ROCHESTER, MINN. – Milk prices for Midwest dairy farmers would have been more than $1.00 per hundredweight higher last year if the proposed federal Dairy Security Act (DSA) program had been available to them, a national dairy industry official told cooperative farm leaders gathered here Wednesday for the Minnesota-Wisconsin Dairy Policy Conference.

Jim Mulhern, Chief Operating Officer for the National Milk Producers Federation and a Wisconsin native, said a farmer with 200 cows, who purchased margin coverage at a level of $6.50 per hundredweight, would have received more than $44,000 in additional payments in 2012 under the Dairy Security Act that is now pending before Congress.

“The DSA was designed for the type of conditions we experienced last year: high feed costs and weak farm milk prices. If DSA had been in effect, dairy farmers who chose to participate in the program would have received margin insurance payments to cover increased costs and would have had to make only small reductions in milk output under DSA’s market stabilization program,” Mulhern said. “The net increase in farm revenue at the $6.50 margin coverage level would have averaged more than $200 per cow for the year,” he said. “This is income that would not have been received by a farmer if they weren’t in the program.”

The Dairy Security Act was approved by both the House and Senate Agriculture Committees during consideration of last year’s farm bill. The full Senate also approved the bill, but the House failed to vote on the farm bill last year, so Congress is now beginning efforts to pass a farm bill this year.

Mulhern said the Senate Agriculture Committee is expected to begin work on a new farm bill later this month, and the House Agriculture Committee likely will follow later this spring.

“I believe Congress will pass a farm bill this year, and when all the dust settles, DSA will be the dairy program in the final bill,” he said. “Congress will adopt the DSA because it is the only program that truly provides an effective safety net without busting the budget.

“The plan’s combination of affordable margin insurance and a stabilization program to quickly send production signals to producers when market prices are falling is specifically designed to protect both farmers and taxpayers,” Mulhern said.

A margin insurance-only alternative proposed by milk processors is irresponsible, Mulhern said, because it would create price-depressing milk surpluses and potentially cost billions of dollars.

“It would be terrible for our industry to enact a margin insurance-only program that guaranteed processors access to cheap milk by encouraging excess milk production, but that is exactly what some have proposed. An insurance-only program is dangerous because, by insulating producers through insurance payments, it actually prevents market signals from getting through,” he said.

Mulhern added that realistic insurance rates under a margin-only program would have to be much higher than those proposed in the Dairy Security Act in order to cover a greater portion of the cost of such a program.

“We are able to keep the insurance rates affordable under the DSA because the market stabilization program will help keep supply and demand in better balance,” he said. “Without stabilization, a margin-only program could become prohibitively expensive for small- and medium-sized producers to participate. That would be damaging here in the Midwest, and throughout the country.”

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. Visit www.nmpf.org for more information.

The drumbeat of headline-making announcements about product sourcing trends in the food industry continues:  restaurant chains wanting cage-free eggs; pizza chains wanting gestation stall-free pork; supermarkets only selling sustainable seafood; Whole Foods labeling all GMO ingredients.  Each of these developments adds to a growing chorus of concerns putting added pressure back up the food chain, ultimately at the front gate of farmers, ranchers and fishermen.

Fortunately, there’s another bit of good news of late on this issue:  the National Dairy FARM program has reached a participation threshold of 70 percent, meaning nearly three quarters of the nation’s milk supply is enrolled in the nation’s preeminent dairy animal care program.  With the addition of several major cooperatives and proprietary processors in recent months – and thanks to funding from the national dairy checkoff for the third-party verification element in the program – we have a compelling, critical mass of support behind FARM.  And given the trends in the industry, it’s not too soon to reach this mark.

NMPF started the FARM program three years ago to provide a consistent, national, verifiable means of showing consumers and the food value chain how milk is responsibly-harvested from cows.  Even then, the writing was on the wall:  we either had to develop a scalable, uniform program with real teeth and performance metrics in it…or, others entities further down the supply chain would do it themselves.  Farmers, cooperatives and processors would then be looking at having to adopt not just one, but multiple animal care systems, all with similar expectations and goals, but each requiring a different verification methodology and a separate set of paperwork.

The challenge in implementing the FARM program, or any such system that looks at a series of practices on farms, is two-fold:  farmers have to understand and abide with its expectations, while retailers and restaurateurs must appreciate that this approach meets their animal welfare expectations.  We’ve had fair questions raised on both ends of the spectrum during the FARM program’s first three years of operation, but as the program continues to grow, those questions are being successfully addressed.

From the standpoint of farmers, they need to see that the criteria used in the program are based on good veterinary science, are measurable and not arbitrary, and were developed by peers and those who understand what happens on a farm.  That’s why the FARM program’s animal care checklist was the product of a technical working group of such experts, as well as NMPF’s Animal Health and Well-Being Committee, which is made up of dairy producers and veterinarians.

From the standpoint of those companies further down the value chain, dairy product end users don’t expect perfection, but they do expect farmers to collectively demonstrate responsible practices, and our commitment to quality animal care.  They need to see that there is a path for continually improving the care standards in the program.  And there has to be evidence that the program is catching on, which is why reaching the 70% participation level is so critical.

The need for ongoing improvement is a big reason why the program’s animal care guidelines are in the final stages of an extensive review and revision process. After nearly a year of consultation, throughout the industry as well as with external experts, the care manual will be updated with slight revisions later in 2013 to reflect the latest knowledge and best practices about proper dairy animal care.  We’ve learned a great deal about animal care just through the 364,000 animal observations collected through on-farm evaluations for FARM program during the last three years.  All these data points will allow us to adjust slightly the 77 different checklist criteria used on each farm in the program.

I am also pleased that the dairy industry’s Innovation Center has endorsed the National Dairy FARM program as the industry standard.  Because the Center is the leading collaborative platform for U.S. dairy marketers, its adoption of this particular program sends a clear signal that other approaches would only detract from the hard work and momentum that the FARM program has built in the past three years.

We’ve long understood that dairy farmers, by and large, have a vested interest in providing conscientious animal care to their cows.  However, we’re no longer in an era when just talking that talk will satisfy everyone.  This benefit of the FARM program is that it transparently quantifies the care that farmers provide and sets a timeline for their continual improvement.  It shows we’re walking the walk, and that proper animal care is not a finite goal achieved through punishment, but an ongoing process that can be attained through education and effort.

The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) welcomed Prime Minister Shinzo Abe’s March 15 official declaration of interest for Japan to join ongoing Trans-Pacific Partnership (TPP) trade talks.

“The addition of Japan, the No. 3 economy in the world and a major dairy importer, would dramatically increase the commercial significance of the talks,” says Tom Suber, USDEC president. “Along with Canada’s recent announcement that it will join the talks, Japan’s involvement will add additional potential for greater U.S. dairy exports, which will supplement the opportunities in existing TPP participants’ markets such as Vietnam and Malaysia.”

At the same time, Japan’s enrollment brings with it certain challenges.

Japan’s entry at this stage of the talks has sparked concern that it could slow the pace of negotiations with the potential to delay or derail the ambitious outcome that the current members are seeking.

“As is the case with Canada, Japan is a large and profitable market that could provide immediate and measurable benefits for U.S. dairy producers and processors, but only if negotiators achieve real, tangible market access,” says Jaime Castaneda, senior vice president for strategic initiatives and trade policy, NMPF and USDEC. “Japan would not only need to loosen its restrictive market access scheme, but also liberalize its complex quota system and address non-tariff trade concerns, such as how its food additive approval system currently operates.”

From the beginning, the TPP talks have been about more than just lowering tariffs. USDEC, NMPF and other U.S. agricultural groups have viewed the TPP as an opportunity to defend the right to use common food names in the face of the European Union’s aggressive efforts to confiscate those names through its restrictive geographical indication system.

USDEC and NMPF have also led a broad coalition calling for effective disciplines on the application of sanitary and phytosanitary (SPS) measures in TPP negotiations—disciplines that place greater reliance on science-based regulations and are fully enforceable, while also going beyond the World Trade Organization’s SPS Agreement on these and related issues.

“The U.S. dairy industry sees real value in the TPP negotiations if we are able to open new markets, like Japan and Canada, use the TPP process to strengthen global trading rules and secure meaningful competition policy changes in New Zealand’s dairy sector,” says Suber.

Current U.S. dairy trade with Japan speaks volumes about that nation’s potential if barriers are removed. U.S. dairy shipments rose 13 percent to $284 million in 2012, keeping Japan the fifth-largest U.S. market despite prohibitive tariffs and non-tariff barriers in many of the largest dairy categories.

The 16th round of TPP talks just concluded in Singapore; the 17th round is set to take place in May in Lima, Peru. Japan will not likely join the talks until late August. The entry of Japan will expand the TPP group to 12 countries, including Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Thailand has also expressed interest in joining.

 

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.

NMPF Also Expresses Concern with Elimination of NASS Monthly Milk Production Report

ARLINGTON, VA – The National Milk Producers Federation (NMPF) Board of Directors reaffirmed the organization’s support for a new farm bill, containing a better safety net for dairy farmers, at the Federation’s spring meeting Tuesday in Arlington.

With the Senate Agriculture Committee expected to begin work on a new farm bill next month, NMPF’s leadership said this week that a new, voluntary dairy program known as the Dairy Security Act (DSA), which combines margin insurance with market stabilization, remains critical to the future of the industry.

“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.”

Mooney said that NMPF members were encouraged by a report delivered to them Monday from Rep. Collin Peterson (D-MN), the ranking Democrat on the House Agriculture Committee, who reaffirmed his support for the DSA and indicated that the House agriculture panel also will begin work on a farm bill this spring.

In another development Tuesday affecting NMPF and its members, the USDA’s National Agricultural Statistics Service announced that it will suspend the monthly milk production report for the remainder of fiscal year 2013, as a result of sequestration-reduced funding.

The monthly milk production report for February’s milk output will come out next Tuesday, but the next six reports for April through September will be suspended, as will the Milk Production, Disposition and Income (Milk PDI) reports previously scheduled for release next month.

NMPF President and CEO Jerry Kozak said that, “Eliminating the USDA’s monthly milk production report through September will detrimentally affect how decisions are made about the marketing of milk, starting at, but not ending with, the farm level.”

“This report is important for ongoing industry outlook purposes, and it’s also an essential input for estimating the monthly commercial disappearance of all dairy products, which is of importance to the dairy promotion program,” Kozak said.

He noted that among the other NASS report suspensions, “Dairy is the only major commodity that will be substantially affected. The July Cattle report consists of a mid-year update of the January Cattle report, which is obviously not affected by the current fiscal year suspension, and other NASS reports will continue to report non-dairy cattle inventory information.”

“This decision is a concern to NMPF as well as to the entire dairy industry, and we will need to have further discussions with USDA about why an extremely important informational tool involving a major commodity is being affected this way.”

 

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.

This week, NMPF released its 2012 Activities and Accomplishments Report, which recounts the organization’s various achievements throughout the past year. The report covers important issues such as dairy policy reform and the Farm Bill, tax and budget, food safety, nutrition, animal care, and trade. It also highlights activities of the NMPF membership, featuring the board of directors, member cooperatives, and Young Cooperators. The report will be distributed at NMPF’s board of directors meeting next week.

The report is available electronically on the NMPF website. Please contact Sarah Olson to request hard copies of the report.

The outlook for a new farm bill, and a better safety net for dairy farmers, will be one of the key sessions at the upcoming National Dairy Producers Conference (NDPC) April 7 – 9 in Indianapolis, Indiana.

The conference, open to dairy farmers from across the country, will provide an in-depth discussion of the issues facing the dairy industry, with educational discussions on topics ranging from farm policy to immigration reform to agricultural finance. The meeting is organized by NMPF.

On Monday, April 8th, a two-hour session will address the prospects in 2013 for the NMPF-backed dairy reforms contained in the 2012 Farm Bill. That session will feature presentations from congressional staff, NMPF leadership, and agricultural economists – all discussing the outlook for getting the Dairy Security Act (DSA) passed this year, and how that measure would benefit farmers. Although the DSA came close to passage at the end of 2012, the agriculture committees in the House and Senate will have to restart the farm bill process this spring. The NDPC panel will review how that process will unfold, and will examine why a dairy margin insurance program with market stabilization will provide better financial protection for farmers compared to current programs.

“The National Dairy Producers Conference is the only forum where dairy farmers from across America can meet together and have in-depth discussions about the policy issues affecting them,” said Jerry Kozak, President and CEO of NMPF. “There’s no shortage of major challenges right now in our business. The focus of this conference is on addressing solutions for the future.”

In addition to reviewing the farm bill, the conference will include another session about the prospect for immigration reform legislation on Capitol Hill, with presentations from individuals representing dairy farmers, the White House and Congress. The National Dairy Producers Conference will also examine the state of the agricultural banking sector as it relates to dairy farming. A trade policy panel will address how the U.S. can both protect and promote its dairy products in world markets, while a panel on dairy cow marketing will focus on the marketing of cull dairy cows.

Guest speakers at the NDPC include Purdue agricultural economist Christopher Hurt, who will review the outlook for feed prices this year, and Bill Weldon of Elanco, who will discuss new ideas under development for products to enhance a dairy cow’s productivity.

The NDPC sessions will be preceded by an optional farm tour that will take place on Sunday, April 7th. Participants will be able to get an insider tour of Fair Oaks Farms, one of the largest dairies in the country, with a consumer education facility.

Although the conference is geared primarily toward dairy producers, anyone with a stake in the dairy industry is invited to attend. This may include dairy cooperative executives and directors, dairy processors, suppliers and consultants to the dairy industry, state and federal regulators, promotion organization executives, and academics.

The deadline to make hotel reservations is March 14th. For more information on the NDPC, including how to register, visit www.nmpf.org/NDPC.

NMPF and the U.S. Dairy Export Council (USDEC) welcomed the announcement last month that the U.S. and European Union (EU) will launch trade negotiations. The U.S. and EU stated that the planned Transatlantic Trade and Investment Partnership is intended to be a comprehensive agreement that addresses a broad range of bilateral trade and investment matters, including regulatory issues.

“NMPF believes that considerable potential exists for greater U.S. dairy exports to the EU, if the Transatlantic agreement effectively tackles not only market access issues but also the many nontariff barriers that have made it challenging for the United States to make more headway into the European dairy market,” said Jerry Kozak, president and CEO of NMPF.

“The U.S. dairy industry is now a major exporter globally. Despite this fact and the large size of the European dairy market, U.S. dairy exports to the EU have lagged and totaled only $88 million last year,” said Tom Suber, president of USDEC. “This is not because we can’t compete there, but because of the many tariff and regulatory hurdles facing our exporters seeking to enter the EU. The EU currently enjoys a dairy trade surplus with the United States of $1.2 billion. This is at a time when the United States is exporting $5.2 billion in dairy products around the world. We believe the Transatlantic agreement can do a lot to drive more reciprocal dairy trade between the United States and EU.”

In prior submissions to the Administration about U.S.-EU trade, NMPF and USDEC have noted that U.S. exports to the EU are hindered by significant tariffs, as well as sizable regulatory barriers such as requirements unrelated to food safety with respect to somatic cell count limits for imported dairy products, tariff-rate quota administration details, cumbersome mandates related to certificate dating, bans on the use of generic food names and other requirements. As a result, U.S. dairy sales last year to all 27 EU member states—home to over 500 million people—just barely edged out those to Singapore, a country well known for its commitment to free trade, yet home to just over 5 million people.

NMPF and USDEC also reiterated the need to ensure that any discussions on the use of common food names and geographical indications (GIs) be aimed at uprooting the rapidly expanding EU effort to erect de facto barriers to trade against U.S. products through granting GIs to many common food names.

Congressional legislation allowing states to increase the weights of trucks used on their interstate roads has the endorsement of NMPF, along with hundreds of other associations and companies.

Reps. Reid Ribble (R-WI) and Mike Michaud (D-ME) introduced the “Safe and Efficient Transportation Act (H.R. 612),” known as SETA, on Feb. 14. The legislation allows an increase to 97,000 pounds on interstates, provided that trucks which utilize the higher weight limit add an additional sixth axle in order to maintain the same stopping distance and weight distribution as trucks currently operating on interstate highways.

NMPF has been circulating a letter in support of the bill, and has signed on to another letter being circulated by the National Cattleman’s Beef Association with signatures from other agricultural organizations.

“This bill is one way Congress can help permit the industry to increase its efficiency, thereby keeping down one key cost in transporting milk and dairy products,” said Jerry Kozak, NMPF President and CEO, in a letter to Congress.

While the bill has received a large amount of bipartisan support, serious opposition remains to giving states the option to increase their truck weights on interstate highways. The SETA legislation failed to make it into the two-year authorization of highway funding passed last July. Instead, a study was commissioned to review the possible safety implications of such a change. The highway bill will expire on Sept. 30, 2014, and SETA will be likely to be a key point of debate in the reauthorization effort.

Dairy farmers continued in 2012 to improve their already stellar track record of keeping antibiotic residues out of the milk supply, with the most recent national survey finding that only 0.017% of all bulk milk tankers, or 1 in 6,000 loads, showed any sign of an animal antibiotic drug residue. On-farm vigilance in following drug withdrawal times has led to a steady decline in antibiotic residue, falling from an already low level of 0.061% in 2002, a decline of nearly 75% in the last decade.

These figures are based on information reported to the Food and Drug Administration’s National Milk Drug Residue Data Base by state regulatory agencies under the National Conference on Interstate Milk Shipments (NCIMS). Data are reported on the extent of the national testing activities, the analytical methods used, the kind and extent of the animal drug residues identified, and the amount of contaminated milk that was removed from the human food supply.

All milk loads are tested for antibiotics, and any tanker which tests positive for a drug residue is rejected before entering a dairy plant and does not enter the market for human consumption. The full report is available online.

The most recent national government survey looking for pesticide residues in foods found virtually no positive levels in milk, and none that exceeded government tolerance levels.

The U.S. Department of Agriculture (USDA) conducts an annual Pesticide Data Program annual survey to test various food commodities for pesticide residues. Each year, USDA and the Environmental Protection Agency jointly determine which commodities to test. In 2011, the USDA collected 743 whole milk samples in ten of the largest states, mostly at the retail level.

Overall, only five of the milk samples showed any presence of pesticide residue, and all were lower than Environmental Protection Agency-established tolerances for those compounds.

In February, Cooperatives Working Together (CWT) helped member cooperatives make 85 foreign sales of cheese, butter, and whole milk powder totaling 22.8 million pounds of product.

The 43 cheese sales assisted by CWT totaled 10.8 million pounds of cheddar, Gouda, and Monterey Jack cheese. The 40 butter sales amounted to 11.9 million pounds of product, while two sales of whole milk powder totaling 130,073 pounds were made as well.

This brought total CWT-assisted sales in 2013 to 30.1 million pounds of cheese, 21.6 million pounds of butter, and 218,258 pounds of whole milk powder. The milk equivalent of this amount was 749.1 million pounds, or the annual production of 35,600 cows.

CWT is a significant factor in exports of U.S. dairy products, accounting for 83% of American-type cheese exports and 18% of all cheese exports in 2012. CWT export assistance also accounted for 62% of all U.S. butter exports.

NMPF continues to work with other national and state farm groups on reforms to America’s immigration policies that would allow for the future flow of workers on dairy farms and the opportunity for existing workers that may lack legal documentation to continue working on dairy farms.

NMPF, a founding member of the Agriculture Workforce Coalition (AWC), sent a letter to House and Senate leadership last week calling for support of immigration legislation that addresses agriculture’s unique labor needs. The letter was delivered as the House Judiciary Subcommittee on Immigration & Border Security held a hearing last Tuesday focused on the need for a new agricultural guest worker program.

The Senate and House may pursue separate legislative paths to immigration reform, and NMPF is talking with leaders in both chambers to ensure that whatever decisions are made will address the unique needs of dairy farms.