The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) applaud the United States’ decision to welcome Japan into Trans-Pacific Partnership (TPP) free trade negotiations.

“Japan greatly enhances the potential value of the TPP to U.S. dairy producers and processors,” says Jaime Castaneda, senior vice president for strategic initiatives and trade policy, USDEC and NMPF. “Japan is the third-largest economy in the world and already a major dairy importer. Reducing excessive tariffs and removing non-tariff barriers to trade will significantly increase U.S. dairy export opportunities, which helps drive overall U.S. dairy industry growth.”

U.S. suppliers shipped $284 million worth of cheese, whey proteins, milk powder and other dairy products to Japan in 2012. It is the fifth-largest U.S. dairy export market, despite substantial market access barriers in many of the biggest dairy categories.

The U.S. Trade Representative’s Office officially notified Congress of the American government’s intention to enter into TPP trade talks in 2009. At that time, it did so with the idea that the TPP would eventually expand from the initial eight participants—Australia, Brunei, Chile, New Zealand, Peru, Singapore, the United States and Vietnam—to the entire Asia-Pacific, thus expanding the economic significance of the deal.

“The addition of Canada in 2012 and now Japan greatly raises the possibility of a positive overall TPP dairy package. But negotiators must now follow through on another promise made back in 2009: concluding a high-standard trade agreement,” says Castaneda. “We need to secure, in ongoing talks, effective disciplines on sanitary and phytosanitary (SPS) measures, strong defense of common food names and meaningful competition policy changes in New Zealand’s dairy sector.”

Japan needs approval from all current TPP participants before officially joining the group. Although the United States has endorsed Japan’s participation now, we expect that the rest of the TPP partners will soon follow suit. The 17th round of negotiations takes place May 15-24 in Lima, Peru. Japan will join the actual negotiations 90 days after the United States notifies Congress of their intent to enter into negotiations with Japan.

 

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 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 30 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.

Prospects for Passing New Farm Bill Reviewed at National Dairy Producers Conference

INDIANAPOLIS, IND. – The benefits of adopting the Dairy Security Act (DSA) as part of the next farm bill will be obvious to farmers and policy makers as Congress begins assembling new agricultural policy this spring, according to speakers here at the National Dairy Producers Conference.

During a two-hour long session Monday reviewing the prospects of the Farm Bill in general – and the outlook for the Dairy Security Act in particular – panelists agreed that the risk management approach embodied in the Dairy Security Act provides a cost-effective safety net for farmers.

University of Minnesota economist Marin Bozic (in the photo), who participated in the discussion in Indianapolis, reported that farmers who enroll in the DSA will find that the program “works as catastrophic risk insurance. It reduces extreme margin risk, as it pays you the most when you need it the most.”

He said that farmers will likely view the risk of not enrolling in the program as far greater than being part of it. Regarding concerns that milk production growth could be restricted by the DSA’s market stabilization component, Bozic told the crowd that producers using the three-month rolling base will experience milk production growth over the long term similar to if they were not part of the program.

Bozic is one of a group of Midwestern university professors who have performed a detailed analysis of how the DSA program performs for farms of various sizes, under various economic conditions. The analytical tool he reviewed has been developed to help farmers determine how best to participate in the DSA, once it becomes law.

One of the other academics, John Newton, described how an independent economic model of DSA can serve as a tool for farmers to help them make decisions regarding participation on the proposed DSA. Newton, an Ohio State University doctoral candidate, said that DSA works for farmers, whether small or large, and regardless of whether the model is merely a yearly analysis or a cumulative revenue report over a period of years.

Monday’s findings by the agricultural economists about the effectiveness of the DSA will bolster the case on Capitol Hill that the measure needs to be part of the next farm bill, according to NMPF’s Chief Executive.

“We’ve spent the past three years working within the industry, and with members of Congress, developing a program that meets the needs of America’s dairy farmers in the 21st century,” said Jerry Kozak, President and CEO of NMPF, which organized the National Dairy Producers Conference. “The evidence continues to demonstrate that the DSA is both good policy, and good politics.”

Kozak said that competing approaches to the DSA, either featuring no market stabilization element, or exempting all but the largest farms from market stabilization, are both overly costly, and politically unacceptable.

“Any proposal featuring margin insurance alone, such as the Goodlatte-Scott amendment, which severely limits the amount of milk that farmers can insure, will hamper the growth of their operations. Beyond that, it’s a prescription for lower milk prices and higher government costs, which will scuttle the whole economic basis for margin insurance in the future,” he said.

By the same token, “any approach that attempts to drive a wedge between farmers of differing sizes by exempting large numbers of farmers from the market stabilization program is divisive and wrong. In addition, it would dramatically increase the cost of the overall farm bill. The industry has moved beyond the regional divisiveness of past dairy policies and Congress needs to do so as well,” he said.

 

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 30 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.

The 2013 Annual Conference of the American Butter Institute (ABI) & the American Dairy Products Institute (ADPI) will be held April 28 – April 30, 2013 at the Chicago Marriott Downtown, where record attendance is expected.

The 2013 conference promises to be educational and informative and will feature two days of speakers and programs on various industry topics. The meeting will kick off Sunday evening with Rick & Teresa Kaepernick, father of San Francisco 49er and Super Bowl Quarterback Colin Kaepernick.

Sessions will including a panel discussion on the industry’s current market conditions and outlook with expert panelists from Blimling & Associates, ADM Investor Services, Rabobank International, and T-Storm Weather, LLC., followed by a panel on key challenges and opportunities in the dairy ingredient sector.

A session on traceability, with some of the industry’s leading experts on the topic, will be moderated by Craig Nelson, Food Automation, LLC. Speakers include: Dermot Carey, Darigold; Matt Mathison, Wisconsin Milk Marketing Board; Marianne Smukowski, Wisconsin Center for Dairy Research; and Vikki Nicholson, U.S. Dairy Export Council.

Tuesday’s program continues with a morning breakfast featuring Richard Field, Orrani Consulting, who will provide information on China’s Dairy Market. This will be followed by a session entitled Dairy Industry 2020 Vision – A CEO’s Perspective. The panelists include top dairy industry chief executives who will discuss what future opportunities lay head for the dairy processing industry over the next several years. Panelists include Clay Galarneau, Michigan Milk Producers Association; Mark Korsmeyer, Dairy Farmers of America, Inc.; David Lenzmeier, Milk Specialties Global; and Jerry O’Dea, Glanbia Nutritionals Ingredient Technologies.

Additional information about the 2013 ABI/ADPI Conference is available at www.butterinstitute.org, including online registration and exhibitor information. Information may also be obtained by contacting the American Butter Institute at 703-243-5630 or AMiner@nmpf.org.

NMPF will continue accepting applications for its National Dairy Leadership Scholarship Program until Friday, May 3. Any graduate student (enrolled in Master’s or Ph.D. programs) actively pursuing research of direct benefit to milk marketing cooperatives and dairy producers is encouraged to apply. Applicants do not need to be members of NMPF to qualify.

Scholarship recipients will be selected by NMPF's Board of Directors in June and notified soon afterwards. The top scholarship applicant will be awarded the Hintz Memorial Scholarship, which was created in 2005 in honor of the late Cass-Clay Creamery Board Chairman Murray Hintz, who was instrumental in establishing NMPF's scholarship program.

Recommended fields of study include but are not limited to: Agriculture Communications and Journalism, Animal Health, Animal and/or Human Nutrition, Bovine Genetics, Dairy Products Processing, Dairy Science, Economics, Environmental Science, Food Science, Food Safety, Herd Management, and Marketing and Price Analysis. Applications received after Friday, May 3 will not be eligible for consideration. For an application or more information, please visit the NMPF website or call the NMPF office at 703-243-6111.

The Senate Health, Education, Labor and Pensions Committee reauthorized the Animal Drug User Fee Act on March 21. Created in 2003, the program allows the Food and Drug Administration (FDA) to collect user fees from drug manufacturers in order to reduce backlog of applications for new animal drug approvals. The program is set to expire on October 1, 2013.

The FDA’s Center for Veterinary Medicine completed its recommendations to Congress for the reauthorization in consultation with key industry stakeholders at the end of February. The Animal Health Institute, the American Veterinary Medical Association and many livestock groups, including NMPF, supported the legislation.

An amendment by Sens. Kirsten Gillibrand (D-N.Y.) and Dianne Feinstein (D-Calif.) to require FDA to annually report the amount of antibiotic sales to farms failed. The Pew Charitable Trusts backed the amendment, and vowed to push the issue again when voted on by the full Senate.

Last month, NMPF joined the Center for Food Integrity and the U.S. pork sector to jointly launch "See It? Stop It!SM Animal care starts with you," a proactive demonstration of agriculture’s commitment to farm animal care. The initiative empowers, and in fact, demands that if signs of animal abuse, neglect, mishandling or harm are witnessed, anyone working on a farm or in a farm setting has an obligation to report it immediately.

Though it is uncommon, when animal abuse, neglect, harm or mistreatment takes place, it is essential to give animal care providers resources to swiftly report what they witness. The "See It? Stop It!" initiative provides several options to enable employees to speak up to stop animal abuse. Ultimately, empowering animal caretakers and giving them responsibility to report animal abuse immediately will help assure the best care for animals.

Betsy Flores, NMPF’s Senior Director of Animal Health and Welfare, stated, "Care of animals could not be more important to farmers. Having a system in place to contact any of several authorities is imperative, and ‘See it? Stop it!’ provides that resource. This initiative combines well with the dairy industry’s National Dairy FARM Program: Farmers Assuring Responsible Management^TM to ensure the well-being of animals in our care."

The initiative demonstrates to the public that farmers are committed to good animal care and calls on anyone who witnesses abuse to stop it immediately. This includes those who are on farms to videotape animal production activities. Additional information about the program, including an employer checklist, guidance for integrating the program into existing animal well-being programs, posters for use in barns and guidance on employee training is available at www.SeeItStopIt.org.

The dairy industry’s animal care program has achieved an important milestone, with 70 percent of the nation’s milk now participating in the program. With the recent addition of several major cooperatives in the National Dairy FARM Program (Farmers Assuring Responsible ManagementTM), more than two-thirds of the nation’s cows will be covered by the industry’s animal well-being effort, according to the National Milk Producers Federation (NMPF).

NMPF started the FARM program three years ago to provide a consistent, national, verifiable means of showing consumers and the food value chain how dairy products are produced. The number of cooperatives and processors subscribing to the program has continued to grow, and now includes farms producing 70% of America’s milk supply.

“Consumers and customers don’t expect perfection, but they do expect us to collectively demonstrate our industry’s responsible practices and our commitment to quality animal care,” said Jerry Kozak, President and CEO of NMPF. “I’m proud of the ongoing progress our farmers are making by working to implement the FARM program’s guidelines on their own operations.”

In addition to the positive development in the level of participation in the program, Kozak said that the FARM program’s guidelines, contained in the National Dairy FARM Animal Care Manual, are in the final stages of an extensive review and revision process. After nearly a year of consultation throughout the industry, with farmers, veterinary experts, and cooperative staff, the three year-old animal care manual will be revised slightly to reflect the latest knowledge and best practices about proper dairy animal care. Revisions to the animal observation component also relied on analysis of over 360,000 animal observations collected through on-farm evaluations for FARM program over the last three years.

If the NMPF Board approves the revisions in June, the newly-revised manual will be made available on the FARM website at www.nationaldairyfarm.com.

As international negotiations continue on the Trans Pacific Partnership (TPP), NMPF continued its efforts last month to maximize opportunities for U.S. dairy farmers in the pending trade agreement. First, NMPF helped coordinate a letter signed by 36 Senators and sent to Agriculture Secretary Tom Vilsack, and acting U.S. Trade Representative Demetrios Marantis. The March 15th letter to Vilsack and Marantis urges their agencies to pay particular attention during the TPP discussions to efforts to expand trade with Canada, and mitigate the impact of dairy exports from New Zealand.

“Without open access to Canada and absent significant policy reform by New Zealand, the dairy industry in our states strongly believes that the TPP promise of growth in export demand for U.S. dairy all but vanishes, and that in its place, they could see significant losses here at home,” the letter stated. “To be truly effective, dairy discussions with Canada should include a focus not only on removing tariffs but also on ensuring that various forms of nontariff barriers are not employed to hinder U.S. dairy exports.”

In a related development, NMPF was one of more than 70 organizations that jointly sent a letter March 26th to President Obama in support of Japan’s participation in the TPP negotiations.

“The addition of Japan to the negotiations will exponentially increase the importance of the TPP to U.S. farmers and ranchers, processors and exporters as well as other sectors of the U.S. economy. Furthermore, it will spur interest in the TPP among other countries in Asia and Latin America. Finally, it will send a strong signal to other nations that efforts to negotiate are more open and transparent,” the NMPF letter said. Japan is the fifth-largest dairy export market for the U.S.

March was the most active month in the first quarter of 2013 for Cooperatives Working Together (CWT), with 196 requests from member cooperatives for export assistance. It was also the top month in the first three months of 2013 in terms of bids accepted (103) and pounds of butter receiving export assistance (24.9 million pounds). In addition, assistance was provided on 16.9 million pounds of American-type cheeses and 44,092 pounds of anhydrous milk fat (AMF).

The March activity brought the total amount of CWT-assisted exports in the first quarter of 2013 to 47 million pounds of cheese, 46.5 million pounds of butter, 44,092 pounds of AMF and 218,258 pounds of whole milk powder. The products will go to 30 countries on six continents.

These exports are equal to 1.45 billion pounds of milk production on a milkfat basis. That meant CWT-assisted exports in just the first quarter of 2013 covered 90% of the USDA projected increase in milk production in 2013 for the entire year.

Because a significant portion of the amount budgeted to assist butterfat exports has been committed, effective immediately, CWT is limiting the butter bids it will consider for export assistance to the target areas in the business plan – the Middle East and North Africa. In addition, until further notice, CWT will no longer consider bids for export assistance on AMF. This will allow CWT to make the most effective use of the remaining funds available.

Across the board cuts to federal spending known as “sequestration” began to be implemented on March 2. These cuts, enacted by Congress as part of the Budget Control Act of 2011, apply to nearly all of the farm programs operated by USDA.

While many questions remain about the implementation of the cuts, one immediate result was the suspension of the National Agricultural Statistics Service (NASS) monthly Milk Production reports, and the annual Milk Production, Disposition and Income report. NMPF sent a letter to USDA on March 14, citing the importance of these reports to dairy farmers, and requesting that Secretary Tom Vilsack restore publication of the reports.

In response to NMPF’s criticisms, NASS said last Wednesday that it will compile a partial monthly production report. The use of various administrative data to establish the monthly estimates of milk production will provide a consistent estimation process across all states and the nation, while maintaining cost savings by not conducting the producer survey, according to NASS.

Another program originally expected to be impacted was the MILC program, but on March 19, Secretary Vilsack officially notified Congress that he intends to use his authority to reduce direct payments (due to be paid to producers by Oct 1, 2013) by not more than 8.5% in order to fully fund programs such as MILC. This authority cannot be enacted until 30 days after congressional notification. It is important to note that direct payments would have been subject to cuts of 5.1% as a result of sequestration regardless of this action by the Secretary. These additional cuts to direct payments avoid having the more than 350,000 producers who had already received disaster, SURE, NAP and MILC payments this year to repay some of those funds. Additionally, no additional cuts to MILC will be made as a result of sequestration.

NMPF and the Agriculture Workforce Coalition remain closely engaged in efforts to ensure that legislation being drafted in both the House and Senate reflects the needs of dairy farmers. While no final legislative package has been completed in either the House or Senate, NMPF was pleased with the direction of negotiations on the issues of greatest importance to dairy farmers: protecting the current workforce and securing a future flow for workers to fill the dairy industry’s employment needs. While agreement on a broad framework that addresses these two issues is of the utmost importance, issues such wages, labor standards, and limits on the number of future foreign workers must also be addressed. The Senate may announce the outlines of a deal this week, when Congress returns to Washington after a two-week recess.

Recent developments on a potential deal on the issue of low-skilled, non-agricultural workers have further highlighted the challenges that remain for various aspects of immigration reform, including agriculture. This debate has revolved around the challenge of determining both a wage for foreign workers and deciding whether a cap should be in place on bringing in future workers, and, if so, how is that cap determined. NMPF is committed to ensuring that dairy farmers have access to a workforce that meets their needs, and that the costs of employing such a workforce are manageable for businesses. Other challenges regarding whether current undocumented individuals should be given citizenship or be granted some other form of legal status also must be addressed by members of Congress in any package.

As the effort to pass a farm bill continues this spring on Capitol Hill, NMPF’s Board of Directors recently reaffirmed the organization’s support for a new farm bill – containing a better safety net for dairy farmers – at the Federation’s spring meeting last month.

The Senate Agriculture Committee is expected to begin a legislative markup of the farm bill, perhaps as soon as this month. NMPF’s Board signaled both the Senate and House Agriculture Committees that the dairy producer community remains committed to the voluntary dairy program known as the Dairy Security Act (DSA), which combines margin insurance with market stabilization.

“Our members went through a tough year in 2012, with high feed costs and low milk prices putting the squeeze on farmers across the country,” said Randy Mooney, Chairman of NMPF, and a dairy farmer from Rogersville, Missouri. “Existing federal dairy programs don’t offer the type of safety net our members need, but the Dairy Security Act does.”

NMPF members met last month with Rep. Collin Peterson (D-MN), the ranking Democrat on the House Agriculture Committee, who is the lead sponsor of the DSA in the House. Peterson reiterated his commitment to passing the DSA, and indicated that the House Agriculture Committee is expected to begin work on a farm bill this spring, likely after the Senate ag panel works on its own farm bill version.