A combination of rising supplies and fears of lower demand due to the coronavirus worsened the economic outlook for U.S. dairy producers, with margins under the Dairy Margin Coverage program falling.

The January 2020 Dairy Margin Coverage margin was $10.72 per cwt., a drop of $1.23 per cwt. from the December margin, according to USDA data. This drop was the combined outcome of a $1.10 per cwt. lower all-milk price and a $0.13 per cwt. higher calculated DMC feed cost for January, compared with a month earlier. The January margin was $0.27 lower due to the incorporation of dairy-quality alfalfa in the DMC feed cost formula, which began in 2019.

At the end of February, USDA’s DMC Decision Tool, which can be accessed online, projected the DMC margin would drop sharply for the first several months of 2020 and fall below the $9.50 per cwt. coverage level for April through August. Based on that forecast, coverage at that level would pay an average of $0.18 per cwt. for all of 2020, which was above both the one-year and the 5-year discounted costs of that coverage.

As of Feb. 18, USDA reported that 13,024 dairy operations, or 47.71 percent of operations with production histories, had enrolled in the 2020 DMC program. Many of these enrollees are operations that signed up for 5-year coverage last year. Enrolling in the DMC program at the generous coverage and affordable premiums available will always be a highly recommended risk-management option for dairy farmers, and this year is a case in point. Just a month ago, the USDA DMC Tool indicated that the DMC margin would not drop below $10.00 per cwt. anytime during 2020 and thus would generate no payments during the year.

The DMC information page on NMPF’s website offers a variety of educational resources to help farmers make better use of the program. NMPF also posted a new video explaining how farmers can benefit from the DMC.

Reps. Peter Welch (D-VT), Mike Simpson (R-ID), Anthony Brindisi (D-NY), and John Joyce (R-PA) spearheaded a Feb. 18 letter urging new FDA Commissioner Stephen Hahn to quickly finish the job begun by his predecessor, Scott Gottlieb, in 2018 and finally begin to enforce standards of identity defining what may be labeled a dairy product. The letter garnered 58 bipartisan co-signers.

“The deception caused by mislabeling of imitation products is both unfair to our hardworking dairy farmers and problematic for consumers, making it harder for Americans to make educated decisions about what they feed themselves and their families,” wrote the lawmakers in the bipartisan letter.

Citing public health concerns expressed by medical groups including the American Academy of Pediatrics, the American Heart Association, the Academy of Nutrition and Dietetics, and the American Academy of Pediatric Dentistry, the members of Congress said they appreciated that Hahn saw the topic of fake dairy labeling as “a public health and nutrition matter” while calling action on it “long overdue.”

Many of the letter-signers are also co-sponsoring the DAIRY PRIDE Act, introduced by Representatives Welch and Simpson in the House and Senators Tammy Baldwin (D-WI) and Jim Risch (R-ID) in the Senate, and many also serve on the House Energy and Commerce Committee, which retains jurisdiction over this issue.

The DAIRY PRIDE Act would designate foods that make an inaccurate claim about milk contents as “misbranded” and require FDA to issue guidance for nationwide enforcement of mislabeled imitation dairy products within 90 days of its enactment.

During his confirmation process, Hahn voiced his support for “clear, transparent, and understandable labeling for the American people.” Given the agency’s inability to follow up on earlier pledges to act, NMPF supports DAIRY PRIDE’s passage. The strong bipartisan showing on the new letter will add momentum to this effort.

ARLINGTON, Va. – Tangible gains from the USMCA trade agreement, as well as progress on “Phase One” trade deals with China and Japan, underscore dairy’s persistent efforts to open new opportunities in foreign markets, Jaime Castaneda, NMPF’s senior vice president for policy strategy and international trade, says in this week’s Dairy Defined Podcast.

“I challenge anyone out there that says dairy is dead, or dairy is down. We are consuming more dairy products today than ever,” said Castaneda, a two-decade veteran of dairy trade issues. But because U.S. production is greater than what’s needed to meet domestic demand, “it is absolutely critical for the future of this industry to have market opportunities overseas,” he said.

To listen to the full podcast, click here. You can also find the Dairy Defined podcast on Apple Podcasts, Spotify,  SoundCloud and Google Play. Broadcast outlets may use the MP3 file below. Please attribute information to NMPF.

(Note: NMPF’s Dairy Defined podcast explores today’s dairy farms and industry using high-quality data and podcast-style interviews to explain current dairy issues and dispel myths.)

Dairy Market Report – February 2020

Listen to the latest updates on agricultural labor reform efforts in the U.S. Senate from NMPF Senior Vice President of Membership Services and Strategic Initiatives Chris Galen on Dairy Radio Now.

More than one year after comments closed on FDA’s request for information on fake-milk labeling; with health organizations warning against inappropriate consumption of plant-based beverages; with a rising number of lawmakers asking why nothing’s been done; and with a new FDA commissioner who seems to understand the problem, FDA still hasn’t resolved the public-health issue of mislabeled plant-based products using dairy terms that imply nutritional equivalence to consumers.

Why not?

That would be for FDA to answer. But if the concern is that FDA’s beginning to enforce its own longstanding rules may create confusion, we have an answer for that: a road map that updates dairy-labeling rules, clarifies marketplace practices and ensures fair competition among dairy and plant-based products. Written as a Citizen Petition responding to the comments FDA solicited, the map is NMPF’s proposed solution to the fake-dairy labeling problem – and it includes a few nuggets that might surprise consumers whose news diets include too much plant-based misinformation. For example:

• The petition would clarify that milk from animals other than cows, such as sheep, goats and water buffalo, are acceptable for dairy labeling, because milk only comes from mammals.
• It explains why terms like “Peanut Butter” and “Milk of Magnesia” are compatible with current FDA rules, while calling an almond-based beverage “milk” isn’t. (Short answer: It has to do with a product’s established use – these products aren’t marketed as substitutes for dairy.)
• It even reaffirms circumstances under which plant-based products could still use dairy terms, and it clearly does not ban the use of those dairy terms if used in a way that fits with with decades-old federal regulations that are consistent with the First Amendment. Words such as “alternative,” “imitation” and “substitute,” properly administered, can give consumers the information they need and maintain nutrition and labeling integrity, while allowing plant-based purveyors the leeway to market their heavily processed, flavored sugar waters largely how they’d like.
• Finally, the road map contains a detailed analysis of relevant case law to address First Amendment concerns over labeling terms. It surveys the legal landscape to ensure that solutions on disclosure requirements are narrowly tailored to improving labeling transparency and promoting informed consumer choice. It emphatically does not propose a blanket ban on the use of dairy terms by plant-based products.

Dairy farmers understand the FDA has a lot on its plate. But after more than 40 years of non-enforcement – and a nearly two-year-old pledge to act – let’s get real.  The path is clear, the road map exists. All that’s left is action – by FDA, Congress, or both – to do what’s right for consumers. We won’t be quiet until it’s done.

NMPF commends the 58 members of the House of Representatives who wrote FDA Commissioner Stephen Hahn today, urging the agency to quickly finish and act upon its examination of how to enforce regulations defining what may be labeled a dairy product.

“The deception caused by mislabeling of imitation products is both unfair to our hardworking dairy farmers and problematic for consumers, making it harder for Americans to make educated decisions about what they feed themselves and their families,” wrote the lawmakers in the bipartisan letter, which was led by Reps. Peter Welch (D-VT), Mike Simpson (R-ID), Anthony Brindisi (D-NY), and John Joyce (R-PA).

Citing public health concerns expressed by medical groups including the American Academy of Pediatrics, the American Heart Association, the Academy of Nutrition and Dietetics, and the American Academy of Pediatric Dentistry, the members of Congress said they appreciated that Hahn saw the topic of fake dairy labeling as “a public health and nutrition matter” while calling action on it “long overdue.”

“FDA knows this is a problem, and now is the time to solve it,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “Dr. Hahn has shown his interest in resolving it, public-health professionals have spoken out, and more and more members of Congress are as well. Agency inertia shouldn’t jeopardize public health. We applaud the efforts of lawmakers to prod FDA into action.”

Many letter-signers are also co-sponsoring the DAIRY PRIDE Act, introduced by Representatives Welch and Simpson in the House and Senators Tammy Baldwin (D-WI) and Jim Risch (R-ID) in the Senate. That legislation would designate foods that make an inaccurate claim about milk contents as “misbranded” and subject to enforcement of labeling rules. It would require FDA to issue guidance for nationwide enforcement of mislabeled imitation dairy products within 90 days of its passage and require FDA to report to Congress two years after enactment to hold the agency accountable in its enforcement.

Hahn has voiced his support for “clear, transparent, and understandable labeling for the American people.” Given the agency’s inability to follow up on earlier pledges to act, NMPF supports DAIRY PRIDE’s passage.

ARLINGTON, Va. – Dairy farming continues to advance in sustainability and animal welfare as technology and scientific understanding evolves, ensuring better care for the planet and for animals, said Jamie Jonker, NMPF vice president for sustainability and scientific affairs, in this week’s Dairy Defined Podcast.

Jonker discussed the significance of recent USDA discussions on agricultural sustainability in which he’s been involved while drilling more deeply into a topic of long-term importance to public health: improved management of antibiotics use in livestock. As science advances, so does dairy, Jonker said, making the sector’s ambitious sustainability and public-health goals achievable even as productivity increases, he said.

“The dairy farm I that grew up on looked a lot different from my great-grandparents’ dairy farm. Our animals made a lot more milk because we knew a lot more about genetics. They made a lot more milk because we knew how to feed them. They also made a lot more milk because we knew a lot more about how to take care of them,” Jonker said. “That’s just going to continue on into the future.”

To listen to the full podcast, click here. You can also find the Dairy Defined podcast on Apple Podcasts, Spotify,  SoundCloud and Google Play. Broadcast outlets may use the MP3 file. Please attribute information to NMPF.

(Note: NMPF’s Dairy Defined podcast explores today’s dairy farms and industry using high-quality data and podcast-style interviews to explain current dairy issues and dispel myths.)

ARLINGTON, Va. – Of the many inaccurate arguments misattributed to dairy in the debate over imitation-product labeling, one of the most persistent is that “Big Dairy says consumers are confused about what milk is” – a statement that tries to turn a public-health issue into a debate on respect for consumer intelligence.

Saying that “Big Dairy” (whatever that is) thinks consumers can’t tell real milk from a plant-based beverage  is a classic “red herring” argument, a logical fallacy that leads audiences toward false conclusions by misdirecting an important question. The misstatement – let’s call it what it really is: the Big Lie – creates its own confusion by substituting the important public-health issue that dairy and health advocates are raising – whether consumers understand the nutritional differences between dairy products and plant-based imitators – with an argument that no one is actually making, but is easier to refute.

That’s the kind of obfuscation a sector trying to get away with inaccurate marketing wants to create. For the public good, they can’t get away with it.

So, for the thousandth time: The concern over “confusion” being raised by dairy groups isn’t about whether or not a dairy product contains an almond. It centers on the wildly different nutritional profiles of non-dairy products that create a false consumer perception of equivalence when they use dairy terms on their labels — and encourages decisions well-meaning consumers might not otherwise make were labels more accurate.

Misleading labeling harms public health. That’s the concern NMPF raised last month in a hearing on the DAIRY PRIDE Act, which would direct the FDA to enforce labeling integrity. That’s the concern addressed in last year’s FDA docket on dairy labeling. And that’s the concern on which research is quite clear. A 2018 IPSOS survey commissioned by Dairy Management, Inc. found that:

• 77 percent of consumers thought almond-based drinks had as much or more protein per serving than milk. Milk has up to eight times as much protein.
• 53 percent said they believed that plant-based food manufacturers labeled their products “milk” because their nutritional value is similar.
• Misinformation was even more prevalent among consumers who solely purchase plant-based beverages. Of those buyers, 68 percent strongly or somewhat agreed that those drinks have the same nutritional content as dairy milk.

Don’t believe that data? Here’s what the American Academy of Pediatrics has to say:

Pediatricians report that 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. … Given the importance of dairy products in the diet of children and the confusion that parents exhibit with regards to the nutrients contained in plant-based alternative products, the AAP recommends that FDA reserve the label of “milk” solely for traditional dairy products to ensure that children receive the optimal nutrition they need.

To fight the misdirection, it’s crucially important to remember the actual question before FDA: whether clear labeling that reserves dairy terms for dairy products would help consumers. Given the nutritional confusion in the marketplace, a signal to a consumer that indicates a non-dairy substitute isn’t nutritionally equivalent to a dairy product would seem helpful. It’s what other countries do, and it’s what many good-actor companies already do in the U.S., so the goal is clearly easy to achieve.

It’s time to bury the “consumers already know what’s in their milk” red herring. Busy, intelligent consumers need all the help they can get, without plant-based peddlers exploiting the fact that most people aren’t nutrition scientists and understandably (and accurately) associate beneficial nutritional qualities with dairy terms.

Let people who want high-protein, high-calcium, nutrient-rich, natural dairy products know that the real thing – with a label that uses dairy terms correctly — gives them what they seek. Other consumers can buy whatever imitations they wish. But companies shouldn’t be allowed to market with terms that imply they’re something they’re not.

Plant-based products have their place. Red herrings should have no place in their promotion.