For the November CEO’s Corner, we are including the joint presentation made October 30th, 2012 by Jerry Kozak and NMPF Chairman Randy Mooney at the NMPF annual meeting in Lake Buena Vista, FL:
Randy Mooney
It’s good to be with all of you once again, this time in the Magic Kingdom, for the annual speech that Jerry and I have the privilege to deliver. I wish our time here was all about fantasy and enchantment. Maybe there’s some of that, and some wishful thinking, but we also have to talk about the realities of the dairy business.
Jerry Kozak
Yes, Randy, reality usually intrudes once people leave Disney. I know that when I return to Washington in a few days, I have to go back to a town filled with partisan politics, and a dysfunctional Congress that has failed to lead. It’s not Adventureland, Frontierland, or even Fantasyland. Nor is it really Main Street USA.
Randy Mooney
Right, Jerry. Those of us who actually reside in Main Street America have to go back to managing our farms. This year, we’ve been fantasizing about adequate rain fall, cooler temperatures, lower feeds costs, and a finished farm bill. But not even the legendary Disney magic could make any of that appear yet in 2012.
Jerry Kozak
Despite this reality check facing us soon, I remain optimistic that the path we are on, particularly regarding the Dairy Security Act, will help farmers like you, Randy – and everyone else here – to secure a better future.
While our work is not yet complete, we’re on the verge of finalizing a new direction that provides a much better safety net for your hard-earned equity than what we have today.
Randy Mooney
A year ago, when we gave our report, we had just spent months and months working out the details of a program we called Foundation for the Future. We road-tested that concept with thousands of farmers in the summer of 2011, sharing the details of the program developed by NMPF’s members. As a result of your feedback, we made some changes. These improvements were reflected in the legislative version of the Foundation for the Future program, called the Dairy Security Act, which was formally introduced in Congress last fall.
Jerry Kozak
And after our annual meeting last year, the Dairy Security Act has since come even further. It was included by the members of the Senate Agriculture Committee in the draft Farm Bill approved last spring. Subsequently, the entire Senate approved a Farm Bill containing the DSA. Then, the House Agriculture Committee approved its own version of the Farm Bill earlier this summer. It’s essentially the same as the version approved by the Senate.
Randy Mooney
All along the way, we’ve had to beat back challenges to the Dairy Security Act. There have been repeated efforts to water it down, or strip out the market stabilization elements that help make it effective. Working with our allies in Washington, we’ve been able to defeat those challenges because they’re bad politics, bad policy, and in many cases, are being done in bad faith. I want to thank NMPF’s members for working together to support the DSA we helped create more than a year ago. We’ve made it this far by working together, keeping the faith, and not getting distracted by alternative approaches offered by those who don’t have the best interests of dairy farmers at heart.
Jerry Kozak
So we’re this close to getting it done. To use a football analogy, we’re not just in the red zone, we’re first and goal. But great field position, even with the momentum that comes with a long drive, is not the same thing as putting points on the board. All our hard work, all of our compromises and meticulous planning – none of it matters unless we can finish the job.
Randy Mooney
And to again use a football analogy, the House of Representatives has punted on the entire farm bill. The House Ag Committee did its job, and passed by a wide, bipartisan margin a farm bill back in July. There was enough time for the full House to act on the bill prior to this month. But they didn’t. NMPF and its member cooperatives mounted a big grassroots effort to get farmers to contact their elected officials to urge them to act. I want to thank those farmers who helped in this effort. But for a variety of reasons, mostly political, the farm bill wasn’t brought to a vote. They even tried to pass a one-year extension of current programs, but we rose up against the status quo, and it didn’t go anywhere.
Jerry Kozak
And for the moment, at least, the Dairy Security Act is in limbo, along with the rest of the Farm Bill. Many programs in the previous farm bill expired a month ago. Congress needs to do something beyond just duck and delay, putting off the big decisions till 2013. We do expect the farm bill to be in play during the anticipated lame duck session of Congress coming after next week’s elections. There are many other key decisions that Congress has delayed, and must return to Washington to address. Our goal in the weeks ahead is to make sure the farm bill is part of that agenda. We need a farm bill now!
Randy Mooney
We have a great message to go with that campaign. The Dairy Security Act, along with the rest of the new farm bill, saves the government money. We can do more, with less, than under the current program. This message – this fact – should appeal to those who want to reduce government spending and improve its efficiency. If the question in Washington is how to reform government programs and make them more effective, we have an answer: pass the 2012 Farm Bill. By not acting on this measure, Congress actually increases federal spending next year.
Jerry Kozak
Through all of this, and no matter what else we tackle, our mantra is like the Bruce Springsteen song “We take care of our own.” What that means is we’re always proactive in addressing the challenges we face, and look out for the dairy farmers in our producer family.
Let’s shift the focus now to some of the other major issues that NMPF, its staff and its members have been dealing with in the past year. The Farm Bill has been at the top of our list of priorities, but it’s part of a list, it’s not there alone. There are many other items that affect the overall health of dairy farms, and we’ve got an eye on all of them.
Randy Mooney
Like it or not, there is a continued focus on the treatment of farm animals in our society. We must have a good story to tell – a positive, consumer-friendly story – because farmers aren’t the only story tellers out there. Those who would reduce or eliminate animal agriculture also have their own stories to tell, and in those stories, unfortunately, dairy farmers like me are the bad guys. So, my story, and the tale that others in farming must tell, has to have its positive, defensible, and understandable points. That’s where the National Dairy FARM program comes in.
Jerry Kozak
We started the FARM program three years ago to provide a consistent, national, verifiable means of showing the food value chain how dairy products are produced. This allows us to see where we are as an industry, and ask if we’re we using the best animal care practices possible. If not, we have to ask what else we can be doing to make continuous improvements. Consumers and customers don’t expect us to be perfect, but they do expect us to collectively show an interest in making progress. To be indifferent to that expectation is to put all of us in a position where all we’re doing is playing defense, and being defined by the occasional bad actors and worst-case scenarios that we sometimes must explain.
Randy Mooney
We’ve made continued refinements in the FARM program, and participation has continued to grow. But it’s not where it needs to be. We need more farms, more coops, and more companies to commit themselves to this program. The expectations are out there. The questions are being asked. We have to provide answers. And I’d like to thank the National Dairy Board for providing an answer in terms of helping to fund the program. The NDB recently decided to allocate some resources to help defray the cost of the third party verification process. This financial commitment will allow us to increase the use of the FARM program.
I’m pleased to announce today that we anticipate that membership in FARM will exceed 70 percent of the nation’s milk supply in 2013.
Jerry Kozak
And one thing we are adding to the program is the See It, Stop It component that encourages farm workers to communicate with their managers, and vice versa. Many of the problems depicted in hidden videos, and not just in dairy, are the result of a lack of clear communication to the farm’s entire workforce that everyone employed on a dairy has to be part of the solution. The See It, Stop It effort encourages workers to share information about what farm owners may need to know, but can’t always be around to see. And it helps set up a protocol so that problems get nipped in the bud before they show up on the internet.
It’s this same type of proactivity that led us this summer to make the decision we made about the FARM program and tail docking. We take care of our own, and don’t need animal rights activists, or the government, to tell us how to run our farms.
Randy Mooney
Now, I know this is a powerful issue for many farmers, and it was a challenging one for our Board of Directors. But Jerry and I agreed that, given the direction of the veterinary community, and the nature of the decisions being made by our customers, we need to adjust the recommendations of the FARM program to oppose routine tail docking.
Jerry Kozak
It’s important that the FARM program reflect the best-available evidence concerning the optimal care practices for dairy cattle and calves. Once emotions are set aside, the intellectual and scientific basis for the practice just doesn’t stand. Incorporating this change into the standards of the FARM program helps us offer ongoing education about better ways of ensuring the comfort and cleanliness of both cows and farm workers. It also helps avoid public battles over the practice on a state by state basis. This is not a fight we are going to win, so it’s important for us not to fall on our swords trying to do so.
Randy Mooney
Another issue we need to address is how we can expand our marketing opportunities overseas, while also protecting against further encroachment from imports. There weren’t any new trade deals completed or signed in 2012, but there’s been plenty of behind the scenes negotiations on several, especially the Trans Pacific Partnership talks involving the U.S., and a growing list of countries that border the Pacific Ocean.
Jerry Kozak
Our challenge with these TPP talks is two-fold: first, we want to see if we can involve potentially lucrative new nations with currently protectionist dairy markets, especially Canada. We’ll see if our northern neighbor will play ball on this. The second challenge is to make certain expanded dairy exports from New Zealand aren’t the primary net result of the TPP. New Zealand would like that to be the case, and we’ve stuck to our message that, given the unique market structure of New Zealand’s dairy sector, we can’t allow that to happen. We are committed to taking care of our own.
Randy Mooney
There’s another challenge facing the U.S. and its trading partners, and this one involves the names of the dairy products we export. Most of the cheeses we make in this country have European origins, such as Cheddar, Gouda and Feta. These products have migrated from the Old World to the New, to the U.S., as well as to places like Australia and New Zealand. But now, the Europeans want to keep some of these names just for their own products. These terms, known as Geographic Indications, will be on the table as part of future trade negotiations.
Jerry Kozak
It may seem crazy that Fetas and Parmesans made by U.S. dairy companies might not be able to use these names any more, but that’s definitely what the European Union is pushing to do with its trade deals. For instance, any cheeses labeled as Asiago, Feta, Fontina, and Gorgonzola now sold in Korea can only come from Europe. And even though the U.S. just signed its own free trade deal with South Korea, we’re now subject to the cheese geographic indication restrictions written into the deal between the EU and Korea.
Randy Mooney
NMPF is attacking this protectionist encroachment in a number of ways. First, we are pushing our trade negotiators not to cave in to the demands of Europe to claw back these product names. Second, we have joined a new coalition called the Consortium for Common Food Names. Working with the U.S. Dairy Export Council, which formed this new group, we want to rally all the farmers, manufacturers, and retailers who have a stake in this. It’s a big list, and it’s not just about cheese: wines, fruits, and other consumer products could also be affected if this GI precedent takes hold. We need to defend our ability to use these time-tested, consumer-friendly product names. We will take care of our own, in this case, the names of our own products.
Jerry Kozak
Without a doubt, the best example of us taking care of our own is Cooperatives Working Together. After nearly 10 years, CWT is still the only non-governmental, dairy-farmer funded tool with the flexibility to help farmers boost their sales, and their bottom lines.
Randy Mooney
CWT is funded voluntarily by 70 percent of the nation’s milk supply. So far this year, it has helped us sell 100 million pounds of cheese, and 59 million pounds of butter and anhydrous milkfat. These products have been sold to 34 countries on four continents, and represent 2.2 billion pounds of milk. Here’s another way to think about the value of CWT: these exports represent 60 percent of the increase in milk production we’ve seen so far in 2012.
Jerry Kozak
CWT is an investment in building that 14 percent of our milk production that is exported. Remember that the U.S. is a relative newcomer to competing in global markets. Even as a major producer, we historically haven’t had the clout of other major global marketers. CWT helps overcome that challenge by allowing us to close deals and compete with aggressive players such as New Zealand’s monopolistic exporter Fonterra. It’s a potent tool in our arsenal that allows us to assist sales for U.S. dairy products that might not be made otherwise.
Randy Mooney
Let me also talk about another way to both defend and advance the interests of dairy farmers, and the products made from their milk: the REAL Seal. I can remember when I was first starting out in dairy farming how exciting it was to see a new logo calling attention to the content of dairy products. The battle back in the late 1970s was imitation cheeses, particularly those used in frozen foods. Flash forward 30 plus years, and we still have some of the same challenges to real dairy products.
Jerry Kozak
You all know we’ve been beating for years on the Food and Drug Administration to prevent the use of dairy terms like milk and cheese on products made from nuts, beans, seeds and weeds. Unfortunately, the regulatory cops are asleep on the beat. But there’s more than one way to crack this nut. The Real Seal gives us the opportunity to play some offense, by helping consumers distinguish between products made from real milk, and those that are either imported, or not made from milk at all. We need to take care of our own real dairy, real American-made products.
Randy Mooney
According to research done by DMI, the REAL Seal has 91% consumer awareness – meaning nine out of ten people recognize it — and 78% of consumers are familiar enough with it to know what it stands for. What’s more, 360 food companies are registered to use the Real Seal on more than 10,000 products.
Jerry Kozak
So NMPF has been given the opportunity to manage the Real Seal program. Thanks to an agreement between us and UDIA, we’ll now be responsible for licensing the seal, and overseeing how it can be used, and by whom. In fact, here’s the new website for the REAL Seal. I see this is a perfect extension of our organization’s efforts to protect the integrity of dairy products, and promote them in the marketplace, both domestically and internationally. This is crucial because the FDA won’t preserve the integrity of our products; we will take care of our own.
Randy Mooney
We all know that consumers are paying more attention today to where products are from, who makes them, and what’s inside them. The Real Seal helps address those questions with an easily identifiable icon. In the months ahead, NMPF will be working more with the companies already using the seal, and those who may want to consider its use, to build additional awareness of how it can help sell dairy products. It’s a big challenge: we have to convince marketers that consumers are interested in it, while convincing consumers it means something important. But we’re confident that the Real Seal can help answer questions that many are already asking.
Randy Mooney
As we close today, the path for NMPF is the same as it’s always been: we are a proactive organization, united in common purpose, and dedicated to taking care of our own.
Jerry Kozak
We take care of our own, whether it’s designing a better economic safety net for dairy farmers…
Randy Mooney
Or initiating our own animal care program…
Jerry Kozak
Or developing immigration policies specific to the needs of dairy farmers…
Randy Mooney
Or defending our global trade opportunities in the TPP and other trade agreements…
Jerry Kozak
Or enhancing our export sales through Cooperatives Working Together…
Randy Mooney
Or defending farmers’ rights to work together in programs like CWT from those who would eliminate the Capper-Volstead protections…
Jerry Kozak
Or protecting the integrity of dairy standards and enhancing our products’ appeal through the Real Seal…
Randy Mooney
Or standing firm against the threat posed by the failure of Congress to address the estate tax, thus preventing the transfer of our family farms from one generation to the next…
Jerry Kozak
Or getting ahead of the curve and implementing an antibiotic residue avoidance program…
Randy Mooney
Jerry, the list goes on and on, and it has to, as we face a future of reduced government support on the one hand, and more government intrusion on the other.
Jerry Kozak
And the best way to deal with that future is being proactive, always doing the right things, and most importantly, taking care of our own.
Randy Mooney
I am proud of our own staff, our officers, our board, and all of our members, and our team efforts with DMI and USDEC. We have never been so united.
Jerry Kozak
Bruce Springsteen’s poignant song reflects what has happened this year:
I’ve been knockin’ on the door that holds the throne
I’ve been lookin’ for the map that leads me home
I’ve been stumblin’ on good hearts turned to stone
The road of good intentions has gone dry as bone
Randy Mooney and Jerry Kozak
We WILL take care of our own!!
That’s a reflection of where things stand today. But by allowing the words “American made” to accompany the existing logo, we can help both private label and branded manufacturers, active in both domestic and international markets, distinguish their products from competitors from foreign nations. And by adding the words “made with real dairy ingredients” or “made with real butter” (or cheese), we can help food processors promote their use of dairy ingredients from real cows’ milk, and encourage the use of such ingredients over imitators. These additional label claims also will draw attention to the superior nutrient content of dairy foods, which in most cases offer a better nutritional profile than plant-based imitators.
Voting Ends December 15th to Select Three National Winners
Time Running Out for Legislators to Improve Dairy Farmer Safety Net
Last week, dairy producers, member cooperatives, Young Cooperators (YCs), industry representatives, staff, and others from all over the country met at the Walt Disney World Dolphin Hotel in Orlando, FL for NMPF’s annual meeting, which is held jointly every year with the National Dairy Promotion and Research Board and the United Dairy Industry Association.
In other news at the annual meeting, a Parmesan cheese made by Associated Milk Producers Inc. (AMPI) was awarded the Grand Champion Cheese award at the 2012 NMPF cheese competition. The cheese, made in Hoven, South Dakota, received a score of 99.0 from the judges. The AMPI Parmesan was selected from among 176 entries to this year’s NMPF cheese contest – a record number of entries. A total of 3,006 pounds of cheese was judged. (Right: AMPI representatives accept the Chairman’s Plaque for their winning Parmesan.)
With the dust settling on this week’s elections, the focus in Washington will turn to resolving unfinished business that languished during the campaign season. Congress will return to Capitol Hill next week in a lame duck session, where it will have to tackle issues such as the fiscal cliff of tax increases and budget cuts looming in January.
