Early July futures for feed and milk prices are pointing toward stronger margins for the remainder of 2016, and into 2017.  A rebound in cheese prices, and the continued strength of butter, are boosting expectations for milk prices in the last half of this year, while improved crop growing conditions are keeping a lid on feed costs.

Dairy farmers have from now until Sept. 30 to enroll in the Margin Protection Program for coverage in 2017, or to change their coverage level if they are already participating in MPP.  NMPF’s Future for Dairy website offers a variety of educational resources to help farmers select the desired coverage level.

Cooperatives Working Together member cooperatives captured 17 contracts to sell 4.868 million pounds of American-type cheese, 458,562 of butter and 2.119 million pounds of whole milk powder in June. These products will go to customers in Asia, Central America, the Middle East, North Africa, Oceania and South America. The product will be shipped from June through December 2016.

For the first six months of 2016, CWT assisted members in winning export sales contracts totaling 28.098 million pounds of American-type cheese, 5.351 million pounds of butter (82% milkfat) and 20.406 million pounds of whole milk powder going to customers in 20 countries on five continents. The sales are the equivalent of 528.696 million pounds of milk on a milkfat basis. Totals are adjusted to reflect cancellations.

Assisting CWT member cooperatives gain and maintain world market share through the Export Assistance program expands the long-term 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.

New legislation was introduced in the U.S. House of Representatives in mid-June that would create tax incentive investments in biogas and nutrient recovery. NMPF worked with the bill’s sponsors to enhance the value of the legislation, titled the Agriculture Environmental Stewardship Act, to dairy farmers.

The new measure, introduced by Reps. Ron Kind (D-WI) and Tom Reed (R-NY), will help dairy farmers increase their investment in technologies, such as manure digesters, that help recover and recycle nutrients from animal waste.

“This measure recognizes the value that biogas systems can have as dairy producers continue improving the sustainability of their farms, large and small, across the country,” said Jim Mulhern, president and CEO of NMPF. “It will benefit society by decreasing nutrient runoff in waterways, decreasing farm odors, and improving water quality.

Mulhern said the creation of this new investment tax credit “also addresses the value of nutrient recovery technologies, which can transform manure into fertilizer for crops and bedding for cows.”

The Agriculture Environmental Stewardship Act is also sponsored by the bipartisan co-chairs of the Congressional Dairy Farmer Caucus. NMPF sent a letter thanking the sponsors for their efforts to move this legislation through Congress. A similar bill is expected to be introduced this year in the Senate.

As President Barack Obama met with his counterparts from Canada and Mexico last week in Ottawa, NMPF joined the U.S. Dairy Export Council in issuing a joint statement calling on the United States to ensure that Canada “plays by the rules” when it comes to dairy trade.

NMPF cited the “continual erection of nontariff trade barriers” by Canada, including the recent milk pricing policy change designed to discourage Canadian processors from using imported dairy products. In light of this disingenuous use of policies and regulations to block trade, NMPF stressed the importance of ensuring that the nation’s existing trade obligations, as well as its new commitments in the Trans-Pacific Partnership agreement, work in practice as intended on paper.

This was also the message delivered by NMPF staff on a trip to Canada last month. During that visit, NMPF’s Senior Vice President for Strategic Initiatives & Trade Policy, Jaime Castaneda, met with the U.S. Ambassador to Canada, Bruce Heyman, as well as representatives from the USDA’s Foreign Agriculture Service and the State Department. In addition, there were also meetings with high-level officials at the Canadian Ministry of Agriculture and the Canadian Dairy Commission. Throughout these discussions, NMPF expressed strong concerns with Canada's trade-restricting actions and clearly communicated that the United States is resolute about its rights to defend U.S. market access avenues. 

NMPF Chairman Randy Mooney told a congressional panel last month that free trade agreements have the potential to benefit America’s dairy farmers, but current – as well as future – trade deals must be carefully enforced.

Mooney told the House Ways and Means Trade Subcommittee on June 14 that U.S. dairy sales in foreign markets have risen dramatically in the 21^st century, increasing 435% since 2000.  He said well-negotiated agreements have paved the way for this increase, citing the World Trade Organization’s GATT agreement, NAFTA, CAFTA, and the agreement with South Korea as examples of trade deals that have benefited America’s dairy farmers.  [Mooney’s full testimony can be found here].

However, the benefits of trade agreements can erode if they are not carefully structured and then continuously and judiciously enforced, he said.  One recent example of such a situation is in Canada, where efforts to restrict market access for American milk products are growing, in anticipation of the enactment of the Trans-Pacific Partnership agreement.

“NMPF supports TPP. We believe this agreement could deliver important benefits to U.S. dairy farmers provided that it’s properly implemented and enforced.” But if TPP partners are allowed to erode existing access in order to undermine future U.S. export gains, “it is hard to see how this agreement will live up to its potential to move us forward,” Mooney said. This is particularly a concern with Canada, he indicated.

“We are drawing the line here. This recent action by Canada is a clear violation of their prior trade commitments, as well as the spirit of Trans-Pacific Partnership, and it cannot be permitted,” said Mooney, referring to a decision by Ontario’s provincial government to favor domestic milk proteins designed for use in Canadian cheese manufacturing in a way that disadvantages U.S. milk exports.  The regional Ontario milk pricing policy may soon also be implemented across Canada.

Mooney pointed to a basket of U.S.-made farm products to drive home the message that a growing concern in trade policy is the push by European governments to restrict the use of common food names in a way that will hamper exports of certain foods, including many varieties of cheese made in America and sold internationally.

Rather than serving as a means to remove trade barriers and increase free trade of agricultural products, he said that the European Union “not only is maintaining their existing barriers, but also is actively pushing in the Transatlantic Trade and Investment Partnership to impose new barriers through geographical indications provisions. The TTIP cannot be an agreement that expands EU dairy exports while failing to resolve barriers to U.S. dairy exports.”

Given that European food companies already enjoy a major export advantage to the U.S., “America’s dairy farmers will not support a TTIP agreement that incorporates policies aimed at artificially increasing the $1.5 billion transatlantic dairy trade deficit. A solid deal must level the playing field for U.S. dairy exports.”

NMPF also reiterated this point in a letter [LINK] to U.S. Trade Representative Michael Froman and Agriculture Secretary Tom Vilsack, dated June 22. NMPF joined 36 other agriculture groups in calling on Froman and Vilsack to ensure the TTIP agreement is comprehensive and meets the needs of the food and agriculture industries.

“Anything less will fail to gain the necessary support for ratification while making it all the more difficult to achieve the resolution of the various issues plaguing our industries,” the letter said.

Nearly 60 young farmers joined a large contingent of NMPF board members who descended upon Capitol Hill in early June to advocate for a sensible solution to the dispute over the proper labeling of foods produced using biotechnology. The Capitol Hill blitz demonstrated a groundswell of grassroots support that helped lead to the now imminent congressional action on the measure.

The activity on Capitol Hill was one highlight of last month’s summer NMPF Board meeting, which coincided with the then-stalemated negotiations between key senators on the food biotech disclosure measure.

Just as they do each June, the national Young Cooperator (YC) program brought farmers from all over the country to discuss key issues of concern with their elected officials, which also included trade agreements and biogas tax legislation (see separate stories on developments on those issues). NMPF board members joined the YCs on these visits to further press their representatives on supporting a common-sense biotech disclosure agreement.

On June 7^th, the YCs joined the board and NMPF staff in celebrating the organization’s centennial with a rooftop dinner overlooking the Capitol building. Sens. Pat Roberts and Debbie Stabenow, and Rep. Collin Peterson attended the dinner, making remarks encouraging NMPF’s members to speak out on behalf of the dairy industry.

“During our 100^th anniversary commemoration last month, NMPF again confirmed the effectiveness of its member engagement on national policy issues,” said Jim Mulhern, President and CEO.  “As we have seen many times, farmers can have a noticeable impact here in Washington when they speak with one voice. Our members demonstrated that once again during our meeting in June.”

Efforts to adopt a national framework for the labeling of foods made with biotechnology are nearing successful completion on Capitol Hill, now that Senate leaders have agreed on a compromise approach to achieve that goal. The Senate is expected to take a preliminary cloture vote on the measure on Wednesday afternoon which, if successful, will be followed by a vote on final passage on Friday.

NMPF is urging its members to contact their Senators in support of the measure, using the Dairy GREAT online email tool.  Once the Senate acts, the measure also will have to be approved by the House of Representatives before being signed by President Obama.  The window of opportunity to complete the process is narrow, as Congress is slated to recess on July 15 until after Labor Day, which is why NMPF is coordinating a strong grassroots campaign to spur action this week.

After months of negotiation, Sens. Pat Roberts (R-KS) and Debbie Stabenow (D-MI) of the Senate Agriculture Committee reached an agreement in late June on legislation that would create a national, mandatory system to disclose the use of biotech ingredients. The Senate measure would preempt state laws, such as the one in Vermont, which takes effect this month.  The Robert-Stabenow agreement received strong support in a procedural vote last Thursday, and is expected to move toward final adoption later this week.

The agreement requires that products or ingredients made with biotechnology disclose this information through three possible methods: through text or a symbol directly on the packaging, using a QR code, or a link to a website where consumers can go for more information.

“We need this sound and workable approach to reaffirm the federal government’s role in food labeling policy and prevent the chaotic mess that would arise from leaving this issue to the whims of 50 different states,” said NMPF President and CEO Jim Mulhern.

Throughout the Senate negotiations, NMPF argued strongly that milk and meat from animals that consume feed grown from biotech seeds are not subject to the labeling disclosure provisions.

“This is an important, common-sense provision,” Mulhern said. “Milk and meat are not genetically modified by the cows consuming biotech feed, just as humans are not genetically modified by consuming foods derived from biotechnology.”

Earlier last month, at the organization’s summer board meeting, the NMPF Board of Directors adopted a resolution calling on Congress to act quickly to provide consumers across the country clear and consistent information on food biotechnology.

One of the realities of the human experience is that we are evolutionarily conditioned to enjoy the tastes imparted by sugar, salt and fat.  In reasonable amounts, foods containing some combination of these nutrients make eating much more enjoyable. The key is always drawing the line between moderation and excess.

While federal food policy doesn’t change as rapidly as food fads, it does evolve over time to reflect the shifting scientific consensus about the optimal choices for our diets.  Fifty years ago, dietary fat and cholesterol were viewed as major public health concerns, and through a combination of labeling mandates, public health education campaigns, an incessant media drumbeat and clever marketing, the fat content was significantly reduced in many major food groups, including dairy.  The latest version of the federal Dietary Guidelines for America still reflects this mindset, even if the scientific research isn’t as indisputable as it once was said to be about the relative threat to public health posed by animal fats.

In fact, recent research has demonstrated that the anti-fat gospel of the past several generations can’t be supported by a more robust assessment. Leading publications, from the Annals of Internal Medicine, to the American Journal of Clinical Nutrition, to the medical journal Atherosclerosis, have published peer-reviewed articles reassessing the cause and effect of animal fat consumption and heart disease – and are not finding a connection.  Those who attend NMPF’s annual meeting this October will hear first-hand about this dynamic from journalist and author Nina Teicholz, who in her 2014 book “The Big Fat Surprise,” wrote that much of the rationale for the anti-fat crusade was based on thin, even contradictory evidence.

Not surprisingly, this emerging recognition that animal fat is not necessarily bad for us hasn’t yet been fully embraced by many in the nutrition community. Some groups that have built their reputations and raised lots of money pushing the contrary thesis for the past several decades are having a hard time acknowledging that perhaps they overstated the evidence. But we are working to steadily change this decades-old mindset about dairy fat. Even as nutritionists are gradually reconsidering their viewpoints, consumers are already reversing a generational trend in milk consumption: sales of whole milk increased 4.5% last year, while fat-free milk sales declined 12.3%.  Taste is a powerful motivator.

The result of the half-century-long health crusade demonizing fat was to reduce its use in many prepared foods.   But since taste is the primary driver for people when choosing a food, what replaced fat in certain cases was refined carbohydrates – often sugar or some closely related sweetener.   As marketers – prodded by “health” groups – jumped on the low-fat/high-carb kick, Americans gained weight.  The evidence is not absolute that there is a direct causation between these events, but the net effect is beyond dispute: The average person today is heavier, and society has a much higher rate of obesity-related diseases such as diabetes, than in the 1960s.

Now one of the current targets is the presence of sugar in foods.  Advocacy groups have gone after the soda industry with a series of local taxes on soft drinks, and at the same time, the Food and Drug Administration is targeting the levels of sugars added to foods.  The FDA’s just-released update of the Nutrition Facts panel is notable because it requires food companies to explicitly quantify the added sugar in foods. 

NMPF was engaged in this regulatory battle because of our concern that naturally occurring lactose in functional ingredients such as whey and nonfat milk should not be lumped in with other sugars added merely as sweeteners. The FDA accepted our reasoning, which is a victory for dairy.  Nonetheless, sugars in their various forms are now being subject to the same criticism that was directed at fat a generation ago.

Now that the revised Nutrition Facts label has been finalized, the other looming public health focus in the food category is on sodium. Salt is as common a component as sugar or fat in formulated foods, including in many dairy foods.  And, as with sugar and fat, it plays a role in taste and functionality. Sodium also plays a role in food safety.  Salt consumption by Americans remains above government-recommended levels, and has been linked to hypertension – even though the verdict is still out as to whether people with normal blood pressure benefit from lower sodium consumption.

Recently, the FDA issued a voluntary guidance to, in its words, “explore effective and efficient strategies to promote sodium reduction in the food supply. We believe that these voluntary goals can be an effective means to achieve significant benefits to public health…”  The FDA has outlined some aspirational goals for reducing the sodium level in a wide variety of foods, including cheese and butter. The objective is to cut average salt consumption from 3,400 milligrams per day to 2,300. This is a voluntary campaign, at least for now.

That’s a big reduction, and it would drastically alter the taste, texture and appeal of a whole variety of items in our diets.  NMPF will continue to engage in this process, especially because the science is still evolving on the impact of sodium in our diets – and because history shows that what passes for a slam-dunk consensus on the specific role and impact of certain nutrients in our diets can, and should, change over time.

ARLINGTON, VA – The National Milk Producers Federation has updated its Margin Protection Program website – futurefordairy.com – with new materials to assist dairy producers considering enrollment in the third year of the federal dairy safety net program. The enrollment period officially opened July 1 and ends September 30, 2016, for coverage in calendar year 2017. Farmers already participating in the program can change their coverage level during this three-month enrollment window.

The Margin Protection Program (MPP) provides financial assistance to participating dairy producers when the margin – the difference between the price of milk and feed costs – falls below a coverage level selected by the producer. Dairy farmers can insure their farms on a sliding scale between $4 and $8 per hundredweight, deciding both how much of their production history to cover, and the level of margin to protect. The program, created in the 2014 farm bill, offers more extensive coverage for low-margin conditions than previous programs.

“The poor margins in the first half of 2016 demonstrate that the Margin Protection Program can play an important role in helping America’s dairy farmers manage their financial risks,” said Jim Mulhern, president and CEO of NMPF.  “While we continue to examine ways to improve the program in the future, farmers need to carefully consider their risk management coverage options in 2017.”

To better inform producers as they enroll in MPP, or choose different supplemental coverage levels, NMPF offers the following materials on the website’s Resources page:

• Overview of the Margin Protection Program
• A link to the MPP online calculator
• How to use the MPP online calculator
• Informative PowerPoint presentation on MPP
• Frequently Asked Questions
• MPP Margin Spreadsheet of Milk and Feed Prices, 2007-2015

At the request of NMPF, the USDA has made several improvements in the MPP program in the past year. One change announced by USDA in April ensures that farms enrolled in the program will receive catastrophic coverage at the basic, $4 per hundredweight margin level on 90% of their production history, even if a farmer purchases additional, supplemental coverage at a level of less than 90% of their production base. This should improve the flexibility of the program in offering effective risk management options to dairy farmers.

The USDA also announced earlier this year that a farm’s production history can be restructured to accommodate new family members joining the dairy operation. This will accommodate the intergenerational transfer of production history for children, grandchildren and their spouses to join a dairy operation. Any dairy operation already enrolled in MPP that had an intergenerational transfer occur will have an opportunity during the 2017 annual coverage election period to increase the operation’s production history up to 4 million pounds per year.

Those dairy farms that have already signed up for the MPP will remain in the program through 2018, as long as they pay the $100 administrative fee each year. Producers have the option of selecting a different coverage level during open enrollment each year.  Those enrolled in the MPP as of the start of 2015 will receive a 1.3% increase in their production history for 2017, reflecting the overall national increase in the nation’s milk supply since last year.

According to the USDA, 54% of America’s 43,000 dairy farms are enrolled in the MPP, representing 80% of the nation’s milk supply.  The USDA also has its own website on the MPP.

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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.

ARLINGTON, VA – Today the United States, Canada and Mexico kicked off the North American Leaders’ Summit in Ottawa. One topic of key importance in the trading relationship between the United States and Canada has been Canada’s persistent undermining of U.S. dairy export access, a pattern that has cost American dairy farmers and processors hundreds of millions of dollars. Most recently, Canada has instituted a new pricing policy at the provincial level that is designed to discourage Canadian processors from using imported dairy products.

The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) expressed appreciation for the Obama Administration’s attention to the harmful impact on U.S. dairy exports caused by Canada’s continual erection of nontariff trade barriers. The two organizations underscored the importance of high-level discussions this week on Canada’s actions on dairy, and how they hurt the U.S.-Canada trading relationship.

“America’s dairy farmers rely on exports to provide a home for the equivalent of one day’s worth of milk production each week,” said Jim Mulhern, President and CEO of NMPF. “When other countries disingenuously use policies and regulations to block those sales – especially in light of previously negotiated free trade agreements – the negative impact is felt on the farm. This is particularly damaging in tough years like this when milk supplies exceed demand. We hope President Obama will continue to hold our trading partners accountable, particularly those with whom we’re preparing to deepen our trade ties, such as Trans-Pacific Partnership members.”

Tom Suber, President of USDEC, echoed that point: “U.S. companies have made investments here at home, adding more jobs and expanding manufacturing facilities, to meet the demands of global buyers – including those in Canada. Our industry recognizes that we need to play by the rules – it’s only right that the U.S. insist that others do so, as well.”

NMPF and USDEC both support the Trans-Pacific Partnership. Both organizations, however, have stressed the importance of ensuring that the agreement works in practice as envisioned on paper and the importance of Canada’s compliance with existing obligations in achieving that result.

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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.

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.