If experience is the best teacher, Congress should have learned an important lesson from the experience with the dairy Margin Protection Program during the past two years: letting policy be dictated by an inaccurate Congressional Budget Office computer model that attempts to predict costs of a proposed program 10 years into the future is a recipe for failure.

That’s exactly the place we find ourselves in as discussions begin on the 2018 farm bill. A reliance on CBO budget projections that were wrong right out of the gate – they missed the mark in both the first two full years of the program – has resulted in a program in need of improvement to become the safety net it was envisioned to be.

The good news is that National Milk’s members have developed a carefully-calibrated series of changes that will patch the holes in this new federal safety net, restoring it to its original form, so that it will have value to farmers.

The dwindling participation between 2015 and 2017 in the MPP’s supplemental coverage option paints a clear picture of the current shortcoming. Farmers’ use of the MPP – which enables them to insure the margin between milk prices and feed costs, paying premiums for increasing levels of coverage – has declined because the program underestimates their true feed costs. 

In 2015, the MPP’s first full year, 56% of dairy farmers elected to pay premiums to purchase coverage above the bare-bones $4 margin level.  But even with the higher coverage levels selected by many farmers, who paid $73 million in premiums that year, MPP issued only miniscule payouts, amounting to less than $1 million.  This was despite the fact that actual margins were tight in 2015.  The program’s enrollees experienced a similar frustration last year, again paying millions more in premiums than the program returned to participants, even though just 23% purchased supplemental coverage.

This year, only 8% of the farms, producing just 2% of the milk supply, are paying premiums for enhanced coverage.

The takeaway from this situation is that there is a profound mismatch between farmer needs and expectations, and the usefulness of the Margin Protection Program.  And because much of the structure of the MPP is written into the 2014 Farm Bill, it will take congressional action to rectify the program’s shortcomings.

The MPP’s limitations are an issue affecting the entire dairy sector, not just the farmers using the program.  Without an effective safety net to better manage risk, both milk production and milk prices are likely to be as volatile as they’ve been for the past 15 years.  This unpredictability becomes a challenge for the entire value chain: cooperatives, processors, retailers and ultimately, consumers.

NMPF has engaged in a top-to-bottom review of the MPP during the past six months, culminating in March with a decision by the NMPF Board to recommend changes in four key areas that will revitalize the MPP. These include:

• Restoring the original feed cost formula first proposed by NMPF.  The feed formula assigns a value to corn, soybean meal and alfalfa hay in order to capture the national average cost of feeding dairy cattle.  But that formula was cut by 10% due to the erroneous budget forecast by CBO. This decision has resulted in USDA-reported margins that are almost $1 per hundredweight higher than they would be under the original blueprint.  I told the House Agriculture Committee at a hearing last month the proposal was right the first time, and the MPP should revert to the original feed formula. We’re also asking that Congress work with the USDA to evaluate the pricing data used for corn, soybean meal, hay, and the all-milk price – all of which should be refined to more closely match the margin conditions experienced across the country.
• Improving the affordability of the program’s premiums.  The cost of premiums should be adjusted to incentivize increased farmer participation in the program, but this must be done in such a fashion that overall MPP budget costs remain reasonable. To be an effective safety net the program needs to enable more robust participation than the current 8% of farms opting for supplemental coverage.  This is not an encouraging participation level for a program of this importance.
• Making payments and annual enrollment more farmer-friendly. Currently the program calculates margins every other month, rather than monthly.  This is a small change that would also boost participation.  Likewise, rather than closing the annual enrollment window in the summer, farmers should have until the end of the year prior to the coming calendar year in which to make enrollment decisions. This another small convenience that enhances the ability of farmers to use the MPP properly.
• Expanding the use of the Livestock Gross Margin Program with the MPP.  Under current law, dairy farmers must choose either the MPP, or the Livestock Gross Margin (LGM) program to manage their risks – even though the programs are complementary, not duplicative.  The LGM works well for some farmers, and modest improvements to it, along with changes to the MPP, would greatly expand the risk management safety net available to dairy producers.

Taken together, these proposals will have a modest budget impact – indeed, how could they not, when right now more revenue is flowing to the government from farmers’ premiums than the MPP is returning to enrollees?  Fortunately, the leaders of the House Agriculture Committee have acknowledged that the farm bill priority of Congress should be to first develop the proper policy, and then allocate resources to properly implement that policy. 

Right now, instead, the budget tail is wagging the dog, which is the wrong way to formulate a viable dairy program, and not what farmers need and deserve. By applying these lessons learned, Congress can fix the MPP in the upcoming farm bill and we will have a viable, and effective, dairy safety net for the future.

Mulhern-Farm-Bill-Testimony 032217.pdf

WASHINGTON, D.C. – As Congress begins its deliberations on the next farm bill, improvements to the dairy Margin Protection Program must be a top priority for lawmakers, said Jim Mulhern, president and CEO of the National Milk Producers Federation, who spoke today before the House Agriculture Committee.

During the farm bill hearing on Capitol Hill, Mulhern told committee members that the dairy Margin Protection Program (MPP) is failing to live up to its intended role as a viable economic safety net for farmers, and that a series of changes is needed to restore dairy producers’ confidence in the program. Mulhern’s full testimony can be found here.

“While MPP was, and is, the right approach for the future of federal dairy policy, the program in its current form does not provide meaningful safety net support to the nation’s dairy farmers,” Mulhern said.

The MPP is designed to allow farmers to insure the gap between milk prices and the cost of purchasing feed for dairy cattle. Farmers can choose to pay higher premiums for additional levels of margin coverage, although a decreasing number have elected that approach as they saw the program underperforming. The MPP will continue to falter “without action by this Congress to move it closer to the program it was originally proposed to be,” Mulhern said.

Since its creation in the 2014 farm bill, the MPP has offered little effective support to dairy farmers, resulting in dwindling participation in the program. To rectify that problem, Mulhern shared with the committee members the recommendations to improve the MPP that NMPF’s Board of Directors unanimously approved earlier this month.

NMPF’s proposal includes a series of adjustments that will affect the way both feed prices (including corn, alfalfa and soybean meal) and milk prices are calculated. The most needed improvement is restoring the feed cost formula to the one originally developed by NMPF, he said. During Congress’s deliberations in 2014, lawmakers implemented a 10-percent cut to the weightings of all three feedstuff components of the MPP feed cost formula, due to what turned out to be an inaccurate budget score from the Congressional Budget Office. The resulting feed formula “understates the price to farmers of producing 100 pounds of milk, thereby overstating the actual margins farmers are experiencing,” Mulhern said, adding that the Agriculture Committee “got the calculation right the first time,” and thus needs to restore the MPP feed formula to its original level. Margins using the current formula are approximately $1 per hundredweight higher than they would be if the original feed formula were in place.

NMPF is also asking that Congress direct the Agriculture Department to obtain more precise data for the prices dairy farmers are paying for corn, soybean meal and hay, while also collecting better data for the price farmers receive for milk. These changes will more accurately reflect the true margin dairy producers are experiencing, Mulhern said.

The other NMPF recommendations include: Improving the affordability of the program’s premiums; changing the timing of payments and annual enrollment to be more farmer friendly; and expanding the use of additional risk management tools, such as the Livestock Gross Margin Program, to complement the risk management offered by the MPP safety net.

“We look forward to working with this committee to enact these changes in the next farm bill,” Mulhern said.

His testimony also addressed an issue of great concern to many in the dairy community: the need for immigration reform. The importance of immigrant workers to the U.S. dairy industry cannot be overstated, Mulhern said. At least 50 percent of the U.S. dairy farm workforce is comprised of foreign-born labor. Because the seasonal H-2A visa program does not apply to dairy farms with a year-round demand for labor, Congress must provide the agriculture industry with an effective guest worker program to meet its future needs, while also providing a way to address current workers with improper documentation.

“Without access to a steady and reliable workforce, our industry will not be able to survive, let alone thrive, in the future,” Mulhern said.

Mulhern also touched on trade’s impact on dairy, which has expanded considerably in the last decade. The United States has gone from exporting less than $1 billion of dairy products in 2000 to a record $7.1 billion in 2014 – an increase of 625 percent. Because of this, Mulhern said, the United States must preserve and enhance successful elements of its free trade agreements, such as its partnership with Mexico, America’s No. 1 dairy export market. The federal government should also work to rectify problematic trade issues, such as Canada’s protectionist attempt to undermine its trade commitments to the United States, and the European Union’s attempts to co-opt the use of common food names like parmesan and feta.

“If we aren’t in the game actively negotiating on these issues, we are ceding ground to our competitors and those looking to make it tougher for us to do business in their markets,” said Mulhern.

Mulhern’s testimony also stressed the need for congressional support for the DAIRY PRIDE Act, introduced by Reps. Peter Welch, Mike Simpson and Sean Duffy in the House, and Sen. Tammy Baldwin in the Senate. The legislation would force the U.S. Food and Drug Administration to enforce its long-standing rules defining the composition of products that use the term “milk.”

Mulhern said that plant-based alternatives lack real milk’s consistent level of nutrition, and that in the absence of proper labeling enforcement, increasing numbers of nutritionally inferior dairy imitators will lead to confusion in the marketplace.

WASHINGTON, D.C. – As Congress begins its deliberations on the next farm bill, improvements to the dairy Margin Protection Program must be a top priority for lawmakers, said Jim Mulhern, president and CEO of the National Milk Producers Federation, who spoke today before the House Agriculture Committee.

During the farm bill hearing on Capitol Hill, Mulhern told committee members that the dairy Margin Protection Program (MPP) is failing to live up to its intended role as a viable economic safety net for farmers, and that a series of changes is needed to restore dairy producers’ confidence in the program. Mulhern’s full testimony can be found here.

“While MPP was, and is, the right approach for the future of federal dairy policy, the program in its current form does not provide meaningful safety net support to the nation’s dairy farmers,” Mulhern said.

The MPP is designed to allow farmers to insure the gap between milk prices and the cost of purchasing feed for dairy cattle. Farmers can choose to pay higher premiums for additional levels of margin coverage, although a decreasing number have elected that approach as they saw the program underperforming. The MPP will continue to falter “without action by this Congress to move it closer to the program it was originally proposed to be,” Mulhern said.

Since its creation in the 2014 farm bill, the MPP has offered little effective support to dairy farmers, resulting in dwindling participation in the program. To rectify that problem, Mulhern shared with the committee members the recommendations to improve the MPP that NMPF’s Board of Directors unanimously approved earlier this month.

NMPF’s proposal includes a series of adjustments that will affect the way both feed prices (including corn, alfalfa and soybean meal) and milk prices are calculated. The most needed improvement is restoring the feed cost formula to the one originally developed by NMPF, he said. During Congress’s deliberations in 2014, lawmakers implemented a 10-percent cut to the weightings of all three feedstuff components of the MPP feed cost formula, due to what turned out to be an inaccurate budget score from the Congressional Budget Office. The resulting feed formula “understates the price to farmers of producing 100 pounds of milk, thereby overstating the actual margins farmers are experiencing,” Mulhern said, adding that the Agriculture Committee “got the calculation right the first time,” and thus needs to restore the MPP feed formula to its original level. Margins using the current formula are approximately $1 per hundredweight higher than they would be if the original feed formula were in place.

NMPF is also asking that Congress direct the Agriculture Department to obtain more precise data for the prices dairy farmers are paying for corn, soybean meal and hay, while also collecting better data for the price farmers receive for milk. These changes will more accurately reflect the true margin dairy producers are experiencing, Mulhern said.

The other NMPF recommendations include: Improving the affordability of the program’s premiums; changing the timing of payments and annual enrollment to be more farmer friendly; and expanding the use of additional risk management tools, such as the Livestock Gross Margin Program, to complement the risk management offered by the MPP safety net.

“We look forward to working with this committee to enact these changes in the next farm bill,” Mulhern said.

His testimony also addressed an issue of great concern to many in the dairy community: the need for immigration reform. The importance of immigrant workers to the U.S. dairy industry cannot be overstated, Mulhern said. At least 50 percent of the U.S. dairy farm workforce is comprised of foreign-born labor. Because the seasonal H-2A visa program does not apply to dairy farms with a year-round demand for labor, Congress must provide the agriculture industry with an effective guest worker program to meet its future needs, while also providing a way to address current workers with improper documentation.

“Without access to a steady and reliable workforce, our industry will not be able to survive, let alone thrive, in the future,” Mulhern said.

Mulhern also touched on trade’s impact on dairy, which has expanded considerably in the last decade. The United States has gone from exporting less than $1 billion of dairy products in 2000 to a record $7.1 billion in 2014 – an increase of 625 percent. Because of this, Mulhern said, the United States must preserve and enhance successful elements of its free trade agreements, such as its partnership with Mexico, America’s No. 1 dairy export market. The federal government should also work to rectify problematic trade issues, such as Canada’s protectionist attempt to undermine its trade commitments to the United States, and the European Union’s attempts to co-opt the use of common food names like parmesan and feta.

“If we aren’t in the game actively negotiating on these issues, we are ceding ground to our competitors and those looking to make it tougher for us to do business in their markets,” said Mulhern.

Mulhern’s testimony also stressed the need for congressional support for the DAIRY PRIDE Act, introduced by Reps. Peter Welch, Mike Simpson and Sean Duffy in the House, and Sen. Tammy Baldwin in the Senate. The legislation would force the U.S. Food and Drug Administration to enforce its long-standing rules defining the composition of products that use the term “milk.”

Mulhern said that plant-based alternatives lack real milk’s consistent level of nutrition, and that in the absence of proper labeling enforcement, increasing numbers of nutritionally inferior dairy imitators will lead to confusion in the marketplace.

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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.

MEXICO CITY –The leaders of three major U.S. dairy organizations Wednesday promised to continue a strong commitment to their time-tested partnership with Mexico’s dairy industry and consumers.

“We have always seen Mexico as a partner first and a customer second,” U.S. Dairy Export Council (USDEC) President and CEO Tom Vilsack told Mexican dairy leaders attending the National Dairy Forum in Mexico City. “That’s why we intend to continue working with you and your industry to expand the consumption of dairy products in a way that benefits both countries.”

“Mexico is our friend, ally and most important trading partner,” said Jim Mulhern, President and CEO of the National Milk Producers Federation. “Our goal this week in visiting Mexico is to communicate our steadfast commitment to our partnership with the Mexican industry, even as we continue to explore ways to deepen that relationship by working on issues of mutual benefit.”

“The United States proudly provides the majority of imported dairy products to Mexican consumers,” said Michael Dykes, D.V.M., President and CEO of the International Dairy Foods Association, which represents dairy food companies and their suppliers. “We strongly believe that it’s in the best interest of both countries to preserve and enhance our excellent trade relationship, now and in the future.”

Vilsack and Mulhern spoke at the Femeleche conference here, which brought together Mexican dairy industry leaders, farmers and government officials. As part of the coordinated message of collaboration and partnership with Mexico, the three CEOs of the leading U.S. dairy policy organizations are also meeting with a variety of government officials, including the Mexican Minister of Agriculture and the U.S. Ambassador to Mexico.

The reassurance from U.S. dairy leaders comes during a time of political uncertainty on both sides of the border.

Since NAFTA became law in 1994, U.S. dairy exports to Mexico have more than quadrupled to $1.2 billion. That makes Mexico the U.S. dairy industry’s No. 1 export market, accounting for nearly one-fourth of all U.S. dairy exports last year.

Put another way, exports to Mexico require the milk of 345,000 American cows. They create approximately 30,000 U.S. jobs, according to USDA, and $3.6 billion in U.S. economic impact.

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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.

The International Dairy Foods Association (IDFA), Washington, D.C., represents the nation’s dairy manufacturing and marketing industries and their suppliers with a membership of nearly 525 companies within a $125-billion a year industry. IDFA is composed of three constituent organizations: the Milk Industry Foundation (MIF), the National Cheese Institute (NCI) and the International Ice Cream Association (IICA). IDFA’s nearly 200 dairy processing members operate more than 600 manufacturing facilities and range from large multi-national organizations to single-plant companies. Together they represent more than 85 percent of the milk, cultured products, cheese, ice cream and frozen desserts produced and marketed in the United States. Visit IDFA at www.idfa.org.

ARLINGTON, VA – The National Milk Producers Federation Board of Directors today unanimously approved a series of recommended changes to the dairy Margin Protection Program (MPP) that will restore several key elements first proposed by NMPF during development of the 2014 Farm Bill. These changes to the MPP will ensure an effective safety net for the nation’s dairy farmers – if the recommendations are adopted by Congress.

Too many of the nation’s dairy farmers are facing an ongoing, daunting challenge: finding enough American workers to fill jobs on their farms, even when they provide wages higher than those paid by other local jobs.  This “between a rock and hard place” dilemma has grown more acute as the national unemployment rate has dropped – and will likely get even more dire, now that U.S. Immigration and Customs Enforcement has begun stepping up its efforts to locate and remove undocumented individuals.

That’s why NMPF has continued to drive home the point with lawmakers that it is critical that any effort to solve the immigration quandary will require not just additional law enforcement, but also a means to ensure that farm employers – including dairy operations – have access to a legal, secure workforce.

This is not a new problem, nor is it limited to just a few large dairies in certain parts of the country.  To illustrate the extent of the concern, NMPF twice worked with economists at Texas A&M during the past decade to assess the role played by foreign-born workers in dairy production – and the potential consequences of not having those employees. In its most recent national survey, the university researchers estimated that 150,000 employees worked on U.S. dairy farms as of 2014, and that approximately 51 percent of them were immigrants.

Because such a large volume of milk production depends on them, losing even just a portion of foreign-born undocumented workers would have serious implications for both farmers and consumers. In the worst-case scenario, a complete loss of immigrant labor in dairy farming could cut U.S. economic output by $32 billion, resulting in 208,000 fewer jobs nationwide.  Not only would farm workers be lost, but those further down the value chain whose jobs are tied to crop, produce and livestock production would be at risk.

The current environment is filled with a great deal of uncertainty and confusion about the scope of the recent, stepped-up enforcement actions. I received a note last month from a farmer in the Midwest who, after hearing of workers being deported from farms in her state, expressed her growing level of concern:

“Our employees are very jittery. We’ve coordinated driving to grocery stores and outlined ‘safe’ roadmaps (county & town roads) to get to the dentist, doctor and grocery store. They’ve gotten their papers in order if they are deported so that their children can be taken care of.  They are scared, frustrated, and a little angry. We as dairy farmers are too.”

Recognizing that the absence of a workable immigration policy is a threat to the economic viability of dairy farms, NMPF continues to work with elected officials on implementing a policy solution that adhere to two key principles:

1. Providing an affordable and efficient guest-worker program that ensures the continued availability of immigrant labor for all of agriculture, including dairies; and

2. Permitting those currently employed or with employment history in the U.S. to earn the right to work here legally, regardless of their current legal status.

Our point to elected officials is that, as important as border security and interior law enforcement procedures are, such measures must be paired with a focus on current and future agricultural labor needs.  Creating a guest-worker program to bring in legal employees will allow federal and state governments to focus resources on removing bad actors from the U.S., and prevent the migration of others who are not coming here for legitimate work opportunities.

The only current means of addressing domestic labor shortages in agriculture is the H-2A temporary and seasonal foreign agricultural workforce program, intended to help employers with short-term labor needs.  Many jobs in farming and food processing are not seasonal and thus can’t use the H-2A program at all – which is why dairy farmers need another approach, not one centered on reforming H-2A.

Farm and ranch groups have collaborated in the past in formulating ideas for a new national visa program that can provide a legal source of foreign-born workers to farm employers.  And we continue to reach out to the Administration and Congress in support of workable policies to control our borders and provide a stable workforce. Agriculture in America can’t grow without a reliable workforce. Immigrant workers are an essential part of that picture today, and they must be part of it in the future. This is a message we will continue to advance so that agriculture can help grow its contributions to America’s economy.

The National Dairy FARM Program released more resources in February to help farmers train their employees in quality animal care – and to better educate consumers about the proper care being taken of cows on America’s dairy farms.

The FARM program website has been updated to feature more technical information and training materials for all three silos of the program: Animal Care, Antibiotic Stewardship and Environmental Stewardship. Each component has its own page containing frequently asked questions, technical resources and background information. This is to better help consumers find relevant information on any part of the program.

Because FARM Animal Care Version 3.0 requires annual employee training, the program is expanding its collection of educational resources. This includes a stockmanship training video, in partnership with the National Beef Quality Assurance program, that is now available on the FARM Program website. The first video in the FARM training series focuses on cattle flight zones, points of balance and tools to utilize when moving cattle. It will eventually also be offered in Spanish.

The program is also hosting a new training course for evaluators and evaluator trainers on April 25-26 in Grand Rapids, Mich. Registration is now open.

Cooperatives Working Together member cooperatives gained 44 contracts in February to sell 6.54 million pounds of cheese and 52,360 pounds of butter to customers in Asia, Central America, the Middle East, North Africa and Oceania. The product will be shipped from February through May 2017.

These CWT-assisted transactions will move the equivalent of 132.12 million pounds of milk on a milkfat basis to customers in 11 countries on five continents.

Assisting 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.

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 on the CWT website.

NMPF has endorsed a recent decision by the Commodity Futures Trading Commission not to propose position limits on Class III milk futures, options and equivalent swaps contracts. The CFTC rule is a victory for dairy farmers and cooperatives using risk management tools, and the latest development in a multi-year process through which the Commission is attempting to further regulate speculative activity in futures markets by limiting the positions any individual party could take in such contracts.

In a response to provisions of the Dodd-Frank Act to regulate speculative activity in futures markets, the CFTC proposed limits in 2013 for Class III milk and 27 other physical commodity contracts. At that time, NMPF, several of its member cooperatives and others in the dairy industry argued that such limits would reduce the effectiveness of Class III contracts for dairy farmers.  National Milk said the proposal would diminish the liquidity needed in dairy futures contracts and make it more difficult for NMPF’s cooperatives to offer risk management programs for their members.  In such programs, cooperatives take offsetting, non-speculative Class III milk futures positions on often sizeable volumes of member milk production.

NMPF also argued that, in contrast to delivery-settled futures contracts, position limits were less appropriate for dairy futures contracts, which are cash-settled to a USDA announced price, and in which open interest positions remain high through contract expiration, thus making the risk of distorting speculative activity very minor.

The Commission cited this earlier push-back from NMPF and dairy groups as a key reason for its recent decision to defer imposing limits on Class III milk and two cash-settled contracts for other animal agriculture commodities. However, CFTC declined to exempt cash-settled contracts altogether, and indicated it would revisit the issue of position limits on such contracts at some future time.

In its recent comments to the CFTC, NMPF again argued that there is little reason to impose limits on dairy futures contracts, and it will continue to argue to this effect in response to any future Commission proposals on the issue. The CME exchange has rules that are adequate to guard against any distorting speculative activity in dairy futures contracts, NMPF said.

The U.S. average all-milk price rose $0.10 a hundredweight in January to $18.90 per hundredweight, as reported by USDA’s National Agricultural Statistics Service (NASS). NASS also said the ingredient prices in the MPP monthly feed cost were $7.84 per hundredweight, generating a monthly margin of $11.06 per hundredweight. The January MPP margin was down $0.04 a hundredweight from the December margin.

USDA’s current MPP margin forecast, based on the March 3 CME futures settlements, projects the margin will remain above $9 per hundredweight during most of 2017. However, this forecast has been dropping in recent weeks, and the department now projects a 25-percent probability that the margin will fall somewhere below the $8-per-hundredweight coverage level during both the May-June and the July-August bimonthly periods. 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.

In late February, NMPF challenged a number of flaws in FDA’s Hazard Analysis and Risk-Based Preventive Control for Human Food Draft Guidance for Industry, also known as the Preventive Control for Human Food rule, under the Food Safety Modernization Act (FSMA).

In the guidance, the U.S. Food and Drug Administration (FDA) identified hazards that the dairy industry should consider when developing food safety plans, as required by the rule. NMPF replied that FDA’s definition of a “hazard” includes consideration of the severity of a potential injury or illness, as well as the probability that one will occur. FDA listed many hazards that NMPF argued would not result in an injury or illness or had little to no probability of occurring.

FDA identified drug residues in dairy products as a chemical hazard that should be considered when conducting a hazard analysis. NMPF challenged this concern, pointing out that the dairy industry tests approximately 99 percent of the raw milk supply for beta-lactam residues. Last year’s national survey of milk tankers found that only 0.011 percent tested positive, while the testing of retail-ready dairy products found zero residues. In addition, a review of the scientific literature failed to identify any allergic reaction to drug residues in milk. FDA also identified lactose as a potential hazard, and suggested allergen labeling as a form of preventive control. However, lactose is not an allergen and therefore would not trigger an allergic reaction. NMPF asked for that section of the guidance to be redrafted to avoid confusing consumers about the distinction between milk protein allergies and lactose intolerance.

However, NMPF did concur with FDA that pathogens in raw milk are a hazard that should be addressed, which is why milk and dairy products are pasteurized and raw milk sales should be restricted.

In a second set of comments on the guidance, NMPF pointed out that the product categories were inappropriately named. NMPF argued that for the sake of consistency, clarity, and to avoid consumer confusion, the names of non-dairy alternatives should reflect federal standards of identity. NMPF requested the names for some products to be changed to rice or soy “beverage” and “soy-based frozen dessert,” or else include the word “imitation.” NMPF will continue to argue for proper use of standardized dairy terms.