(Washington, D.C.) – The CEO of a major farmer-owned dairy cooperative in Washington state told a congressional panel today that the North American Free Trade Agreement (NAFTA) has created jobs and increased sales for his company and the entire U.S. dairy sector, and that a renegotiated treaty must maintain market access to Mexico while also fixing trade challenges with Canada.

“An agreement that has done this much good and that supports more than 25,000 in the dairy sector alone must be preserved,” said Stan Ryan (right), president and CEO of Darigold in Seattle. Darigold is the third-largest privately held business in Washington state, with total annual sales of $2.1 billion in fiscal year 2017. Darigold markets 40 percent of its milk products outside the United States. The cooperative is a member of both the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC).

On Tuesday, Ryan told members of the House Ways and Means Subcommittee on Trade that Darigold and other U.S. dairy companies have benefitted from NAFTA through “stronger demand for their milk than would otherwise be the case. It is critical that this progress not be reversed and that our fully open access to the Mexican market remain in place.” Ryan’s full testimony can be found here.

“NAFTA has been a driving force behind remarkable growth in dairy exports and is the reason the United States’ share today of Mexico’s dairy imports is 73 percent,” Ryan said, adding that U.S. dairy sales to Mexico have risen to $1.2 billion in 2016 from just $124 million in 1995.

Ryan noted that the preferential tariffs enjoyed by the United States could be undermined if the dairy-specific benefits of NAFTA are watered down in a revised pact. He also said Mexico is currently negotiating a trade agreement with the European Union and exploring possible agreements with New Zealand and Australia, all of which are significant dairy exporters with an interest in expanded sales to North America.

NAFTA is “the vehicle the U.S. will need to ensure that we remain competitive in that market, should Mexico decide to use its ongoing trade discussions with major dairy exporting nations to open up new inroads to its market,” Ryan said.

His testimony also focused on the lack of U.S. dairy access to Canada included in NAFTA, a hold-over from when the agreement was negotiated in the early 1990s, as well as subsequent challenges that have resulted from Canadian policies designed to distort trade.

“NAFTA modernization discussions are an unmissable opportunity to address just that type of unfinished business in order to truly open up the North American market and put our dairy exports to Canada on par with the vast majority of the rest of the U.S. economy,” Ryan said.

In particular, he focused on a new Canadian pricing scheme developed to restrict U.S. dairy protein exports to Canada while also facilitating the disposal of Canada’s excess milk proteins in world markets. This system “is actually eroding what little opportunity the U.S. had for sales in Canada, and even worse, it is being used to underprice dairy products from the U.S. and other major dairy suppliers in markets around the world,” Ryan said.

Canada’s National Ingredient Strategy contravenes the spirit of Canada’s World Trade Organization and NAFTA trade commitments, Ryan said, adding that the new Class 7 pricing strategy allows Canada to sell milk powders at prices intended to undercut competing products from other nations, even though domestically Canada has one of the world’s highest raw milk prices.

“If Canada wishes to retain a government-run system of micro-managing its milk supply, that is its prerogative, but that does not give it the right to use the high returns from that system to disrupt with indirect subsidies the commercial dairy markets on which Darigold and countless other good-faith competitors in the U.S. and elsewhere rely,” he said.

“Common-sense economics would say, if it looks and feels like subsidized dumping, it probably is,” Ryan said. “This just started, and it will damage U.S. dairy export shares around the globe.  We request that Congress work with the Administration to repeal it.”

 

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About NMPF
The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance the wellbeing 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. Visit www.nmpf.org for more information.

About USDEC
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 rise in antibiotic-resistant bacteria seen in the United States and elsewhere in the world is frequently and unfairly blamed on antibiotic use in agriculture. This is unfortunate because it tends to mask the real problem: misuse of antibiotics in human medicine. The reality is that the vast majority of the bacterial strains with resistance or reduced susceptibility to antibiotics are not foodborne pathogens, indicating that veterinary use of antibiotics is not the leading cause of these resistant bacteria. In the United States, hospital-acquired infections are a major factor in antibiotic resistance.

Nevertheless, antibiotics are a valuable tool in veterinary and human medicine alike, and everyone must be careful stewards of these products. In hindsight, the agriculture community likely contributed to its public perception problem by fighting to hang on to growth promotion uses of antibiotics past the point of no return. But for dairy, veterinarians and farmers strive to limit use of antibiotics important in human medicine, and largely confine such use to treatment of a specific disease for a prescribed length of time. Our industry has a long, proud track record of judicious use and of ongoing efforts to ensure a safe milk supply for consumers, one free of any antibiotic residues.

Starting this month, dairy farmers will have a new opportunity to demonstrate their commitment to proper antibiotic use, as federal and state regulators expand their already extensive screening of the U.S. milk supply. This new drug testing pilot program, which will examine hundreds of thousands of milk tanker loads for the tetracycline class of antibiotics, will further demonstrate that we are serious about being good managers of the pharmaceutical tools available to agriculture.

The debut of the new tetracycline testing program comes two years after the National Conference of Interstate Milk Shipments first proposed the idea at its 2015 conference. In the months that followed, National Milk provided input into how the testing program would best generate meaningful data while working to ensure that it did not become burdensome on farms or processors. 

What happens now is that all Grade “A” plants (those making milk and yogurt products) are expected to participate in the screening. Dairy plants that process cheese and butter may also participate in the process. The pilot program will require that at least one out of every 15 tankers will be screened on a random basis.  Some plants may test every load every day, while others may test every load on a certain day each week. Regardless of the sampling method, a rapid response test will check the loads for the presence of any of these drugs: tetracycline, oxytetracycline and chlortetracycline. During the next 18 months, it’s reasonable to assume that nearly every U.S. dairy farm will have its milk tested, not just those shipping to a Grade “A” plant. 

This new program largely mirrors the ongoing beta lactam screening program, which for decades has checked every single tanker load of milk for the penicillin class of drugs. The findings of that program should reinforce the knowledge that our industry’s combination of education, proactive veterinary treatment and careful record-keeping do a tremendous job in minimizing the chances that any trace levels of antibiotics appear in milk.

In fact, since 1996, the percentage of milk tankers that test positive for the presence of beta lactams dropped from an already small figure, 0.104% (that’s almost 99.9% antibiotic residue-free), down to just 0.011% ( that’s nearly 99.99% antibiotic-free) in 2016.  During this 20-year period, any of the tankers that tested positive for violative residue were dumped, the milk never reaching store shelves. The severe threat of being held financially accountable for the disposal for even just one milk tanker is a powerful incentive to be cautious about using these drugs. The many educational materials offered by our own Farmers Assuring Responsible Management (FARM) Program, especially our drug residue prevention manual, have helped the industry continue improving its great track record.  The new requirement that FARM Program participants have a documented relationship with a veterinarian also helps bolster the oversight of the proper use of these products.

The uses of tetracycline are not the same as beta lactams, however, so farmers must continue to ensure that any administration of the drug doesn’t end up in the milk supply.  In particular, the routine use of powdered tetracycline as a treatment for hairy foot warts can cause violative residues in milk. Farmers should work with vets and hoof trimmers to ensure the drugs are used wisely, and that drug withdrawal times are carefully followed so that milk from any treated cow is disposed of until the antibiotic completely clears her body.

At the end of 2018, FDA will study the pilot program data collected and decide whether to formally require testing for tetracyclines. Even though any milk loads testing positive will be disposed of, any violation matters. We need the data to reflect the prudent use of these products, and beyond that, the responsible treatment of dairy cattle throughout their lives.

Ultimately, routine residue testing isn’t what protects consumers from a sub-standard or unsafe product. The procedures that are followed as the animals are handled and the milk is harvested are what protects consumers. A quick test is only the last step in a much larger and robust management system on farms. All the available evidence to date confirms that our system is working well.  The new pilot program will be one more proof point.

At NMPF’s June board meeting, the NMPF Scholarship Committee selected two graduate students to receive scholarships as part of the 2017 NMPF National Dairy Leadership Scholarship Program. These students are conducting research in areas that will benefit dairy cooperatives and producers.

The 2017 Hintz Memorial Scholarship, given to the top scholarship candidate, was awarded to Sarah Adcock (above right), a Ph. D candidate in animal behavior at the University of California-Davis, who is studying the long-term welfare implications of hot-iron disbudding in dairy calves.

A scholarship was also awarded to Carlyn Peterson (above left), a Ph. D candidate in animal biology, also at the University of California-Davis, who is studying the use of a novel methane inhibitor to improve the environmental footprint of dairy cattle.

National Milk congratulated the Michigan Milk Producers Association (MMPA) after the member cooperative won honorable mention at the 2017 U.S. Dairy Sustainability Awards in late June for their work supporting food-insecure families after the Flint water crisis.

Together with the Food Bank of Eastern Michigan, The Kroger Co. of Michigan and Michigan State University (MSU), MMPA received an honorable mention for Outstanding Achievement in Community Partnerships. The group donated over 36,000 gallons of milk (589,824 servings) to the Flint community after it became susceptible to lead poisoning from contaminated water in 2016.

 “When a crisis occurs in a community near you, farmers know just how important it is to step in and offer support, especially during a time when milk can make a difference,” said Ken Nobis, NMPF first vice-chair and MMPA president. “MMPA is appreciative of all those who sprang into action last year to aid Flint with nutrient-dense milk. We are humbled by this honor from the Innovation Center for U.S. Dairy and hope that other organizations may learn from our initiative and replicate in their own communities to support even more food-insecure families.”

The U.S. Sustainability Awards is a program hosted by the Innovation Center for U.S. Dairy that recognizes dairy farms, businesses and partnerships whose practices improve the well-being of people, animals and the planet. Award winners represent the U.S. dairy community’s voluntary efforts toward continuous improvement in sustainability. The 2017 recipients were announced June 28 in Chicago.

National Milk is advocating in support of new legislation, introduced in both the House and Senate, that would create tax incentives for nutrient recovery and biogas systems, and is working with the legislation’s sponsors to find opportunities to pass the measure as part of a broader tax reform bill.

The legislation, known as the Agriculture Environmental Stewardship Act, will amend the tax code to make nutrient recovery technologies and biogas systems eligible for an investment tax credit to cover the upfront capital costs of installing the systems. The measure was sought by NMPF to help dairy farmers increase their investment in technologies that help recover and recycle nutrients from animal waste, in turn improving water quality in communities.

The new measure, H.R. 2853, was introduced in the House on June 8 by Reps. Ron Kind (D-WI) and Tom Reed (R-NY), and features a growing, bipartisan coalition of 24 representatives as co-sponsors. Sen. Sherrod Brown (D-OH) introduced an identical bill, S. 988, in the Senate in late April, where he was joined by co-sponsor Sen. Pat Roberts (R-KS), chair of the Senate Agriculture Committee.

“By creating incentives to make biogas and manure resource recovery technologies more affordable, the Agricultural Environmental Stewardship Act will encourage more widespread use of these technologies. This will benefit society by decreasing nutrient runoff in waterways, decreasing farm odors and improving water quality,” said Jim Mulhern, NMPF president and CEO. 

The Agriculture Environmental Stewardship Act is also sponsored by the bipartisan co-chairs of the Congressional Dairy Farmer Caucus.

In a move supported by NMPF and other farm groups, the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers announced they are taking initial steps to rescind the Waters of the U.S. (WOTUS) rule, which expanded federal authority to place certain waters under the Clean Water Act. The rule – suspended last year by a district court – frustrated dairy farmers and state attorneys general around the nation with its ambiguity and potential for serious regulatory overreach. NMPF, which repeatedly asked EPA to rewrite the rule, applauded EPA and the Trump Administration for recognizing the flaws in the existing regulation.

In May, NMPF told EPA to repeal the existing rule and implement a separate one that both closely adheres to the language in the Clean Water Act (CWA) and aligns with recent Supreme Court decisions that prompted EPA to issue the rule in the first place. NMPF will provide input to EPA on the action to rescind the current rule, as well as engage in the rulemaking process to redraft the previous language, once EPA initiates that action.  

“NMPF is pleased by EPA’s action in tackling what most farmers in the nation viewed as a highly flawed rule,” said Jim Mulhern, president and CEO of NMPF. “We are confident that this time EPA and the Corps will get it right, thanks to input from NMPF and other agriculture organizations.”

The original WOTUS regulation, proposed in April 2014, established federal authority over “navigable” U.S. waters, but was later expanded to include upstream waters and streams, which farmers often use for drainage and irrigation. NMPF was not satisfied with the EPA’s first attempt to develop the regulation, and supported efforts to halt its implementation.

In total, 11 lawsuits were brought in federal district courts against EPA, and another 14 petitions were filed in U.S. Courts of Appeals around the nation. Earlier this year, the U.S. Supreme Court halted the rule indefinitely to determine which courts have jurisdiction over the matter.

CWT member cooperatives secured 26 contracts to sell 4.1 million pounds of cheese to customers in Asia, Central America, the Middle East, North Africa and Oceania in June 2017. The product will be shipped from June through September 2017.

These transactions raise the total CWT-assisted product sales to 41.8 million pounds of cheese and 3 million pounds of butter. The sales are going to customers in 17 countries in five regions, and will move the equivalent of 453.9 million pounds of milk on a milkfat basis overseas through August 2017.

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 affects 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 online.

The monthly Margin Protection Program (MPP) feed cost for May was $8.09 per hundredweight based on corn and alfalfa hay prices reported last week by USDA’s National Agricultural Statistics Service (NASS), and soybean meal prices reported earlier by the department’s Agricultural Marketing Service (AMS). NASS also reported a 20-cent-per-hundredweight increase from April in the May U.S. average all-milk price, to $16.70 per hundredweight. Therefore, the monthly MPP margin for May was $8.61 per hundredweight.

The modest increase in the monthly all-milk price should be the beginning of a recovery that the current CME dairy futures markets collectively predict will top out at the end of this year at about the same price as when the year began, just under $19 per hundredweight. The milk price rise is being powered by increases in both Class III and Class IV prices, with most of that due to higher milkfat prices. Neither Class III nor Class IV skim prices are projected to rise much above their current levels through the end of the year, while domestic cheese stocks remain high and skim milk powder continues in oversupply globally.

The CME futures are currently projecting modest increases in corn prices into the harvest season and virtually flat prices for soybean meal through the end of the year. After falling for most of last year, the NASS alfalfa hay price has been increasing this year, from $128 per ton in January to $155 per ton in May. USDA’s current MPP margin forecast, based on the June 29 CME futures settlements, continues to project that the margin will remain well above $8 per hundredweight during 2017 with essentially no chance under current conditions that it will fall below that level.

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