Work on two massive free trade agreements, both with major implications for U.S. dairy farmers, has intensified with the start of 2015.

Officials from 12 Pacific Rim countries met in New York during the last week in January in an attempt to finish work on the Trans-Pacific Partnership, the approval of which could open major new markets for U.S. dairy products in countries including Japan and Canada. NMPF Senior Vice President for Strategic Initiatives & Trade Policy Jaime Castaneda was on hand for the talks, which are moving quickly and could be concluded as early as March.

Meanwhile, a new round of negotiations on the Transatlantic Trade and Investment Partnership is scheduled to resume in Brussels during the first week in February. One reason the Transatlantic trade agreement is important is because of European Union attempts to ban the use of feta, parmesan,  muenster and other common cheese names all around the world – including in the U.S. – unless the products are manufactured in Europe. The EU wants to use the TTIP to impose these bans, just as it has sought to do with its other trade agreements, against the strong opposition of NMPF and the U.S. dairy industry.

In Washington, the dairy industry’s concerns on the cheese names issue, known officially as geographic indications, are resonating with lawmakers. At a January 27th Senate Finance Committee hearing, Chairman Orrin Hatch (R-UT), and others grilled U.S. Trade Representative Michael Froman on the issue. Hatch said any final TTIP agreement “must … address the systemic misuse of geographical indications to create market barriers.”

Meanwhile, in the House of Representatives a day earlier, Ways and Means Committee Chairman Paul Ryan (R-WI) brought a wedge of Wisconsin cheese to a hearing to drive home the point on cheese names. “We need to address these trade barriers,” he told Froman.

Both hearings also stressed the importance of ensuring that TPP delivers meaningful export access for U.S. dairy products into key markets, a point highlighted by Chairman Ryan and Finance Committee Ranking Member Ron Wyden (D-OR), as well as additional members of Congress in both hearings. TPP talks are entering a critical stage during which the U.S. dairy industry will need to ensure its demand of a balanced market access outcome is heeded.

The U.S. Department of Agriculture announced last month that approximately half of the nation’s 46,000 dairy farmers have chosen to enroll in the new Margin Protection Program for 2016. Not only did more than 50 percent of all dairy operations enroll in the MPP, but 55 percent of those who signed up selected coverage above the basic, $4 per hundredweight level.

“For a totally new program that asks dairy producers to pay to participate, these numbers are very encouraging,” said NMPF President and CEO Jim Mulhern. “And with milk prices trending down, the MPP is the right solution at the right time for dairy farmers.”

The USDA also published a state by state breakdown of enrollment levels, ranging from a low in Wyoming of 5%, to a high in Nevada of 90%. The participation level in the ten largest dairy states was 51%, almost identical to the national average.

Anecdotal reports indicated that the sign-up extensions granted by USDA after Thanksgiving, coupled with a sharp downturn in milk price forecasts for 2015, encouraged additional participation prior to the December 19 cutoff. The next enrollment window, for calendar year 2016, begins July 1 and lasts for three months.

In January, Cooperatives Working Together helped its member cooperatives sell 4.4 million pound of cheese and 14.4 million pounds of butter overseas. The products – the equivalent of 365 million pounds of milk on a milkfat basis – will go to customers in 14 countries on four continents.

Developed by NMPF, CWT is a voluntary export assistance program supported by dairy farmers producing 70 percent of the nation’s milk. By moving U.S. dairy products into world markets, CWT helps keep domestic inventories and dairy farmer milk prices at reasonable levels.

In 2014, CWT helped 10 member cooperatives sell 190 million pounds of butter, cheese and whole milk powder overseas. That is the milk equivalent of 2.5 billion pounds of milk.

NMPF President and CEO Jim Mulhern defended animal care in the dairy industry and highlighted NMPF’s own responsible care program at the latest Food Dialogues session sponsored by the U.S. Farmers and Ranchers Alliance. The 90-minute online discussion originated from Boca Raton, Florida, and focused on animal care practices, particularly in the dairy industry.

Mulhern noted the frustration farmers feel when animal abuse videos surface in the media. While calling the videos “an aberration,” he said polls show consumers are genuinely concerned about animal care on farms, and that expectations across the food value chain have risen in recent years.

Mulhern explained that, to demonstrate dairy farmers’ commitment to humane care, NMPF in 2010 launched Farmers Assuring Responsible Management, or FARM, an on-farm education and evaluation program. Some 15,000 dairy farmers have since gone through the program’s second party education process, at the same time that organizations marketing 80 percent of the nation’s milk have committed to utilizing the program with all of their farmer-suppliers.

Calling it a “continuous improvement program,” Mulhern said FARM’s 50 on-farm animal care indicators are reviewed every three years and adjusted with input from farmers, veterinarians, animal care experts and the public. He indicated that in order for any animal care program to result in positive change, it needs to be widely adopted, which is why the FARM program will be successful as its adoption continues to grow.

Mulhern participated in the 14th Food Dialogues sponsored by the USFRA, an alliance of more than 80 farm organizations attempting to educate consumers about how food is grown and raised in America.

As a result of objections initially raised by the National Milk Producers Federation and endorsed in legislation passed late last year by Congress, the U.S. Environmental Protection Agency (EPA) has withdrawn a regulatory guidance issued as part of the Waters of the U.S. proposal concerning when farmers must seek Clean Water Act permits for a long list of normal farming activities near wetlands.

On Friday, January 29, the EPA and the U.S. Department of Army signed a memorandum withdrawing the “Interpretive Rule Regarding the Applicability of Clean Water Act Section 404(f)(1)(A).”

Last summer, NMPF requested that the Interpretive Rule be withdrawn because it could have actually discouraged water conservation and environmental best practices. Language prompting the EPA to withdraw the language was included in a spending bill approved last December in Congress.

“Our concern with the initial proposal from last year is that it could have altered the long-standing and productive relationship between farmers and the USDA’s Natural Resources Conservation Service, in a way that would have made it harder for farmers to implement water conservation measures,” said Jamie Jonker, NMPF’s Vice President for Sustainability & Scientific Affairs.

“We’re pleased the EPA and Army have recognized that this regulation could have backfired, and that they’ve taken the necessary step to withdraw it,” Jonker said. The EPA guidance, officially called an Interpretive Rule, was issued in March 2014. It said farmers are only exempt from needing Clean Water Act permits for more than 50 routine farming practices if they comply with detailed NRCS technical conservation standards.

Historically, these standards have been voluntary, and the farming practices exempt from the permit process. Had the interpretive rule not been withdrawn, “the NRCS would have been thrust into the role of enforcer, rather than remaining a source from which farmers could seek conservation advice. This could have hindered rather than helped conservation efforts,” Jonker said.

NMPF joined more than 90 other agriculture and related groups last week in urging West Coast shippers and dockworkers to settle a dispute that has hampered exports, cut revenues, and wasted food, including dairy products intended for export across the Pacific.

The dispute between the International Longshore and Warehouse Union and the Pacific Maritime Association began last summer, and has led to a slowdown in exports leaving West Coast ports.

In an open letter to both sides, the 92 agriculture groups said: “This regrettable situation is having a severe impact on our ability to export agricultural and food products to many of our main export markets… A more immediate problem, however, is the effect the drastic reduction in containers being loaded is having on perishable commodities. Those goods are spoiling and being destroyed before they can be shipped or are being diverted to the domestic market at severe discounts.”

The farm and food groups noted that exports of agricultural products have exploded in the last 20 years, growing from $46 million in 1994 to $144 billion in 2013. They urged both sides to resolve their differences quickly. They also asked the federal government to use “all available remedies” to end the dispute.

Graduate students researching dairy-related subjects are encouraged to apply for the National Dairy Leadership Scholarship Program. Each year, NMPF awards scholarships to Masters- or Ph.D.-level students conducting research of interest to NMPF member cooperatives and the dairy industry in general.

Recommended fields of study include agricultural communications, dairy science, animal health, animal or human nutrition, bovine genetics and herd management. Applicants do not need to be affiliated with NMPF members.

Candidates have until March 27 to apply for scholarships for the 2015-2016 academic year. Recipients will be selected by the NMPF board of directors in June and notified soon after afterward. Visit the NMPF website or call 703-243-6111 for details.

As the result of objections raised by the National Milk Producers Federation, the U.S. Environmental Protection Agency (EPA) has withdrawn a regulatory guidance issued last year concerning when farmers must seek Clean Water Act permits for a long list of normal farming activities near wetlands.

On Friday, January 29, the EPA and the U.S. Department of Army signed a memorandum withdrawing the “Interpretive Rule Regarding the Applicability of Clean Water Act Section 404(f)(1)(A).” Last summer, NMPF requested that the Interpretive Rule be withdrawn because it could have actually discouraged water conservation and environmental best practices.

“Our concern with the initial proposal from last year is that it could have altered the long-standing and productive relationship between farmers and the USDA’s Natural Resources Conservation Service, in a way that would have made it harder for farmers to implement water conservation measures,” said Jamie Jonker, NMPF’s Vice President for Sustainability & Scientific Affairs.

“We’re pleased the EPA and Army have recognized that this regulation could have backfired, and that they’ve taken the necessary step to withdraw it,” Jonker said.

The EPA guidance, officially called an Interpretive Rule, was issued in March 2014. It said farmers are only exempt from needing Clean Water Act permits for more than 50 routine farming practices if they comply with detailed NRCS technical conservation standards. Historically, these standards have been voluntary, and the farming practices exempt from the permit process.

In comments filed last July, NMPF said the guidance changes NRCS’s role from that of a conservation partner to that of an enforcer of the Clean Water Act, on EPA’s behalf.

Had the interpretive rule not been withdrawn, “the NRCS would have been thrust into the role of enforcer, rather than remaining a source from which farmers could seek conservation advice. This could have hindered rather than helped conservation efforts,” he said.

Jonker noted that NMPF has drawn up a detailed environmental handbook based on NRCS standards but tailored specifically to dairy farmers. Those who followed the guidelines in the book apparently would not have qualified for a permit exemption, “challenging the very notion of why the handbook was created in the first place,” Jonker added.

Established initially the 1930s, the NRCS provides voluntary help to farmers who want to conserve the resources on their farms.

The now-withdrawn Interpretive Rule was intended to be part of the larger Waters of the U.S. proposal issued last year by the EPA. The larger proposal is still under review by both EPA and the Army Corps of Engineers, and is also being scrutinized by Congress.

 

The National Milk Producers Federation, 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 more than 32,000 dairy producers on Capitol Hill and with government agencies.

Mark Twain observed that history doesn’t repeat itself, but it does rhyme. We can hear those rhymes while listening to the familiar patterns of the dairy market, particularly as the 21st century unfolds. The question we have to answer, as history echoes around us, is what can and should we be doing differently in this New Year to help make the rhymes of our economy be as harmonious as possible?

As 2015 gets underway, farm-level milk prices have dropped from their record high at the end of last summer. January’s Class III price will be at least one-third less than the September peak of $24.60, with further declines in the offing. World prices have already seen an enormous retrenchment in the past six months. What’s remarkable about this turn of events is that it’s not remarkable in the least; in fact, it’s emblematic of the cycle we’ve been observing in recent decades. The years 2003, 2006, 2009 and 2012 all brought downturns in milk prices. And yes, these troughs were interspersed with years of much stronger prices, like what we saw in 2014, but the trend is clear that 2015 will be a year of weaker milk prices.

As the familiar axiom correctly states, high prices tend to cure high prices, and the rhyme is the same for low prices. It’s a function of how markets respond to price-driven pivots in supply and demand. Yet, the issue remains: how can individual farmers and other relatively small players in the global market for dairy foods protect themselves from the times when the pendulum swings, and aims to knock them from their feet?

There are several answers, the most obvious of which is that America’s dairy farmers now have a new tool to hedge against the combination of lower milk prices and high feed costs. The U.S. Department of Agriculture announced last month that approximately half of America’s 46,000 dairy farmers enrolled for 2015 in the new Margin Protection Program. For a brand new program, initiated in a year of record-high prices, a 50% enrollment rate represents a glass that’s more than half-full.

This is especially true in light of the fact that during most of the signup period last fall, the forecast for milk prices in 2015 was sufficiently solid that the corresponding MPP margins would not have produced any payouts. It was only in December, when commodity prices stumbled, that the real need for the MPP became apparent. If it does generate payments this year, interest in the program will certainly become greater still for coverage in subsequent years.

Another tool to help blunt the impact of the roller coaster is Cooperatives Working Together. Now in its 13th year of operation, CWT remains the only farmer-funded and managed tool to help build U.S. dairy sales overseas, reduce domestic stocks of products, and stimulate farm-level prices for America’s farmers. One of the big reasons why U.S. values for cheese and butter did not decline with the same speed or to the same degree as world prices last year, was because of the effort employed by CWT to assist the export of products that help domestic dairy farmers.

CWT just reported in its 2014 year-end summary that the equivalent of 2.5 billion pounds of milk was exported last year through the program’s acceptance of 582 bids to sell more than 190 million pounds of cheese, butter and whole milk powder. Importantly, the combination of these sales helped boost farmers’ milk checks by a collective 38 cents per hundredweight. As China and Russia have become more challenging markets for all exporters, the ability of U.S. dairy marketers to utilize CWT cannot be underestimated.

One area in which history does not rhyme, where CWT is concerned, is that we’ve learned, from the price collapse suffered in 2009, to do things differently. At that time, CWT did not invest all of its member dues in export assistance. Due in part to that dynamic, and the role of the now-defunct price support program, U.S. exports dwindled – even though overall global dairy sales did not. The U.S. ceded markets to its competitors, and our prices languished lower and longer than they could or should have. That’s a discordant note we don’t want to repeat again, in this year or any other.

Ours is a commodity business, prone to regular cycles of high and low. Eventually, conditions correct themselves. What we don’t want to have happen is that all of the correction be borne by farmers who burn through their equity – or worse, have to exit the business – to endure the troughs. Thanks to the MPP, and CWT, the dairy industry is learning from history, and editing the script so the future is an improvement, not an echo, of the past.

ARLINGTON, VA – The new 114th Congress will feature a large and active group of House members looking out for the interests of dairy farmers, according to the National Milk Producers Federation.

A bipartisan group of legislators is reestablishing the six-year-old congressional Dairy Farmer caucus, and NMPF expects the new group to be even larger than the Dairy Farmer caucus in the 113th Congress.

“The 85-member caucus in 2013-14 was nearly one-fifth of the House,” said NMPF Vice President for Government Relations John Hollay. “We expect the 2015 caucus will be at least that large.” Hollay added that the dairy group is one of the most bipartisan and regionally diverse of the many caucuses in Congress.

The Dairy Farmer caucus educates House members on dairy industry issues and helps build consensus on legislation impacting milk producers and processors. For example, Hollay said, the caucus played a key role in enacting the 2015 farm bill, which included the most significant rewrite of federal dairy policy in more than a generation. The congressional Dairy Farmer caucus was initially started in 2006 to provide a bipartisan forum to collaborate on policy issues that addressed the interests of dairy producers nationwide.

In recent years, the caucus has worked closely with NMPF and the dairy industry to secure emergency funding for farmers suffering from low prices and disasters, protect dairy trade interests and secure passage of federal nutrition programs that deliver nutritious dairy products to school aged children.

The eight House members who will serve as co-chairs of the congressional Dairy Farmer caucus in the 114th Congress are: Reid Ribble (R-WI), Peter Welch (D-VT), Michael  Simpson (R-ID), Joe Courtney (D-CT), David  Valadao (R-CA), Timothy  Walz (D-MN), Tom Reed (R-NY) and Suzan  DelBene (D-WA). The bipartisan group issued an invitation to their colleagues to join the caucus this week.

 

The National Milk Producers Federation, 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 more than 32,000 dairy producers on Capitol Hill and with government agencies.

More than Half of Those Enrolled in New Safety Net Choose Added Coverage

ARLINGTON, VA – The U.S. Department of Agriculture provided more specific information Friday about the extent of coverage chosen by dairy farmers enrolled for 2015 in the new Margin Protection Program (MPP), including a state-by-state breakdown of the percentage of farms using the new safety net.

Earlier this week, the USDA announced that more than half of U.S. dairy operations have enrolled in the MPP. Today, USDA provided an estimate that 55% of those farms elected to pay additional premiums to purchase a higher level of coverage, above the basic, $4 per hundredweight level offered for $100 per year.

NMPF President and CEO Jim Mulhern said that the enrollment level represents “a vote of confidence in this new program, and highlights the importance of the MPP at a time when farmers need protection as margins will be challenged because of adverse conditions. The debut of the MPP comes during a year when margins will be compressed, making it the right solution at the right time for our farmers.”

The USDA clarified that 50.4% of the nation’s dairy farms have enrolled in the MPP. The percentage ranges from a low in Wyoming of 5%, to a high in Nevada of 90%. The participation level in the ten largest dairy states was 51%, almost identical to the national average:

 

 

 

 

 

 

 

 

 

 

 

 

 

The next MPP sign-up period will begin in six months, during an open season enrollment window for MPP coverage in calendar year 2016. That enrollment period will run from July 1st until September 30th.

NMPF established its www.futurefordairy.com website to help educate farmers about the program, and worked with USDA and a group of university agricultural economists during 2014 to explain the benefits of utilizing the Margin Protection Program.

 

The National Milk Producers Federation, 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 more than 32,000 dairy producers on Capitol Hill and with government agencies.