ARLINGTON, VA – The Office of the U.S. Trade Representative (USTR) yesterday accepted a petition from the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) to examine India’s failure to follow through on its obligations to provide “equitable and reasonable access to its market” for dairy products. In addition, Indonesia, which has also been pursuing dairy trade distorting policies, will be included in USTR’s review to assess that country’s compliance with its market access obligations.

India has for many years maintained unjustified market access barriers to U.S. dairy products, despite receiving preferential access to the U.S. market under a special duty-free trade arrangement called the Generalized System of Preferences (GSP). India abruptly began denying dairy exports in 2003, citing safety concerns and demanding revised government-issued health certificates. The U.S. industry and U.S. government have worked in good faith over the last 15 years to remove this intractable barrier, but have been met with a shifting litany of demands not founded on sound science.

Meanwhile, since last year Indonesia has been advancing a policy aimed at mandating that importers and manufacturers in its country purchase local milk or contribute monetarily to support the local dairy industry, even though this runs counter to its WTO commitments.

GSP benefits come with the expectation that the trading partners using the program comply with a baseline level of requirements, including those related to reasonable market access terms. USTR has rightfully determined that a thorough examination of these countries’ adherence to these terms of the deal is necessary.

Industry officials praised USTR’s decision to review India’s and Indonesia’s GSP status, and are hopeful that the move will force the countries to halt unfair trading practices that harm U.S. farmers.

“Dairy farmers across the country applaud the White House and USTR for taking this step and holding these countries accountable for their unlawful actions,” said NMPF President and CEO Jim Mulhern. “We’ve been wrongly blocked from the Indian market for more than a decade, and Indonesia has recently been heading down a similar route. If these nations refuse to embrace free and fair trade, there must be consequences.”

“We export dairy products to more than 100 countries and our products are universally recognized as safe,” explained Tom Vilsack, USDEC president and CEO and former U.S. Secretary of Agriculture. “Exports are essential to rural America’s future, and our government must prioritize the removal of trade impediments like this to foster an open and healthy market.”

The two organizations thanked the Trump Administration for sending a strong message that trade should be a two-way street. They said USTR has the opportunity to lead on other key dairy trade issues, such as tearing down policies erected by Canada that are harming U.S. dairy exports and run counter to what is needed from a modernized North American Free Trade Agreement.

USTR indicated that a public hearing and comment period for the new GSP reviews of India and Indonesia will be announced in an upcoming Federal Register notice.

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The National Milk Producers Federation (NMPF), based in Arlington, Va., develops and carries out policies that advance the well-being of U.S. dairy producers and the cooperatives they collectively own. The members of NMPF’s cooperatives produce the majority of the U.S, milk supply, making NMPF the voice of dairy producers on Capitol Hill and with government agencies. For more on NMPF’s activities, visit www.nmpf.org.

The U.S. Dairy Export Council (USDEC) is a non-profit, independent membership organization that represents the global trade interests of U.S. dairy producers, proprietary processors and cooperatives, ingredient suppliers and export traders. Its mission is to enhance U.S. global competitiveness and assist the U.S. industry to increase its global dairy ingredient sales and exports of U.S. dairy products. USDEC accomplishes this through programs in market development that build global demand for U.S. dairy products, resolve market access barriers and advance industry trade policy goals. USDEC is supported by staff across the United States and overseas in Mexico, South America, Asia, Middle East and Europe.

From Jim Mulhern, President and CEO, NMPF:

ARLINGTON, VA – “Congress made important improvements to the dairy safety net earlier this year, but as we have said repeatedly, there is more that must be done in the upcoming Farm Bill. That need is particularly urgent given the ongoing economic distress facing America’s dairy farmers.

“As the House developed its Farm Bill, we have worked closely with the leaders of the Agriculture Committee, including Chairman Mike Conaway, Ranking Member Collin Peterson, Vice Chairman Glenn Thompson and others to make further improvements to the Margin Protection Program and enhance farmers’ ability to use the Livestock Gross Margin program and other risk management tools.

“The bill introduced today includes several changes we have advocated for, particularly in improving coverage levels and providing greater coverage flexibility for dairy producers. It also includes important language on price risk management, which NMPF has worked on closely alongside the International Dairy Foods Association. As the Farm Bill moves forward, we will continue to work with our allies in Congress on a bipartisan, bicameral basis to further strengthen the dairy safety net for producers of all sizes.”

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The National Milk Producers Federation (NMPF), based in Arlington, VA, develops and carries out policies that advance the well-being of dairy producers and the cooperatives they own. The members of NMPF’s cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of dairy producers on Capitol Hill and with government agencies. For more on NMPF’s activities, visit our website at www.nmpf.org.

Although negotiators from Canada, Mexico and the United States made progress last month on several important trade issues within the North American Free Trade Agreement (NAFTA), NMPF’s top priority – addressing Canada’s trade-distorting policies – remains unresolved.

In the face of rising pressure on negotiators to achieve a breakthrough this month, NMPF continues to emphasize the importance of addressing U.S. dairy trade priorities, including rolling back Canada’s new Class 7 pricing program, tackling sky-high Canadian tariff barriers and establishing rules of geographical indications to help safeguard the use of common cheese names.

A number of NMPF members, both farmers and cooperative executives, met recently with Chief Agricultural Negotiator Gregg Doud and Ted McKinney, USDA Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs, to emphasize the importance of dealing with Canada’s trade distorting policies as part of the NAFTA renegotiations. In a letter written by the U.S. Dairy Export Council (USDEC) and NMPF, and co-signed with the International Dairy Foods Association (IDFA), the dairy industry delivered a clear message that NAFTA needs to generate a win for agriculture, as President Donald Trump himself has stated more than once.

NMPF’s Jaime Castaneda attended the seventh negotiating round in Mexico City in March, where he held meetings with U.S. and foreign government officials and attended confidential trade advisor consultation sessions. He also met with Mexican industry allies to discuss the U.S. dairy industry’s key NAFTA goals, including preserving the free flow of dairy products between the United States and Mexico.

The now-concluded chapter on SPS measures will help further safeguard those sales. It reportedly builds upon the text used in the Trans-Pacific Partnership (TPP), during which NMPF played a leading role. NMPF’s goal in encouraging stronger SPS commitments is to make it less likely for unfounded non-tariff barriers to derail U.S. exports.

The United States and South Korea announced that the two countries reached an agreement “in principle” in late March on the bilateral free trade agreement known as KORUS, and in the process achieved a positive outcome for America’s dairy sector. As the trade agreement was renegotiated, NMPF had stressed the need for the United States to remain in this agreement, and pursue targeted changes and solutions to several implementation concerns.

KORUS has been instrumental in preserving U.S. competitiveness in a key dairy market. Without it, the U.S. dairy industry would be the only major dairy supplier subject to 36-percent cheese tariffs or lacking a country-specific tariff rate quota for milk powder.

With this agreement, the U.S. dairy industry will remain a competitive dairy exporter to South Korea in a world in which most other major dairy exporters have access to the South Korean market through other trade agreements. KORUS puts U.S. companies selling dairy products made in American on the same footing with dairy competitors from other countries.

In addition to securing modifications to some non-agricultural portions of the agreement, USTR also tackled concerns related to customs procedures. This refers to whether products coming from the United States are found by Korea to qualify for preferential access under KORUS. NMPF welcomed progress in this area, as it has been a concern in recent years for U.S. dairy exporters whose products risked losing their preferential tariff access rights to Korea if the shipment was routed through a Canadian port rather than remaining in U.S. territory.

On March 29, NMPF and USDEC commended USTR for successfully addressing the specific trade concerns highlighted by various U.S. stakeholders, while also preserving the overall agreement that has been so beneficial to the U.S. dairy industry.

The National Dairy Farmers Assuring Responsible Management (FARM) Program hosted a joint animal care evaluator and evaluator trainer course in Madison, Wisconsin on March 20 and 21, welcoming 16 participants to the evaluator trainer course and 10 to the evaluator training.

These training courses consisted of one day in the classroom and one day on a farm completing a FARM Version 3.0 Animal Care evaluation. The training’s on-farm experience was hosted by Foremost Farms and the University of Wisconsin.

For evaluators and trainers looking to be recertified in person, the FARM Program will host another course in Charlotte, North Carolina, on Nov. 27-28. To remain up to date on certification, evaluators are required to complete an annual recertification course. Those interested in becoming certified FARM animal care evaluators can learn about minimum requirements and certification here.

Meanwhile, third-party verifications of those second-party FARM Program animal care evaluations completed in 2017 are halfway done, with full completion anticipated by the end of May.

The third-party verification process identifies any inconsistences in evaluator observations across the program. Farms that underwent a second-party evaluation in 2017 are placed in a random sampling pool to identify farms that will also undergo third party verification.  The FARM Program has contracted two third-party vendors, Food Safety Net Services (FSNS) and the U.S. Department of Agriculture-Agriculture Marketing Services (USDA-AMS), to complete verifications. All third-party verifications should be prescheduled with farmers and cooperative or processor staff.

If FARM participants have questions about the verification process, please contact Jamie Jonker.

In mid-March, the U.S. Department of Agriculture (USDA) USDA formally withdrew a final rule regarding animal welfare standards, acting on a recommendation from NMPF supporting the department’s proposal after the agency requested comments last December.

The Organic Livestock and Poultry Practices rule, originally published in January 2017, proposed imposing a variety of new animal care and housing standards for farms covered by the certified organic program. NMPF initially expressed concern about the proposed standards in July 2016, saying the changes fall short of those already employed by the National Dairy Farmers Assuring Responsible Management (FARM) Animal Care Program.

In its most recent comments, NMPF stated that the FARM Animal Care Program assures animal care and wellbeing throughout the U.S. dairy industry, thus the requirements in USDA’s final rule are unnecessary and duplicative for dairy cattle. Furthermore, the basis of the FARM Animal Care Program is sound science, and its standards are updated every three years to accommodate the latest research around animal health and wellbeing.

On March 13, USDA formally withdrew the rule, determining it exceeded USDA’s statutory authority. USDA said withdrawing it was justified after assessing rule’s benefits and burdens, as NMPF comments consistently stated.

NMPF is working to relieve the dairy industry from a pending mandate that dictates all commercial trucks be equipped with electronic logging devices (ELDs) to track compliance with federal hours of service (HOS) regulations.

The mandate took effect last fall, but agricultural haulers received a three-month exemption until March. NMPF joined others in agriculture in successfully petitioning for an additional three-month delay. As a result, the mandate will now take effect this June.

At the same time, NMPF is working with the U.S. Department of Transportation (DOT) to improve and clarify the existing statutory HOS exemption for haulers moving agricultural commodities from farm to plant. NMPF believes that a dairy terminal or transfer station should be considered a “source” of agricultural commodities, and thus be exempt from the time limitation. NMPF also commented to the Federal Motor Carrier Safety Administration on how to apply the HOS exemption for agricultural commodities when a hauler is loading a commodity at multiple sources during one trip. Milk is a uniquely perishable commodity, and haulers must often stop at multiple dairy farms to completely fill their tankers. NMPF advocated that milk haulers be able to utilize the 150 air-mile agriculture exemption beginning at each pickup location

NMPF submitted comments urging the DOT to recognize these circumstances and provide clear and consistent interpretation and enforcement guidelines to all states with respect to the application of the agricultural commodities exemption to milk. NMPF will continue to work closely with industry and regulators on this issue.

Cooperatives Working Together (CWT) assisted member cooperatives in securing 78 contracts last month to sell 10.64 million pounds of American-type cheeses and 2.92 million pounds of butter to customers in Africa, Asia, Central America and the Middle East. The product will be shipped to customers in 12 countries in five regions of the world during the months of March-June 2018.

These contracts bring the 2018 total of the CWT-assisted product sales contracts to 29.19 million pounds of cheese, up 23% from the first three months of 2017, and 5.61 million pounds of butter, up 293%. These transactions will move the equivalent of 395.46 million pounds of milk on a milkfat basis overseas.

Helping CWT member cooperatives gain and maintain world market share through the Export Assistance program in the long-term expands the demand for U.S. dairy products and the U.S. farm milk that produces them. This, in turn, positively impacts all U.S. dairy farmers by strengthening and maintaining the value of dairy products that directly impact their milk price. CWT is preparing more detailed education materials for member use as they discuss the future role of the program.

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 online.

The U.S. Department of Agriculture said last week it is proposing two changes in milk marketing regulations, including the creation of a federal milk marketing order in the nation’s largest dairy state, California.

The USDA also said it is proposing a temporary increase in the Class I milk price in the Florida order to help with damages from last fall’s hurricane. The Florida FMMO action would implement a temporary assessment of no more than $0.09/cwt. for seven months on Class I milk in the order. The assessment will not be deducted from the pool, but instead be passed on to consumers at a rate estimated to be less than $0.01 per gallon during the collection period. The revenues are to be used to reimburse handlers and producers for the marketing losses and expenses they incurred as a result of the Hurricane Irma-related disruptions last September.

The proposed amendments were requested by five NMPF member-cooperatives whose farmer members supply the majority of the milk pooled under the Florida FMMO: Southeast Milk Inc., Dairy Farmers of America, Inc., Premier Milk Inc.; Maryland and Virginia Milk Producers Cooperative Association; and Lone Star Milk Producers.

Meanwhile, the California FMMO proposal would establish a federal order in California with many of the uniform provisions that have been adopted into the 10 current FMMOs, including product classification, end-product price formulas, Class I differential structure, and the producer-handler definition. However, the proposed order also recognizes the quota value specified in the California quota program, but would leave the administration of that program to the California Department of Food and Agriculture (CDFA).

Under the proposed FMMO, regulated minimum prices in California, especially for milk used in cheese manufacturing, are likely to be higher than what handlers pay under the current California State Order. However, the proposed FMMO would allow all handlers to elect not to pool milk used in manufacturing.

The proposed California FMMO was initiated by two NMPF member cooperatives with farmer members and processing facilities in the state: Dairy Farmers of America, Inc. and Land O’Lakes, Inc., together with California Dairies, Inc.

A referendum will be held from April 2-May 5 to determine producer approval. USDA will conduct a public meeting on April 10 in Clovis, California, to explain and answer questions about the proposed California FMMO and the producer referendum process.

The monthly margin under the Margin Protection Program (MPP) for February 2018 was $6.88/cwt., $1.23/cwt. less than the margin a month earlier. This was the third monthly drop of more than $1.00 in the MPP margin. The two previous ones, in December and January, were driven mostly by lower milk prices. The further drop from January to February was split more evenly between a lower all-milk price and an increase in the formula’s determination of feed costs. Most of the feed cost increase for February, on a per-hundredweight-of-milk basis, was due to higher soybean meal prices. All three components of the MPP feed cost formula rose from January to February.

The USDA MPP Decision Tool has not yet been updated to show monthly margins following enactment of the Bipartisan Budget Act of 2018 earlier this year, which changed the frequency of MPP payments from bimonthly to monthly. The bimonthly margins the tool still projects, based on the March 27 CME dairy and grain futures settlement prices, are shown in the accompanying graph. They average $7.76/cwt. for all 12 months of 2018. They indicate that, again based on the March 27 futures, purchasing buy-up coverage at the $8.00/cwt. level would yield net payments totaling $0.33/cwt. after deducting the new, substantially lower premium costs for milk covered up to 5 million pounds of production history during all of 2018. MPP buy-up premiums were made more affordable by the Budget Act, which also directs USDA to re-open MPP sign-up for 2018 coverage.

USDA’s MPP margin forecasts are updated daily online. NMPF’s Future for Dairy website offers a variety of educational resources to help farmers make better use of the program.

NMPF expressed support last month for a U.S. Food and Drug Administration (FDA) proposal to revoke an authorized health claim that links soy protein with a reduced risk of coronary heart disease. In comments to FDA on the health claim proposal, NMPF again urged the agency to take action against plant powder-based food companies that inappropriately use dairy terminology to label imitation dairy products like soy “milk.”

Last fall, FDA announced its intention to revoke the health claim because numerous studies since its original authorization in 1999 have presented “inconsistent findings” regarding the relationship between soy protein and a reduced risk of coronary heart disease. Jim Mulhern, president and CEO of NMPF, lauded FDA for acknowledging the continuing evolution of nutrition science and information.

“New research revealing the lack of heart benefits from soy protein or just as important, a positive effect from dairy fat, means that Americans can make more informed, healthier decisions regarding their diets,” he said.

FDA’s proposed rule comes almost 10 years after the agency initially announced its intent to re-evaluate the science behind the soy protein health claim. During this time, NMPF said, certain soy food companies have used the claim when labeling imitation dairy products, insisting that because of soy’s purported healthful properties, soy “milk” is a healthy alternative to conventional cow’s milk. Not only is this health claim without significant scientific support, based on FDA’s proposed rule, it also blatantly skirts federal regulations on the labeling of dairy foods like “milk,” “cheese” and “yogurt,” said NMPF.

“It is imperative that labels give consumers accurate product information and health claims.  The name of the food also conveys nutrition information,” said NMPF, reiterating its plea for FDA to take enforcement action against such products.