NMPF Offers Support to USTR Katherine Tai to Expand Markets

NMPF Chairman Randy Mooney and President and CEO Jim Mulhern met with U.S. Trade Representative Katherine Tai on May 3 to discuss the dairy industry’s trade policy priorities.

Issues addressed included the importance of expanding market access opportunities around the world for American dairy products and enforcement our agreements, including ensuring Canada fully implements its tariff-rate quotas for U.S. dairy consistent with the U.S.-Mexico-Canada Agreement (USMCA). Mooney and Mulhern also raised concerns with EU policies that restrict the use of common food names by American cheese producers.

In a follow-up letter to Ambassador Tai, NMPF laid out how the dairy industry’s commitment to sustainable dairy production and the real-world progress America’s dairy farmers have made to reduce greenhouse gas emissions can further USTR’s climate and sustainability goals if more export opportunities are available to U.S. dairy products.

NMPF, working with the U.S. Dairy Export Council, continues to advocate for the importance of opening and expanding global markets, enabling American dairy farmers to compete on a level playing field and meet the world’s dairy needs with high-quality, sustainable products.

House Coalition Supports School Milk Options

As the school year ends across the country, a bipartisan coalition of 57 House members asked USDA to ensure that school children have access to low-fat flavored milk as the new school year begins in three months. NMPF worked with letter authors Reps. Joe Courtney (D-CT) and Glenn “GT” Thompson (R-PA) to emphasize the importance of aligning USDA school milk regulations with the recommendations of the brand-new Dietary Guidelines for Americans (DGAs), the latest of which were finalized by USDA in January.

As with past versions, the DGAs continue to recommend consumption of low-fat and fat-free milk, with allowance for limited amounts of added sugar to these and other nutrient-dense foods.  Accordingly, USDA has the ability under current law to allow schools to serve low-fat flavored milk.  After USDA removed 1% flavored products a decade ago, the option was reinstated as part of a 2018 rulemaking, which then was overturned in court last year on issues unrelated to the dairy provisions.

NMPF was able to preserve the low-fat flavored milk option for the current school year through congressional appropriations but is now working with Congress to bolster this position for the longer term. The letter helps reinforce NMPF’s message and signals that Congress will be closely watching the issue as the Senate and House prepare to take up child nutrition legislation.

First USMCA Dispute Settlement Case Launched to Enforce Canada’s Dairy Obligations

Following a year of persistent advocacy, NMPF celebrated the Office of the U.S. Trade Representative’s (USTR) May 25 announcement that the agency will request a Dispute Settlement Panel be established to consider Canada’s failure to comply with dairy tariff-rate quota (TRQ) provisions in the U.S.-Mexico-Canada Agreement (USMCA).

This milestone move is a powerful message not only in the Canada dairy context but also in demonstrating to the world the willingness of the United States to use enforcement procedures when it’s clear a country is violating its agricultural trade commitments.

Since mid-2020 Canada has maintained dairy tariff-rate quota (TRQ) measures that run counter to its market access obligations under USMCA, including by awarding the bulk of the TRQs to Canadian processors, not providing fair or equitable procedures for administering the TRQs and not giving retailers any access to the TRQs. While the United States tried to resolve the matter through consultations with Canada, Canada refused to change its policies. With the broad backing of the U.S. dairy industry and clear bipartisan support from Congress for holding our trading partners accountable, USTR has now launched USMCA’s first dispute settlement case. As a result, a panel of judges will evaluate Canada’s actions and determine whether they must be revised to come into compliance with USMCA.

NMPF’s work on reaching this point has been extensive and includes working with the U.S. Dairy Export Council to support U.S. government negotiators during USMCA negotiations to secure the NAFTA upgrades on dairy trade that USMCA put in place.

Once it became clear that Canada had failed to abide by its commitments post-USMCA implementation, NMPF dug in further to arm U.S. government staff with information and to launch wide-spread outreach urging policymakers to support strong enforcement action. A marker of the high level of bipartisan support for just such a step was seen last August in a set of letters sent to USTR by Congress: one letter signed by 25 Senators, and a companion message from 104 members of the House of Representatives, both urging enforcement action be pursued. USTR commenced the first step in the enforcement process in December by initiating formal USMCA consultations with Canada regarding dairy market access. Canada refused to change.

Subsequent Congressional outreach and a direct meeting between the newly appointed U.S. Trade Representative, Ambassador Katherine Tai, and NMPF Chairman Randy Mooney and President and CEO Jim Mulhern on May 3 helped elevate USTR’s awareness and focus on the need for a dispute settlement case to bring Canada into compliance. As part of that process, NMPF worked with USDEC to coordinate a dairy industry letter signed by 68 dairy cooperatives, processors, state associations and dairy trade associations, pushing USTR take the necessary next steps. Meanwhile, Reps. Ron Kind, D-WI, and Tom Reed, R-NY, on May 21 joined with six other leaders, primarily from the House Ways and Means and Agriculture Committees on a bipartisan message to USTR urging further enforcement action.

Additional members of Congress have signaled their support. Rep. Elise Stefanik, R-NY, also sent a letter May 21 encouraging USTR to act and multiple members of Congress voicing their support for further dairy Canada market access enforcement steps during Amb. Tai’s trade oversight hearings this past month. This work, together with outreach from dairy voices across the country over the past year, ultimately resulted in the long-anticipated May 25 announcement that a formal panel will be established.

While the formation of a USMCA dispute settlement panel is a key part of ensuring U.S. dairy producers are provided the access USTR has worked hard to negotiate, it is only one piece of the puzzle dairy needs to be successful global. Even while celebrating this big step forward, NMPF continues to advocate consistently for the importance of expanding market access opportunities elsewhere in the world as well and for ensuring that our existing markets remain open and unimpeded for American dairy products.

NMPF Objects to Proposal Raising Taxes on Farm Assets

NMPF joined other key agriculture stakeholders on May 10 in sending a letter to the top Democrat and Republican in each chamber of Congress, urging them to not alter or eliminate long-standing tax code provisions fundamental to farm businesses.

“Because assets in agriculture are typically held by one owner for several decades, resetting the basis on the value of the land, buildings, and livestock on the date of the owner’s death under a step-up in basis is important for surviving family members and business partners to ensure the future financial stability of the operation,” said the groups in the letter, which came from NMPF and organizations including the American Farm Bureau Federation and the National Association of State Departments of Agriculture. The letter was addressed to House Speaker Nancy Pelosi, D-CA; House Minority Leader Kevin McCarthy, R-CA; Senate Majority Leader Chuck Schumer, D-NY; and Senate Minority Leader Mitch McConnell, R-KY.

Woven throughout Congress’s discussion of a broad, multi trillion-dollar infrastructure package are proposals for how to pay for the bill’s programs and projects, including several changes to the tax code. Two potential tax-code changes could impact farms and farmer assets in specific, yet common circumstances. The first would alter estate tax provisions, which could increase the taxes paid on inherited farm assets. The second changes how capital gains are taxed – repealing the “step-up basis” currently used – which could increase the taxes due on capital gains made on farm and farm-related assets.

While NMPF recognizes the importance of investing in the nation’s infrastructure, the negative impact of these proposed tax changes on producers and their businesses is too vast. These changes could make it more difficult for dairy producers to continue their operations without tax-caused disruption, including buying and selling land and other assets and for families to hold on to their farms through generational changes.

NMPF also joined 115 groups on May 25 organized through the Family Business Estate Tax Coalition (FBETC) in calling on the Leadership of the Senate Finance Committee and the House Ways and Means Committee to oppose these proposed tax changes. “Repealing stepped-up basis by imposing capital gains taxes when assets transfer ownership at death would force many family-owned businesses to liquidate assets or lay off employees to cover the tax burden,” the group’s statement then said. The coalition then urged committee leaders to “protect family-owned businesses from tax increases by defending stepped-up basis and opposing any changes to current law.”

NMPF was pleased to see both Democrats and Republicans in the House send their own messages to their chamber’s leadership, calling for both proposed changes to be dropped from consideration in infrastructure discussions, and will continue to be active in the discussions as they evolve.

CEO’s Corner: Trade + Sustainability = Dairy’s Next Frontier

Among all the great stories dairy can tell in 2021 as it celebrates National Dairy Month in June, from its reaffirmation by grocery shoppers to farmer leadership in COVID-19 vaccine drives, the sector’s gains in global trade is a true standout. U.S. dairy exports volumes reached a record in March, with the percentage of domestic milk production sent overseas that month the second highest ever. Revenues are also increasing – the $688 million worth of dairy products shipped abroad in March was the highest since 2014.

Trade is always top of mind at the National Milk Producers Federation, and of course at the U.S. Dairy Export Council, with whom we work closely. As the U.S. dairy-farmer organization that encompasses the full range of issues that shape a farmer’s success, we at NMPF are also focused on an important part of the trade story that’s less obvious, but increasingly important: how boosting dairy sales overseas depends on progress on sustainability investments at home. Just as it is in the United States, sustainability is increasingly becoming crucial for global consumers. The good news is U.S. dairy is a leader globally on sustainability just as it is on quality and affordability – crucial considerations for feeding the world, which ultimately benefits both farmers at home and consumers abroad.

First, the part we’ve always known: U.S. dairy farmers deliver affordable nutrition that meets global food-security needs. Nutrient-dense U.S. dairy products have nourished billions of people worldwide. They provide nutrients critical to preventing and addressing malnutrition, including high-quality protein, calcium, phosphorus, potassium, iodine, and vitamins B2 and B12. And because U.S. dairy combines high quality and competitive cost, its export creates broad-based nutritional benefits worldwide.

But another, increasingly important element of U.S. dairy’s appeal is its world-leading sustainability. Even as they produce high-quality, affordable products, U.S. dairy cooperatives and the entire industry are cultivating and supporting sustainable food systems that are good for people, animals, and the planet. This serves global consumers and reflects their needs. It dovetails with the environmental, economic and social aspects of sustainability as defined by the UN Food and Agriculture Organization, and it also aligns with the values of stewardship U.S. dairy farmers have always embodied. Sustainability matters to dairy, as U.S. consumers have discovered — and as the world increasingly knows.

U.S. dairy’s commitments are tangible and measurable. The industry’s 2050 Environmental Stewardship Goals and its Net Zero Initiative are putting the U.S. dairy sector on a path toward becoming carbon neutral or better by 2050 while optimizing water use and improving water quality. The same emphasis on sustainable production is at the core of the National Dairy FARM Program, which helps U.S. dairy farmers remain leaders in animal care, environmental stewardship, workforce development, antibiotic stewardship, and biosecurity.

Such sector-wide emphasis on best practices and sustainability leadership has already brought results. Innovative farming practices helped reduce dairy’s carbon footprint per gallon of milk by 19 percent from 2007 to 2017, while using 30 percent less water and 21 percent less land. UN FAO research has found that North America was the only region in the world to reduce farm-level dairy greenhouse gas (GHG) emissions between 2005 and 2015, even as milk production increased.

Choosing American milk products directly reduces global dairy emissions. That’s a great message for the world about U.S. milk. And make no mistake, the world needs what we have to offer. Global dairy consumption is expected to rise 16 percent in the next decade, and with competitors such as New Zealand and the European Union facing constraints on production due to their own policies, the opportunities for U.S. dairy brought through sustainable production are real.

So let’s raise a glass to sustainability this National Dairy Month. U.S. dairy farmers and its world of consumers are working to improve their health and the health of their planet every day. This is a success that can be sustained. And in the U.S. dairy community, it is what we pledge to do.

Dairy is a Cause to Celebrate on a Unique World Milk Day

Annual observances reflect the circumstances that surround them. 2021 is a unique moment, with light at the end of the COVID-19 pandemic in the U.S. and excitement for the future, mixed with apprehension and nervousness about what may lie ahead. World Milk Day on June 1 provides a moment to celebrate — for all the difficulties — dairy’s many impressive achievements of the past year and to consider how those accomplishments can be a springboard for whatever the next year brings. So, on this World Milk Day …

  • Celebrate that the COVID-19 pandemic brought with it a renewed appreciation for nutrition that can be counted on. That was reflected in robust sales of milk and dairy products in grocery stores that outpaced the overall gain in grocery spending. When times turned tough, Americans turned to … baking. And glasses of milk for their children, and cheese and yogurt for their deliciousness, and cream for the coffee brewed before another day of workplace Zoom. Dairy has been part of the resilience that’s seen people through.
  • Celebrate that U.S. dairy is increasingly nourishing consumers around the world. Hundreds of millions of people each day gain the nutrients critical to preventing and addressing malnutrition and promoting a healthy diet, including high-quality proteins, calcium, phosphorus, potassium, iodine, and vitamins B2 and B12. As of early this year, the S. share of the global milk market has risen to 21 percent, up from 19 percent a year earlier. That gain equals roughly 3.4 billion pounds of milk – equal to a month of production from California, the biggest U.S. milk-producing state. Dairy’s global presence – and benefits – are only growing.
  • Celebrate that dairy is asserting itself not just as a global food choice, but as a global sustainability leader. It’s often easy in the day-to-day to forget dairy’s genuine progress in responding to long-term, profound challenges such as climate change. But 2020’s launching of the Net Zero Initiative, along with the voluntary adoption of the U.S. Dairy Stewardship Commitment by companies representing three-quarters of the nation’s milk production, positions the industry well for generational leadership on one of the era’s most crucial concerns.
  • Celebrate that dairy is also rising to immediate challenges. Dairy farmers are recognized leaders in facing society’s most pressing need – to recover from the COVID-19 pandemic. By leading vaccination efforts in rural areas and small towns across the nation, dairy farmers and their cooperatives are playing a key role in the return to normal, a leading light after more than a year of masks, lockdowns, and traumas borne by millions.
  • And celebrate that, in times of intense political division, dairy works across party lines for widespread benefit. From playing a prominent role in the first agricultural labor bill to pass the U.S. House of Representatives in more than a generation, to backing measures that will support rural communities, and from providing necessary farm disaster assistance to crafting programs that serve historically underserved communities, dairy is unfailingly an agent of bipartisan progress, which strengthens the nation and keeps it moving forward.

That’s another thing that annual celebrations do – they reflect on the past, but they help keep people moving forward. There are many reasons, this World Milk Day, to be excited about what’s ahead. May your glass of milk help brace you for the journey. Raise it!

U.S. Dairy Applauds Congressional Dairy Champion Letter Urging USDA to Make Low-fat, Flavored Milk School Flexibilities Permanent

A bipartisan group of more than 50 members of the U.S. House of Representatives today sent a letter to U.S. Department of Agriculture (USDA) Secretary Tom Vilsack urging USDA to address the underconsumption of dairy foods among American school-aged children, specifically by making permanent a current flexibility that allows schools to offer low-fat flavored milk—a nutrient dense option for improving the quality of children’s diets.

The letter cites the 2020 Dietary Guidelines Advisory Committee report, which found that 79 percent of 9–13-year-olds, who rely on the school meal programs to meet their nutritional needs, are not meeting the recommended intake of dairy foods. “Both the 2015 and 2020 editions of the Dietary Guidelines for Americans (DGAs) amplified this concern, stating that, beginning at a young age, average dairy consumption falls short of recommended amounts,” the letter states.

While current USDA flexibilities allow schools to offer low-fat flavored milk through the 2021-2022 school year, USDA has before it a proposed rule that would make these flexibilities permanent. Importantly, this action would remain consistent with the 2020-2025 Dietary Guidelines for Americans.

The National Milk Producers Federation (NMPF) and International Dairy Foods Association (IDFA) today issued the following statements applauding the lawmakers’ proposed solution to addressing underconsumption of dairy among school-aged children:

“Milk benefits children in many ways – but it can’t benefit them at all if they don’t drink it, and ensuring that they do so requires a wide range of options,” said Jim Mulhern, President and CEO, National Milk Producers Federation. “Milk’s unique nutritional package is of great benefit to the nation’s schoolchildren, and this message to Secretary Vilsack strongly supports the critical goal of boosting consumption of essential nutrients of public health concern, including calcium, potassium, and vitamin D. The 2020 Dietary Guidelines Advisory Committee report found that 79 percent of 9-13-year-olds, who rely on school meals to meet their nutritional needs, are not meeting the recommended intake of dairy foods. Milk provides the foundation of a lifetime of better health, and we thank the signers of this letter, led by Reps. Courtney and Thompson, for recognizing and advancing its benefits.”

“Milk, including low-fat flavored milk, is an important way for children to access the nutrient profile of dairy, providing thirteen essential nutrients and unique health benefits,” said Michael Dykes, D.V.M., President and CEO, International Dairy Foods Association. “IDFA appreciates the leadership of the more than 50 champions for dairy in the House of Representatives for encouraging USDA to prioritize dairy in federal nutrition programs, specifically through the inclusion of low-fat flavored milk in school meal programs. Right now, USDA has before it a proposed rule that would return to flexibilities allowing flavored, low-fat milk to be served in child nutrition programs, and IDFA strongly encourages the USDA to adopt school milk flexibility in the rule as a long-term solution. By doing so, the USDA would help ensure more kids meet the recommended intake for dairy set forth in the 2020-2025 Dietary Guidelines for Americans.”

Dairy Industry Applauds USTR Decision to Pursue USMCA Dispute Settlement Case Enforcing Dairy Market Access Obligations in Canada

The U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF) praised today’s announcement that U.S. Trade Representative Katherine Tai has initiated a U.S.-Mexico-Canada Agreement (USMCA) dispute settlement proceeding over Canada’s administration of dairy tariff rate quotas (TRQs).

USDEC and NMPF have been calling for full enforcement of Canada’s trade obligations given Canada’s ongoing refusal to change how it handles dairy market access under USMCA. Initiating an official dispute settlement will, under USMCA rules, establish a panel to determine whether Canada has been violating its trade obligations. If the panel determines a lack of compliance, the U.S. would then be granted the right to impose retaliatory duties if Canada fails to fix its problematic TRQ administrative practices.

“On behalf of America’s dairy farmers, we thank Ambassador Katherine Tai for initiating the USMCA dispute settlement process by requesting the formation of a panel to examine Canada’s failure to provide access to its dairy TRQs in accordance with USMCA,” said Jim Mulhern, NMPF President and CEO. “Canada has failed to take the necessary action to comply with its obligations under USMCA by inappropriately restricting access to its market. This needs to stop and we are thankful that USTR intends to make that happen.”

“Our appreciation goes to the Biden Administration for moving forward with a dispute settlement action against Canada’s administration of dairy TRQs,” said Krysta Harden, USDEC President and CEO. “We have had long-standing and well-founded concerns that Canada undermines its trade agreements when it comes to dairy. Our trading partners need to know that failure to meet their agricultural trade commitments with the United States will result in robust action to defend U.S. rights – today’s action demonstrates just that. The expansion of dairy market access opportunities is critical for our industry. Today’s action is a critical step toward maximizing current export opportunities while sending a strong message in defense against the erection of future barriers in Canada and other markets as well.”

USDEC and NMPF have carefully monitored Canada’s actions regarding its USMCA dairy commitments and have urged the administration and Congress to make this a priority as soon as USMCA entered into force. The organizations highlighted for USTR and the U.S. Department of Agriculture the inconsistencies between Canada’s dairy TRQ allocations and Canada’s USMCA obligations. In a detailed filing submitted to the administration, NMPF and USDEC provided the agencies with a specific review of the Canadian TRQ system and an explanation of the negative impacts resulting from them.

The concerns raised by USDEC and NMPF have been echoed by a broad bipartisan coalition of members of Congress. Most recently, several leading members of the House Ways and Means and Agriculture Committees joined together on a bipartisan message to USTR urging further enforcement action and multiple members of Congress shared a similar message during Amb. Tai’s trade oversight hearings in May. Prior to that, Senators broached the topic with USTR during Ambassador Tai’s confirmation hearing process. Last August, 104 Representatives sent a letter to USTR and USDA asking for Canada to be held accountable to its trade promises while a letter in the Senate was signed by 25 Senators. USDEC and NMPF commend the continued engagement of so many members of Congress on this important issue.

Dairy Defines Sustainability, Land O’Lakes’ Kappelman Says

Sustainability is shaping the U.S. dairy industry’s future, making it better equipped to make sure the world has the nutrition it needs, says Pete Kappelman, a longtime dairy farmer and Land O’Lakes’ Senior Vice President of Member and Government Relations.

“U.S. dairy farmers are deeply involved and concerned about the many communities that they touch. And that starts with producing a safe, nutritious, affordable food, but it also includes things like being good stewards of the land, for the good of the planet,” as well as being able to pass a farm down to future generations, said Kappelman in a Dairy Defined podcast released today. “In order to feed a growing population, we’ve got to work together across continents, across cultures and markets to make abundant nutritious food available so everyone can realize their full potential.”

Kappelman also discusses industrywide sustainability commitments and Land O’Lakes Venture 37, which delivers market insights and technical expertise to agricultural development projects worldwide. The full podcast is here. You can also find the podcast on Apple Podcasts, Spotify and Google Podcasts. Broadcast outlets may use the MP3 file. Please attribute information to NMPF.

 

NMPF and USDEC Welcome Bipartisan Congressional Support to Enforce USMCA Dairy Provisions

From Krysta Harden, president and CEO of the U.S. Dairy Export Council (USDEC) and Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF):

“On behalf of America’s dairy farmers, processors, and exporters we thank Representatives Ron Kind (D-WI), Tom Reed (R-NY), and their colleagues in both parties for their leadership in calling for USTR to fully enforce USMCA provisions on Canada’s administration of its dairy tariff rate quotas,” said Krysta Harden, President and CEO of the U.S. Dairy Export Council (USDEC). “Canada has failed to take the necessary action to be in compliance with its obligations under USMCA by restricting access to the TRQs.”

“We appreciate the bipartisan work from Members of Congress to support America’s dairy industry on this important trade issue,” said Jim Mulhern, President and CEO of the National Milk Producers Federation. “Canada’s failure to take action over the past six months to fix the administration of its TRQs limits the ability of American dairy farmers and workers to benefit from the access that was negotiated in the agreement.”

USDEC and NMPF have closely monitored Canada’s actions regarding its USMCA commitments even prior to the Agreement entering into force. Canada has allocated its TRQs in a manner designed to discourage full use of the TRQs and limit imports of U.S. dairy products. Specifically, Canada is reserving the bulk of quota access to processors, who have little incentive to import U.S. dairy products, and are not providing fair or equitable procedures in administering the TRQs.

Leading this effort with Reps. Kind and Reed were Representatives Antonio Delgado (D-NY), Glenn ‘GT’ Thompson (R-PA), Suzan DelBene (D-WA), Dusty Johnson (R-SD), Jim Costa (D-CA), and David Valadao (R-CA).

Both organizations fully support calls from Congress for USTR to move forward with further enforcement action to resolve this issue.