trends in retail dairy sales, along with the broader implications of a recent court win for U.S. cheesemakers, on WEKZ radio. Grocery-store sales of cheese, butter, yogurt and other dairy products are up over pre-pandemic levels, as a consumer return to reliable, high-quality products during the pandemic takes deeper roots.
Another year, another flavor of COVID-related disruptions, this time the Omicron variant that’s spreading rapidly and disrupting schools and workplaces. But it isn’t 2020 all over again – too many lessons learned, too much resilience has been built up to see a full return to the massive economic and social dislocations of the past.
That’s especially true in dairy, where, despite all the marketplace challenges, demand has only kept growing.
The data don’t lie: Per-capita dairy consumption in the U.S. has been growing and is at the highest levels since 1960. Exports in 2021 are on pace for a record. We already knew that. Now, with last year’s retail sales data available, we can see that 2020’s gains in grocery-store purchases weren’t just a rechanneling of lost school and restaurant business toward at-home consumption. By comparing 2021 with 2019, we can see that dairy’s gains are built to last, according to data from industry researcher IRI.
Cheese is up. Butter, up. Yogurt and sour cream, up. Fluid milk declined as consumers shift toward dairy in other forms, but even that category had bright spots. Because grocery-store milk prices have increased, actual fluid-milk revenues rose nearly $900 million over the past two years. That’s actually a bigger gain than plant-based beverages, which saw sales of their more-expensive products rise only $513 million.
And fluid’s decline wasn’t uniform across all categories: Whole milk consumption increased 0.5 percent over the past two years and is now well-established as the most popular variety of conventional milk, showing that fluid milk is more popular when it tastes more like milk.
The facts show it, once again: Dairy is alive, well and growing. The products dairy farmers and cooperatives labor to create every day are only increasing in importance to U.S. consumers, and even more so worldwide. The trend is so consistent that restating it is almost becoming tiring to say.
But it’s 2022. Being tired doesn’t mean you stop.
With a new FDA commissioner nearing confirmation, NMPF Senior Vice President for Communications Alan Bjerga discusses the state of dairy labeling in the U.S., on RFD-TV. Bjerga also talks about U.S. dairy’s recent win over the European Union on gruyere cheese, which a court ruled is a common name not subject to geographical indication trade restraints.
Dairy prices for 2022 are projected at an eight-year high, with supply adjustments and booming exports across a wide range of products shoring up farmer balance sheets that have struggled with volatility during the pandemic era, NMPF Chief Economist Peter Vitaliano says in an NMPF podcast released today.
Due to tight supplies “not only is the outlook for milk prices the best in eight years, but that’s also the case for the individual dairy products,” Vitaliano said. Peter Vitaliano. “The big question is, with milk prices this good and feed prices not going up as fast as they were last year, how long is that tightness going to continue? And how soon will it be before we see some expansion of milk production again?”
Vitaliano, who also writes NMPF’s monthly Dairy Market Report, also encouraged farmers to sign up for the Dairy Margin Coverage program, which has a deadline of Feb. 18 for 2022 assistance. “The futures markets look very good at the moment, but there are many months to go. The history of dairy farmers second-guessing the markets, even based on the futures, is not very good. And again, given how inexpensive coverage is, our recommendation continues to be you should sign up for the program.”
NMPF resources on the Dairy Margin Coverage Program can be found here.
The full podcast is here. You can find and subscribe to the podcast on Apple Podcasts, Spotify, Google Podcasts and Amazon Music under the podcast name “Dairy Defined.” A transcript is also available here. Broadcast outlets may use the MP3 file below. Please attribute information to NMPF.
Shawna Morris, Senior Vice President for Trade with the National Milk Producers Federation and the U.S. Dairy Export Council, discusses U.S. dairy’s win over Canada in the first trade dispute ever brought before the USMCA’s dispute settlement panel on RFD-TV. The panel ruled against Canada in a case brought by the United States over its unfair allocation of quotas that limited U.S. dairy access to Canada agreed to as part of USMCA.
A judicial ruling has determined that “gruyere” is a generic style of cheese that can come from anywhere. The decision reaffirms that all cheesemakers, not just those in France or Switzerland, can continue to create and market cheese under this common name.
In the judicial decision made public yesterday evening, the Consortium for Common Food Names (CCFN), U.S. Dairy Export Council (USDEC), National Milk Producers Federation (NMPF), and a coalition of other dairy stakeholders prevailed in their sustained fight to preserve the ability of all actors in the U.S. marketplace to use generic terms.
Senior Judge T. S. Ellis III of the United States District Court for the Eastern District of Virginia upheld the August 5, 2020, precedential decision of the U.S. Patent and Trademark Office’s (USPTO) Trademark Trial and Appeal Board.
“Not only is this a landmark victory for American dairy farmers and cheese producers who offer gruyere, this win sets a vital precedent in the much larger, ongoing battle over food names in the United States,” said Jaime Castaneda, executive director for CCFN. “The European Union has tried for years to monopolize common names such as gruyere, parmesan, bologna or chateau. This verdict validates that we’re on the right path in our fight on behalf of American food and wine producers to preserve their ability to use long-established generic names.”
According to the Court’s decision, the arguments of the French and Swiss associations were “insufficient and unconvincing” and CCFN presented “overwhelming evidence that cheese purchasers in the United States understand the term GRUYERE to be a generic term which refers to a type of cheese without restriction as to where that cheese is produced.”
Meanwhile, Europe continues its aggressive and predatory efforts to confiscate names that entered the public domain decades ago. The latest attack was launched by the French and Swiss gruyere associations which had sought to register “Gruyere” as a certification mark in the United States, thereby enabling them to prevent use of the generic term by others in the U.S. marketplace. The USPTO determined last year that the application should be denied, in the process upholding the widespread generic use in the U.S. of the term “gruyere.”
“French and Swiss gruyere producers already have access to the U.S. market and the use of distinctive trademark logos,” noted Castaneda. “In fact, the Swiss association has already registered a logo certification mark with the USPTO for ‘Le Gruyère Switzerland AOC’ to help it uniquely brand Swiss gruyere. Despite this, both foreign associations appealed the USPTO’s ruling to the federal court last year.”
With support from USDEC and NMPF, their member companies, and non-member companies that contributed to supporting the opposition, CCFN dedicated extensive time and resources throughout the appeal process to demonstrate the extensive use of gruyere in the U.S. marketplace and persuasively argue that all cheesemakers and their customers should retain their rights to continue to produce and sell gruyere in the United States.
“This is a huge victory for common sense and for hard-working manufacturers and dairy farmers,” said Krysta Harden, USDEC president and CEO. “When a word is used by multiple companies in multiple stores and restaurants every day for years, as gruyere has been, that word is generic, and no one owns the exclusive right to use it. We are gratified that Judge Ellis saw this straightforward situation so clearly and upheld the USPTO Trademark Trial and Appeal Board’s finding that gruyere is an established generic term.”
“NMPF continues to firmly oppose any attempt to monopolize generic names like gruyere and to reject blatant European market-share grabs designed to limit competition,” said Jim Mulhern, NMPF president and CEO. “Today’s announcement is a landmark win for American dairy farmers and the commonly named cheeses they produce and sell around the world.”
CCFN, USDEC, and NMPF support valid geographical indications (GIs) – compound names associated with specialized foods from regions throughout the world – when used in good faith rather than to establish unfair trade barriers to the sale of common name foods and beverages.
Despite not taking bids for two weeks during December breaks, CWT member cooperatives secured 41 contracts in December adding 3.5 million pounds of American-type cheeses, 105,000 pounds of butter, 44,000 pounds of whole milk powder, 767,000 pounds of cream cheese and 300,000 pounds of anhydrous milkfat to CWT-assisted sales in 2021. These products will go customers in the Caribbean, Asia, Middle East-North Africa and South America, and will be shipped from December 2021 through June 2022.
CWT-assisted dairy product sales contracts for 2021 total 53.1 million pounds of American-type cheese, 16 million pounds of butter, 6.4 million pounds of anhydrous milkfat, 12.2 million pounds of cream cheese and 45.1 million pounds of whole milk powder. This brings the total milk equivalent for the year to 1.447 billion pounds on a milkfat basis.
Exporting dairy products is critical to the viability of dairy farmers and their cooperatives across the country. Whether or not a cooperative is actively engaged in exporting cheese, butter, anhydrous milkfat, cream cheese, or whole milk powder, moving products into world markets is essential. CWT provides a means to move domestic dairy products to overseas markets by helping to overcome U.S. dairy’s trade disadvantages.
The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT will pay export assistance to the bidders only when export and delivery of the product is verified by the submission of the required documentation.
FARM Program stakeholders identified care for sick animals, calves, and non-ambulatory cattle as dairy’s greatest priority to maintain focus on for Version 5 of FARM’s Animal Care Program as determined by an industry wide survey distributed through the fall with results presented at a virtual town hall Dec. 14.
The survey was intended to collect feedback from farmers, veterinarians, cooperatives, processors, and others within the dairy supply chain as planning commences for Version 5 of FARM Animal Care which will launch July 1, 2024. The survey questions were developed following a series of focus groups hosted last August by the National Dairy Farmers Assuring Responsible Management (FARM) Program. FARM received 682 complete responses, and staff were able to identify potential refinement opportunities for the next program cycle in addition to the top animal care priorities from stakeholders.
The survey also showed general support for making minor modifications and adding clarity to the FARM Animal Care Program while avoiding large overhauls. Most survey respondents, including farmers, showed they would willingly support small changes to better address animal care vulnerabilities. Respondents also were in consensus that standards that aren’t direct measures of good animal welfare practices should be updated to prioritize an outcomes-based approach.
For more information, visit the Version 5 development page.
NMPF was pleased to support Senator Tammy Baldwin’s (D-WI) efforts to bring attention to the need for Food and Drug Administration (FDA) enforcement of dairy standards of identity at the confirmation hearing of Dr. Robert Califf to become the next commissioner of FDA.
NMPF has long partnered with Sen. Baldwin on the issue, with the Senate committee hearing on Dec. 14 serving as the latest opportunity to bring critical attention to the agency’s lack of enforcement.
After speaking to the importance of dairy standards of identity, Sen. Baldwin asked Dr. Califf whether and when the FDA will begin enforcing its own labeling standards. Dr. Califf responded that he would make the issue a priority should he be confirmed as FDA commissioner, stating there is “almost nothing more fundamental about safety than people understanding exactly what they’re ingesting, so I am committed to making this a priority if I am confirmed.”
NMPF president and CEO Jim Mulhern thanked Sen. Baldwin for pressing Dr. Califf for “urgent action” on the issue, explaining that the issue “needs to be a top-of-mind issue for Dr. Califf” as the “ground has shifted since his previous tenure in the Obama administration, both as dairy imitators proliferate and the abuse of lax labeling enforcement creates nutritional confusion for consumers.”
NMPF has been advocating for the enforcement of standards of identity and integrity in the marketplace for four decades. The recent, long overdue FDA attention to the issue – including a pledge to provide guidance on enforcement in the coming months – provides an opportunity to lead to key progress toward enforcement. NMPF will continue to work with Sen. Baldwin, other members of Congress, and administration officials on the issue, now with Dr. Califf’s positive comments in hand.
The November margin under the Dairy Margin Coverage program was $9.14/cwt, up $0.60/cwt. from October, as higher milk prices more than offset gains in feed costs. The new calculation will generate a payment of $0.36/cwt. for $9.50/cwt. coverage, which will be the smallest since September 2020.
The all-milk price component of the November margin was $20.80/cwt., $1.10/cwt. higher than a month earlier. The November DMC feed cost was also higher for the month, by $0.50/cwt., with nearly equal contributions from higher corn and soybean meal prices. The November premium alfalfa hay price was down slightly from a month earlier after rising steadily almost every month since September 2020.
The end-of-year dairy futures indicate a possible small payment to $9.50/cwt. coverage for December, but the current strong milk price outlook makes this questionable for future months, given the current market outlook.
Signup for the 2022 DMC program is underway and will close on Feb. 18. This year’s program has paid out $1.2 billion as of January 3, and NMPF is urging dairy farmers who haven’t yet joined the program to do so. NMPF has a page of resources for members who may have questions here.
Robert Chesler, CEO of NMPF member cooperative United Dairymen of Arizona, emphasized the importance of securing new dairy market access opportunities through bilateral or multilateral Free Trade Agreements during a Dec. 14 Farmers for Free Trade (FFT) virtual town hall.
NMPF collaborates with the farmer trade group on town halls and meetings with public officials to tout the benefits of free trade and the need for the United States to pursue agreements that expand U.S. farm exports. The December town hall, headlined by Rep. Jim Costa (D-CA), focused on lost competitiveness for American dairy and agricultural producers as the U.S. government fails to move forward with new trade agreements.
During the virtual event, Chesler addressed the challenges that American dairy exporters face as trade competitors secure greater dairy market access in key export markets. Countries such as New Zealand, Australia, and the EU are aggressively pursuing new trade deals, which then harms the competitiveness of U.S. dairy products at a time when international demand is growing, Chesler said.
“We urge the Administration to seek Trade Promotion Authority renewal to go after new trade agreements,” Chesler said. “This is critical to realizing fully the potential of dairy markets in places like Vietnam, Indonesia, the United Kingdom and other major dairy purchasers. In the meantime, the U.S. should be using all types of trade tools to expand access and reduce barriers to U.S. exports with major agricultural importing markets.”
Chesler’s comments echoed statements made by Doug Chapin, Michigan Milk Producers Association chairman, at a Nov. 3 FFT town hall, part of NMPF’s effort to maintain grassroots pressure for the administration to act.
An NMPF and USDEC member based in Tempe, the United Dairymen of Arizona is a full-service milk marketing cooperative founded in 1960. Its farmer-owned manufacturing facility produces milk powder, cream, butter, and a variety of other dairy ingredients, many of which are exported around the world.
A year of NMPF advocacy to alleviate shipping supply chain disruptions for dairy exports took a significant step forward Dec. 8 with the U.S. House of Representative’s passage of the Ocean Shipping Reform Act.
With input from a joint NMPF-U.S. Dairy Export Council Supply Chain Working Group launched in last July to draw on the expertise of members’ dairy logistics staff, NMPF worked closely with Representatives John Garamendi (D-CA) and Dusty Johnson (R-SD), USDEC and other agricultural partners to shape the legislation, which passed the House with a broad, bipartisan vote of 364-60. The bill is intended to mitigate the delays, disruptions and unreasonable fees that dairy exporters have faced for more than a year.
Following this win, NMPF now is building Senate support for the bill by highlighting key provisions meant to ease disruptions that have cost dairy exporters over $1.3 billion through the first three quarters of 2021.
If signed into law, the legislation would amend the U.S. Shipping Act to provide new oversight and enforcement authority to the Federal Maritime Commission, expand opportunities for shippers to seek redress from ocean carriers, and increase transparency and accountability among foreign-owned ocean carriers. The bill specifically would reign in carriers’ ability to deny contracted export shipments, increase the availability of containers, improve protections against retaliation, and better address fees that are accruing outside of dairy exporters’ control.
As part of the push that led to the overwhelming House vote, NMPF spearheaded a Dec. 8 letter from 78 dairy cooperatives, companies and associations reiterated the legislation’s importance to the continued success of U.S. dairy exports, which are on pace for a record volume in 2021 when final numbers are compiled. A FAQ on the bill that NMPF and USDEC created is here.
“We thank Representatives Garamendi and Johnson for their leadership in working to address the challenges dairy and other agricultural exporters have struggled with for the most of this year,” said Jim Mulhern, president and CEO of NMPF, in a statement after House passage. “The Ocean Shipping Reform Act is an important move toward ensuring the international competitiveness of our dairy producers is not unfairly limited by abuses from ocean carriers. We look forward to working with the Senate to carry this momentum forward.”
