An economic analysis published today shows the serious impact of the European Union’s Skim Milk Powder (SMP) Intervention Program on the U.S. dairy industry—especially to U.S. farm-gate milk prices—in the years 2016-2019.

The report authors conclude that the United States was “economically harmed by the EU’s Intervention program for SMP” in three ways. First, the EU program depressed the global price of SMP, which lowered U.S. milk prices in 2018 and 2019, contributing to a $2.2 billion loss of U.S. dairy-farm income those years. The EU program also artificially inflated its global export market share, resulting in drastically lower market share for U.S. dairy exporters and other SMP exporters and U.S. dairy export losses of $168 million from 2018-2019. Finally, the analysis shows that when the EU unleashed its stockpile of “Intervention SMP” onto the global marketplace, the disposal of the product had harmful effects on the competitiveness of the United States in historically important export markets including Southeast Asia.

In a letter to U.S. Trade Representative Robert Lighthizer and Agriculture Secretary Sonny Perdue, the leading dairy trade associations in the United States—the International Dairy Foods Association (IDFA), the National Milk Producers Federation (NMPF), and the U.S. Dairy Export Council (USDEC)—point to this economic analysis as proof that the EU’s SMP Intervention program wreaked havoc on the U.S. dairy industry. In their letter, the groups urge the U.S. government to prevent the EU from using future Intervention practices to effectively dispose of publicly stockpiled EU dairy products at discounted prices in the international markets. In May, dairy groups from across the Americas joined to call for an end to the EU Intervention Program.

“It is time for the EU to stop dumping government-purchased SMP on the world market and implementing policies that undermine global dairy markets under the guise of protecting its farmers,” said Michael Dykes, D.V.M., president and CEO of IDFA. “The EU program has harmed U.S. dairy export prospects by artificially inflating the EU’s market share and damaging the competitiveness of the United States in historically important export markets.”

“This report puts into hard numbers the bitter truth that U.S. dairy farmers already know: the EU’s dump of intervention stocks onto the world market depressed farm-gate milk prices in the U.S. in 2018 and 2019,” said Jim Mulhern, president and CEO of NMPF. “Now, as farmers and cooperatives are working tirelessly amid a global pandemic to keep an essential food ingredient moving to those markets that need it most, it’s time to do the advance work necessary to ensure we don’t see a repeat of those harmful impacts from EU Intervention policy in the future. The EU SMP Intervention Program needs serious reforms and the Administration should examine the best tools at its disposal to help drive that needed change.”

“Europe’s SMP Intervention Program is just one tool in the EU’s arsenal of destructive trade policies meant to propel their dairy industry forward at the expense of the rest of the world. As the global dairy market reels from unprecedented disruption, and the consequences of the use of this EU policy to disrupt trade have become much clearer, it’s essential to drive forward reform of this program. Looking ahead, if the EU is allowed to again dump government stockpiles on the world market, it will harm U.S. farmers and processors and erode efforts to advance fair trade policies that create greater market access for U.S. dairy,” said Tom Vilsack, president and CEO of USDEC.

The EU tripled the annual ceiling of SMP Intervention purchases in 2016 from 109,000 metric tons (MT) at the beginning of the year to 350,000 MT by June 24, 2016. The EU continued its Intervention Program, accumulating the equivalent of 16 percent of the global market in government storage. As global SMP demand began to improve in 2018, the EU released its stockpile of SMP onto the commercial market. During the 18-month period from January 2018 to June 2019, the EU sold, via a tendering process, 379,453 MT of Intervention product, depressing global prices for SMP below what they otherwise would have been. The EU government implemented no restrictions to prevent the product from entering the global market. The SMP Intervention product entered export channels since the domestic market was not capable of handling this volume without an adverse impact on the domestic price of SMP, and hence the farm-gate milk price. Instead, the negative impacts were felt by others, including U.S. farmers and exporters, in 2018 and 2019.

The economic impact analysis, “Impact of the European Union’s SMP Intervention Program on the United States: 2016-2019,” was written by Kenneth Bailey, Ph.D. and Megan Mao, B.S., from Darigold, a wholly owned subsidiary of the Northwest Dairy Association based in Seattle, Wash.

The United States is now one of the world’s top dairy exporters, shipping high-quality, wholesome, nutritious dairy products to consumers in more than 140 countries. In 2019, U.S. dairy exports were valued at more than $6 billion, according to USDEC, an increase of 8 percent from 2018. U.S. export volumes of SMP/Non-Fat Dry Milk (NFDM) topped 700,000 tons for the second straight year in 2019.

Driven by greater global dairy demand, U.S. dairy exports have nearly tripled since the early 2000s, and the United States is now the world’s third-largest dairy product exporter behind New Zealand and the European Union (EU). As the global population continues to grow and consumers everywhere purchase more delicious dairy products to consume inside and outside of the home, the U.S. dairy industry will continue to advocate for a rules-based system of free trade that provides greater certainty and eliminates barriers for American producers and processors. This report concludes that the United States and other exporters are harmed when publicly stockpiled product accumulates and is disposed of on the global market.

The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) sharply criticized Canada’s allocation of its tariff-rate quotas (TRQ) under USMCA, released Tuesday, June 15. USDEC and NMPF call attention to the fact that these TRQ allocations undermine the intent of USCMA’s dairy provisions by thwarting the ability of the U.S. dairy industry to make full use of the trade agreement’s market access opportunities.

USDEC and NMPF have repeatedly warned that the full benefits of this carefully negotiated trade agreement will not materialize without careful monitoring and stringent enforcement of Canada’s USMCA commitments. The U.S. dairy industry urges the U.S. Trade Representative (USTR) to immediately raise this issue with Canada and insist that Canada adheres faithfully not just to the letter of its commitments under USMCA, but to its spirit as well.

“Canada’s administration of previous TRQs under existing free trade agreements gave the U.S. dairy industry ample cause for concern, which has unfortunately been confirmed by the announced TRQ allocations,” said Tom Vilsack, president and CEO of USDEC. “Canada’s actions place the U.S. dairy industry at a disadvantage by discouraging utilization of the full use of the TRQs and limiting the market access granted by USMCA. We urge the U.S. government to act immediately to ensure that these provisions are implemented in good faith so that the U.S. dairy industry is able to reap the full range of benefits negotiated by USTR and its interagency partners at U.S. Department of Agriculture.”

USMCA will enter into force July 1, 2020 and contains important provisions to the U.S. dairy industry that will facilitate the smooth flow of U.S. dairy products throughout North America at a time of critical need and economic uncertainty. However, Canada has announced the distribution of the TRQs in such a way as to discourage high value food service or retail products from entering the market.  Most of the TRQs are given to competitors who have no incentive to import products.

“U.S. dairy farmers and cooperatives are ready to help increase deliveries of high-quality U.S. dairy products to the Canadian market, but Canada’s TRQ allocations fall far short of the full potential of its commitments under USMCA,” said Jim Mulhern, president and CEO of NMPF. “Canada has chosen once again to manipulate its access commitments in order to protect its tightly controlled dairy market and

U.S. farmers will bear much of the brunt of this biased interpretation of USMCA’s dairy provisions. USTR should act quickly to ensure Canada is held strictly responsible for abiding by the intent of USMCA to promote fairer trade between our nations.”

ARLINGTON, Va. – The committee charged with recommending dietary guidelines for Americans needs to consider the full range of studies on different types of fats and their role in a healthy diet when crafting its final report, noting that scientific understanding has evolved, the National Milk Producers Federation said in letters to Dr. Barbara Schneeman, the chairwoman of the committee, as well as the secretaries of Agriculture and of Health and Human Services.

“We would like to reiterate our strong view, as explained more fully in previous comments to the DGAC, that a body of science in recent years has found that dairy foods, regardless of fat level, appear to have either neutral or beneficial effects on chronic disease risks,” NMPF wrote in a letter co-signed with the International Dairy Foods Association sent earlier today. “We are concerned that a number of well-recognized studies appear to have been excluded from consideration.”

Focusing on the need for the most robust review of science possible, the letter asks the committee “to complete its review by including all relevant scientific studies that bear on these questions and, if the findings so indicate, recommend Americans incorporate dairy foods in all forms as an integral part of all dietary patterns.”

If the committee fails to examine the validity of existing dietary advice, “this will represent a lost opportunity to share newer science with consumers, health professionals and policy makers and contribute to ongoing confusion about the healthfulness of dairy,” the letter said.

The Dietary Guidelines for Americans Committee is discussing its draft conclusions and the final advisory report Wednesday, with final guidelines expected by the end of the year. A copy of the letter is available here.

For years, a variation of this sentence has appeared in nearly every news story that touches on fluid milk consumption: “Milk sales are down while plant-beverages are rising.”

It’s easy shorthand to use because while it has been a factually accurate statement in its own limited scope, it can be used toward fantastical ends, such as overhyping the rise of plant-based drinks or crafting a false narrative about dairy trends when dairy, as a whole, is seeing its highest per-capita consumption levels in decades. The assertion will never require a correction in a newspaper, so it persists.

Except … it’s no longer true. The coronavirus crisis appears to be resetting consumer grocery habits, and early signs are that that some of these changes — including increased milk purchases — are continuing as the country re-opens. If current trends hold, milk’s revival may finally force a revision of one of the few non-fake talking points the “death of dairy” myth ever had.

This year’s data tells the story. While milk outsells plant-based imitators by a margin more than 10 to 1, 2020 began as another year of slow decline for milk sales in stores. And indeed, as the shorthand would have it, plant-based volumes were increasing.

Then the crisis hit – and behavior changed.

As consumers emptied store shelves, both dairy and plant-based beverages saw gains – but the sizes of those gains were drastically different. While consumers bought 7.9 million more gallons of plant-based beverages during the two peak weeks in March than they did during the same period a year earlier, milk demand exploded by more than 45 million gallons, erasing its year-to-date decline in less than two weeks.

This dramatic turnaround was important for dairy farmers. Literally, retail consumers helped keep dairies in business as food-service orders disappeared and federal disaster assistance hadn’t yet arrived. But after the shock of lockdowns faded and everyone had already stocked up, something interesting happened: People still bought more milk. That five-to-one advantage established in March has stayed steady through May.

When times got tough, consumers seemed to want to return to the comfort of natural, wholesome and nutritious foods like milk, eschewing the marketing hype of plant-based imitators whose taste and nutrition profile stack up poorly against the real thing.

Future retail trends are tough to predict, especially in this environment. When life becomes more “normal” and as restaurants re-open, do consumers bring home as many bottles of milk from the grocery store? When schools return, do parents buy less milk for their children? These are open questions.

What we do know is this: Milk is back in grocery carts, in a big way. Its gains are much greater than its self-proclaimed competitors, and they’re showing signs of sticking. Consumers are navigating new grocery realities – and they are creating them as well. The return of milk may be one that’s built to last. That makes it time to pause the “milk is struggling” stories. And it means even less support for the “death of dairy” myth.

Might be smart to toss that one altogether.

NMPF Senior Vice President of Membership Services and Strategic Initiatives Chris Galen discusses the Coronavirus Food Assistance Program (CFAP) and how dairy farmers can enroll on Dairy Radio Now.

Higher milk prices and effective federal policies – both encouraged by dairy’s unity in responding to the coronavirus crisis – are dramatically turning around dairy-farmer fortunes and presenting opportunities to build on positive lessons learned, according to James “Cricket” Jacquier, a member of the NMPF’s executive committee and chairman of the board for Agri-Mark.

For all the disruption the crisis has brought, and for all the questions that have yet to be answered, dairy’s response to it has shown a strength in the industry, said Jacquier, whose Laurelbrook Farm outside East Canaan, Connecticut, is a fourth-generation dairy. Farmers can use their experiences to advance their message of providing wholesome, essential products to consumers, he said.

Responding to crisis “really brings the families together, it brings your employees together, it brings the cooperatives together,” he said. Now, “we’ve got to step it up, and we’ve got to be out there just telling the consumers what we do and have them have a better understanding of where their food comes from.”

To listen to the full discussion, click here. You can also find this and other NMPFs podcasts on Apple Podcasts, Spotify,  SoundCloud and Google Play. Broadcast outlets may use the MP3 file. Please attribute information to NMPF.

 

 

The National Milk Producers Federation, the largest U.S. dairy group, today applauded the bipartisan Growing Climate Solutions Act introduced in the U.S. Senate, calling it an important step toward reducing agricultural carbon emissions that aligns well with dairy’s goal to achieve carbon neutrality or better by 2050 through the industry’s Net Zero Initiative.

The legislation, introduced by Senator Mike Braun (R-IN) and Senate Agriculture Committee Ranking Member Debbie Stabenow (D-MI), along with Senators Lindsey Graham (R-SC) and Sheldon Whitehouse (D-RI), encourages sustainable farming practices by making it easier for farmers to participate in carbon markets. The Growing Climate Solutions Act creates a certification program at USDA to help solve technical entry barriers that make it difficult for farmers and forest landowners to participate in carbon credit markets.

“We commend Senators Braun and Stabenow , as well as Senators Graham and Whitehouse, for their bipartisan work to facilitate greater farmer participation in environmental markets,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “Dairy farmers are environmental stewards who value proactive approaches to sustainability, and this legislation will provide a welcome boost to their efforts. We look forward to working with Senators Braun, Stabenow, Graham, and Whitehouse to advance this bill in Congress.”

Mulhern noted that carbon markets will play an important role in the dairy sector’s goal of net-zero emissions by 2050, an industrywide effort that will require public-policy support. “Net zero is good for dairy farmers, good for consumers and good for the planet,” Mulhern said. “The Growing Climate Solutions Act is part of how Congress can be leaders in this effort, and we are excited to see lawmakers sharing our goal of a climate-friendly future.”

Dairy farmers are eligible for direct support through USDA’s Coronavirus Food Assistance Program (CFAP). CFAP provides direct financial assistance to agricultural producers, providing them the ability to weather the economic uncertainty caused by COVID-19. USDA is accepting CFAP applications through September 11. Call and set up an appointment with your local USDA Farm Service Agency (FSA) office to determine your eligibility and to apply for assistance.

 

Am I eligible for assistance under CFAP?

CFAP payments are eligible to all dairy operations with milk production in January, February, and/or March 2020, including any dumped milk production during that period. All farmers who produced milk between January and March 2020, including those who went out of business or otherwise stopped producing milk during this period or after, are eligible. Production enrolled in risk management programs, including Livestock Gross Margin, Dairy Revenue Protection, Dairy Margin Coverage or forward contracts, also qualifies for CFAP payments.

 

What is the payment level for milk production?

For dairy, a single payment will be made derived from two funding formulas intended to calculate losses caused by the coronavirus. The first and larger component is calculated from a producer’s certification of milk production for the first quarter of calendar year 2020 multiplied by $4.71 per hundredweight. The second component of the payment is based on a 1.014% increase in that first quarter production, multiplied by $1.47 per hundredweight. Overall, the payment amounts to $6.20/cwt. for a farm’s production in January through March of this year.

 

What other CFAP categories am I eligible for?

Besides milk production, dairy farmers may be eligible for payments under the following categories. Click here for the full list of eligible commodities.

Livestock: Cull cows, Steers, Bull calves, Mature bulls, Cull heifers

Non-Specialty Crops: Corn (including high moisture corn), Sorghum, Soybeans

 

How does the livestock payment affect my dairy operation?

Livestock that are no longer used for dairy production and have entered the beef cattle market, if all other eligibility requirements are met, may be eligible for CFAP and would be categorized accordingly. USDA has provided guidance to assist dairy producers in determining eligibility. The payment rates listed below are all per head.

A single payment for livestock will be calculated using the sum of the producer’s number of livestock sold between Jan. 15 and April 15, 2020, multiplied by the payment rates per head, and the highest inventory number of livestock between April 16 and May 14, 2020, multiplied by the payment rate per head. For more information, visit USDA’s CFAP webpage for livestock.

 

How do payment limits work under CFAP?

CFAP payments are subject to a per-person and legal entity payment limitation of $250,000. This limitation applies to the total amount of CFAP payments made with respect to all eligible commodities. Unlike other FSA programs, special payment limitation rules are applied to participants that are corporations, limited liability companies, and limited partnerships (corporate entities). These corporate entities may receive up to $750,000 based upon the number of shareholders (not to exceed three shareholders) who are contributing at least 400 hours of active personal management or personal active labor.

For a corporate entity:

• With one such shareholder, the payment limit for the entity is $250,000;
• With two such shareholders, the payment limit for the entity is $500,000 if at least two members contribute at least 400 hours of active personal labor or active personal management, or combination thereof, with respect to the operation of the corporate entity; and
• With three such shareholders, the limit is $750,000 if at least three members contribute at least 400 hours of active personal labor or active personal management, or combination thereof, with respect to the operation of the corporate entity.

 

Does money I’ve received this year through the Small Business Administration’s Paycheck Protection Program (PPP) and/or the Economic Injury Disaster Loan (EIDL) program count against the payment limits in the CFAP program?

No. Small Business Administration’s loan programs, including the PPP and EIDL program, are separate from USDA’s coronavirus payments. Farmers can apply for financial assistance through both agencies, and assistance received from one agency should not affect assistance received from the other.

 

Are there special provisions for seasonal producers or organic producers?

There are no special provisions for seasonal dairy producers or organic dairy producers under the current program.

 

How do I apply?

A CFAP Payment Calculator is available to assist with applications. This Excel workbook allows you to enter information specific to your operation to determine estimated payments and populate the application form. Producers interested in filling out the application manually can also download the application form, AD-3114.

Producers self-certify when they apply for CFAP, and documentation is not submitted with the application. But you may be asked for additional documentation to support your certification of eligible commodities, so you should retain the documentation used to complete your application.

FSA staff at local USDA Service Centers will work with farmers to file applications. Applications may be submitted via mail, fax, hand delivery, or via electronic means. Please call your office prior to sending applications electronically. Visit www.farmers.gov/cfap for more information. Applications will be accepted through September 11, 2020.

 

When should I expect to receive my payment?

To ensure the availability of funding throughout the application period, producers will receive 80 percent of their maximum total payment, up to the payment limit, upon approval of the application. The remaining portion will be paid at a later date as funds remain available.

 

Should I expect any additional aid in the coming months?

Congress is considering additional legislation to respond to the significant impacts of the COVID-19 pandemic. The House-passed HEROES Act includes a number of beneficial provisions for dairy farmers, including additional direct payments, and we anticipate that the Senate will begin work on a bill in the coming weeks. NMPF will keep dairy farmers updated about any subsequent aid made available.

Dairy farmers and their allies are encouraged to spend a few minutes customizing our call-to-action letter urging Congress to prioritize dairy assistance in its next coronavirus assistance package.

 

Visit www.farmers.gov/cfap for additional information about CFAP and www.nmpf.org/coronavirus for a full listing of coronavirus resources for dairy farmers and co-ops. Please email info@nmpf.org with questions or comments about CFAP and how it is being administered in your local office.

The 40 contracts CWT member cooperatives secured in May added 5.1 million pounds of American-type cheeses, 1.4 million pounds of butter, 456,357 pounds of cream cheese, and 1 million pounds of whole milk powder to total CWT-assisted sales in 2020 This brings the total milk equivalent for the year to 532 million pounds on a milkfat basis. These products will go customers in Asia, Europe, and the Middle East, and will be shipped May through September.

CWT-assisted 2020 dairy product sales contracts total 20.8 million pounds of cheese, 6.2 million pounds of butter, 2 million pounds of anhydrous milkfat (AMF), 2.9 million pounds of cream cheese and 16.8 million pounds of whole milk powder. All this product is scheduled to ship in the first nine month of 2020.

Exporting dairy products is critical during these challenging times 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, pasteurized process cheese, or whole milk powder, the 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.

All cooperatives and dairy farmers are encouraged to add their support to this important program. Membership forms are available at http://www.cwt.coop/membership.

The Fourth annual FARM Evaluator Conference will go virtual this year, unfolding in two sessions on July 21^st and 22^nd.

The FARM team is excited to provide this opportunity, which will allow more evaluators to participate from across the country. Focused over the years on professional development and networking, this year’s conference will include NMPF Communications Team members, Alan Bjerga and Theresa Sweeney-Murphy, to lead the group in media training.

Additionally, a panel featuring the veterinarian community, extension and beef industries will share their success in broad producer and stakeholder engagement related to the FARM Program.  Other topics will include creating a positive on-farm culture, updates on the dairy industry’s sustainability initiatives and key areas that continue to give evaluators valuable expertise to share with their producers.

Cooperative management and staff that are not FARM evaluators who are interested in attending can email dairyfarm@nmpf.org to register for the event.