NMPF and the U.S. Dairy Export Council have told the U.S. Trade Representative that Russia’s ban on Western dairy imports, imposed in response to economic sanctions instituted after the invasion of Ukraine, is disrupting global dairy markets and appears to violate international trade rules. 

In comments filed with USTR late last month, NMPF and USDEC condemned the Russian ban and said it was forcing a shift of dairy supplies from Europe to other global markets, where competition for buyers is intensifying. In addition, they said, “Russia’s outright ban on products from the U.S. and other major suppliers for purely political reasons appears to be in violation of its World Trade Organization commitments.”

The two groups urged USTR to prepare for the ban to be lifted by establishing a government list of dairy facilities wanting to export to Russia. “The reality is that if the ban were lifted tomorrow, the U.S. dairy industry would still be cut off from this market due to the facility listing requirement Russia is maintaining in violation of its WTO accession commitments,” they said.

In separate comments on China’s compliance with WTO rules, NMPF and USDEC said some U.S. dairy companies still are unable to ship products to China because of Chinese registration requirements. They urged the Agriculture Department and the Food and Drug Administration to make complying with the Chinese rules a priority.

NMPF and USDEC also noted that negotiations are under way between China and the European Union over geographical indications. The two groups expressed “deep concern” about the impact of these negotiations on U.S. exports to China and particularly on opportunities to expand the range of products sold in the rapidly evolving Chinese market. 

Dairy producers have more than a month — until November 20 — to sign up for 2016 coverage under the dairy Margin Protection Program.

Agriculture Secretary Tom Vilsack extended the enrollment period under the dairy safety net program on September 22, a week after NMPF expressed concern that the original Sept. 30 deadline coincided with the fall harvest in many areas and also with the enrollment deadline for USDA’s Agriculture Risk Coverage and Price Loss Coverage programs.

“A similar extension last fall greatly helped to boost enrollment in MPP for 2015,” said NMPF President and CEO Jim Mulhern. “This extension should likewise enhance participation in the program for 2016.”

To help farmers make decisions, NMPF has updated tools at www.FutureforDairy.com, a website serving as a clearinghouse for MPP information. Included is a calculator allowing farmers to estimate future margins based on their forecasts of feed and milk prices.

MPP helps protect against the kind of catastrophic losses that many farmers experienced in 2009 and again in 2012. It allows farmers to insure the difference between milk prices and feed costs. Producers insure their operations on a sliding scale, deciding both how much of their production to cover and the level of margin to protect.

Slightly more than half of U.S. dairy operations signed up in the first MPP enrollment period last fall. The program has issued payments to those with the maximum $8 coverage in each of four bi-monthly coverage windows this year. Under the previous Milk Income Loss Contract program, no payments would have been authorized so far this year. 

Cooperatives Working Together member cooperatives last month captured 52 contracts to sell 13.104 million pounds of dairy products to customers in 19 countries. The 3.4 million pounds of American-type cheeses, 6.5 million pounds of butter and 3.2 pounds of whole milk powder will be shipped from September 2015 through March 2016.

These sales contracts bring the 2015 CWT totals through August to 47.1 million pounds of cheese, 25.7 million pounds of butter, and 35.6 million pounds of whole milk powder. In total, CWT assisted transactions will move the equivalent of 1.272 billion pounds of milk, on a milkfat basis, to customers in 35 countries on five continents. These totals are adjusted for contract cancellations.

Developed by NMPF, CWT is a voluntary export assistance program supported by dairy farmers producing 70 percent of the nation’s milk. By helping to move U.S. dairy products into world markets, CWT helps keep maintain and grow U.S. dairy farmers share of these expanding markets which, in turn, keeps dairy farmer milk prices at reasonable levels.

NMPF staff played leadership roles in September at the 2015 International Dairy Federation (IDF), World Dairy Summit (WDE) held in Vilnius, Lithuania. Before the Summit even started, NMPF staff were active in representing the interests of U.S. dairy farmers and cooperatives in the IDF business meetings, discussing important topics including international trade, process cheese standards, farm management issues, antimicrobial stewardship, animal health, environment and sustainability, food safety, and animal care.

Due in large part to NMPF’s contributions, several staff were nominated to take leadership roles on several of IDF’s standing committees. Dr. Jamie Jonker, Vice President of Scientific Affairs, was elected as Chair of IDF’s Farm Management Committee. Emily Meredith, Vice President of Animal Care, was elected as Deputy Chair of the Standing Committee on Residues and Chemical Contaminants. Shawna Morris, Vice President Trade Policy, shown above, will also remain as Vice-Chair for US-IDF for another term.

NMPF spotlighted the U.S. dairy industry successes during the WDS, as well. Dr. Jonker presented during the Animal Health and Welfare Conference on the “Antibiotic Stewardship in the United States Dairy Industry,” showcasing the efforts underway to ensure judicious use of antibiotics by America’s farmers. During the same session, Meredith discussed the National Dairy FARM animal care program in a presentation titled “Addressing animal care concerns and building consumer trust through ‘responsible sourcing’ guidelines for dairy producers.”

At the Dairy Farming Conference during the poster session, Dr. Jonker highlighted the on-going preparedness efforts for “A secure milk supply plan for a foot-and-mouth disease outbreak in the United States.” During the same Conference, he moderated a panel discussion about risk management on dairy farms, where Morris discussed the new dairy Margin Protection Program. Dr. Jonker also moderated the first IDF Dairy Farm

ers Forum, where dairy farmers from around the

 world discussed common issues of economic, social, and environmental sustainability.

In addition to highlighting the great things happening on U.S. dairy farms, the WDS provided an excellent opportunity for NMPF staff to network and engage with experts from numerous countries. Staff in attendance brought back many ideas that will help inform and improve many NMPF programs. 

In early September, the Food and Drug Administration published final versions of two of the longest and most important regulations to be issued under the 2011 rewrite of the nation’s food safety laws.  The regulations spell out good manufacturing practices and preventive controls for producing both human food and food for animals. The human food regulation is 900 pages and the animal food regulation is 600 pages.  NMPF staff currently are reviewing the documents.

The regulations require facilities producing both human and animal food to develop written plans indicating possible problems affecting the safety of their products and the steps they would take to prevent or minimize those problems.

NMPF has been involved in the development of these regulations over several years, advocating on behalf of the dairy industry. A conference call or webinar will be scheduled with NMPF members later this month to review key aspects of the regulations. 

What do the Secretary of Agriculture, former Notre Dame football coach Lou Holtz, and a world-renowned magician have in common?

All are appearing at NMPF’s annual meeting at the Marriott World Center in Orlando October 26-28. The 2015 meeting agenda, which is nearly complete, also includes a marketing expert specializing in millennials, and panel discussions on two of the hottest issues in dairy farming, humane animal care and renewable energy.

NMPF’s annual meeting is held jointly with the National Dairy Promotion and Research Board and the United Dairy Industry Association. The core general session program opens Tuesday, October 27, with the three-hour NMPF Town Hall, at which attendees learn about the Federation’s activities and question staff on the future of the dairy industry.

Millennial marketing expert Jeff Fromm, president of FutureCast, speaks after lunch Tuesday, followed by the panel discussion animal care. Invited panelists include representatives from McDonalds, Starbucks, Kroger supermarkets and Schreiber Foods. Chobani and Walmart are confirmed.

After the panel discussion, NMPF Chairman Randy Mooney and President and CEO Jim Mulhern will present their report on the Federation and its priorities and that evening a Welcome to Florida reception will feature the winners of NMPF’s annual cheese contest.

Wednesday, October 28, opens with the renewable energy panel discussion, featuring Steve Rowe, CEO of Newtrient LLC, a consortium of organizations dedicated to reducing dairy’s environmental footprint. Among other things, Newtrient LLC, helps dairy farmers capture economic value from agricultural by-products.

Tom Vilsack, the longest serving agriculture secretary in nearly 50 years, speaks later in the morning, followed by Tom Gallagher, CEO of Dairy Management Inc.

Holtz, one of the most successful college football coaches of all time and a former ESPN analyst, is the closing lunch speaker and magician Bill Herz is the entertainment for the evening banquet.  

In between these major events are board meetings, a dairy bar, networking and sightseeing opportunities, and a raffle to raise money for NMPF’s scholarship program.

Reservations at the Marriot World Center are still available on a space and rate available basis. Attendees can register for the meeting up to the last minute, but a late fee will be charged. See NMPF’s website for the latest registration and hotel information. 

To help dairy marketers and farmers feed consumers’ hunger for information about where their food comes from, the National Dairy FARM Program will be launching a new website this month. To help share the story of animal care on America’s dairy operations, this October, the FARM Program will be releasing a new suite of communications resources that includes a brand new, consumer-friendly and updated website; a catchy, modern, animated video explaining the program and a blog to talk about animal care.

The FARM Program will also be active on Twitter, Facebook and Instagram to cross-promote the content from dairy farmers and co-ops that are active on social media, especially when they’re mentioning or discussing topics that pertain to animal care. This activity is supported by Dairy Management Inc.

The new education tools come at a time when the number of consumers who say animal welfare is important has grown since 2013 from 17% to 31%.  Today, more than 93% of the domestic milk supply comes from farms that participate in the National Dairy FARM Animal Care Program.

Carrie Hughes, a Texas native with experience in nonprofits, has joined the NMPF staff as executive assistant to President and CEO Jim Mulhern. She will provide administrative support by facilitating day-to-day workflow, coordinating business trips and completing special projects. She replaces Brenda Rowe, who worked under Mulhern for two years.

Hughes has a family history of farming: Her father’s family previously owned a small farm in East Texas, and her aunt and uncle own a ranch in South Texas. Hughes attended Baylor University in Waco, where she majored in political science.

Since then she has received another degree in teaching, and worked for several nonprofits, including the Young Presidents Organization in Texas, and the D.C.-based Arthritis Foundation as administrative coordinator to the vice president of advocacy.

Hughes is attending George Washington University for her master’s in geographical information systems and geography.

OCTOBER 4, 2015 — The National Milk Producers Federation and the U.S. Dairy Export Council noted the conclusion today of Trans-Pacific Partnership (TPP) negotiations and thanked the U.S. negotiators for their work. NMPF and USDEC leadership and staff have attended the talks in Atlanta this week, which kicked off with a chief negotiators meeting on September 26 before shifting into a Ministerial on September 30. Both organizations have been providing input and guidance to negotiators throughout the duration of the regional trade pact.

As expected, details of the agreement were not immediately available. Transparency requirements under the Trade Promotion Authority legislation passed by Congress earlier this year, however, require the full text of the agreement to be released shortly. NMPF and USDEC will carefully review the agreement’s dairy provisions in the coming days.

The organizations expressed deep appreciation to the numerous members of Congress who have conveyed the importance of a successful dairy market access outcome during the years of negotiation, but in particular, during the closing negotiations this week.

 

The federal government has had a sometimes helpful, sometime hurtful role in agriculture throughout the nearly 100 years that the National Milk Producers Federation has been in existence. Various government programs to help level the economic playing field for food producers have come and gone. But the clear trend is toward providing farmers with skin-in-the-game risk management tools to cushion some of the downside damage from the often incredible volatility that they face – without creating a cradle so all-encompassing that it snuffs out competition or innovation.

For dairy farmers, this type of a government-sponsored system to hedge some of their economic risks is a relatively new paradigm.  Up until last year, and dating back well into the 20th century, the government used a mix of interventions, including the price support program, as well as periodic direct payments, to assist the dairy sector.  But as a result of the farm bill that Congress passed last year, those days are behind us.  Today, the same type of risk management that crop producers use – economic insurance to prevent catastrophic production losses – is what dairy farmers now have. 

The USDA’s Margin Protection Program, which took effect back in January, remains a work in progress, but overall, the MPP is functioning the way it was intended.  While older programs were linked to a specific price for milk and dairy products, the MPP recognizes that price alone doesn’t determine the economic health of the industry.  Feed costs play a crucial role – and in fact, have grown in importance given the increased reliance of today’s dairy sector on purchased feed.  That’s why the MPP is focused on the all-important margin between the price of corn, soybean meal and alfalfa, and the farm-level price of milk.

When the initial sign-up period for MPP coverage in 2015 got underway 12 months ago, farmers were enjoying a year of record-high milk prices. Despite our industry’s long history of up-and-down price cycles, the notion that the commodity supply-demand pendulum could swing dramatically back toward lower prices was far from many people’s minds. 

But the cycle did reverse itself, with a vengeance, as this year began.  Growing output in the world’s major milk production regions, the Russian embargo, China’s cooling economy and a strong dollar combined to dampen world dairy prices and U.S. exports. Dairy farmers in Europe and New Zealand are suffering through prices worse than we faced in 2009. Milk prices here have actually been surprisingly consistent – better than the rest of the world, but still disappointingly poor – during the first nine months of 2015.  Unlike several years in the recent past, feed prices have been in a consistently moderate range.

The result of this dynamic has been an average margin of around $8 per hundredweight, using the national formula established under the MPP program.  That figure is close to the average margin we’ve experienced over the past 15 years.  It is certainly well above the horrifically bad margins of 2009 and 2012, when the gap between feed and milk prices was less than $4/cwt.

This year’s distressing, but not disastrous, conditions have created a challenging freshman year for the MPP program.  For those who elected to purchase the maximum level of coverage, at $8, the program has made small payments in every one of the four, two-month payment cycles through August.  While few farmers elected to cover up to that maximum margin level, those that did have been paid.  Those who insured less, including the majority of farmers who paid only $100 for basic $4 coverage, have not received any compensation because margins haven’t been at catastrophic levels. 

From this perspective, then, the MPP has been like any other insurance program.  From a national standpoint, this year’s margins have been closer to a fender-bender, where one’s auto insurance coverage probably isn’t the best way to cover the damages.  This year isn’t the equivalent of a total bumper-to-bumper wreck, necessitating a large payout to fund an entirely new vehicle.  So from that standpoint, the MPP hasn’t been tested by a worst-case scenario. 

Some may have a sense of buyer’s remorse, wondering whether the old MILC payment program would have been more beneficial.  In fact, using the feed-adjusted MILC target price, this year’s milk prices would not have triggered any MILC payments in 2015. Class I prices have been well above the MILC trigger level every month this year. 

We are now in the MPP sign-up period for next year’s coverage. Thankfully, USDA Secretary Vilsack honored NMPF’s request last month for an extension of the sign-up period beyond the fall harvest. Dairy farmers now have until November 20 to elect their coverage level for next year, and will have until September 1, 2016, to pay any premium due for that coverage.

The choice farmers have to make for next year is whether market forecasts indicate that additional margin protection will be worth the added premiums. Such a question is a perennial consideration when purchasing any type of insurance, including protecting your home and property. 

The choice is not, however, whether some other type of government program for dairy farmers is a better approach.  That question was effectively answered in 2009 and again in 2012 – and also this year, which is a historically average one. In each case, the MPP program – a safety net, not an income enhancer – has been the consistent winner.

Jim Mulhern