The Cooperatives Working Together (CWT) Export Assistance program continued in August to assist CWT member cooperatives in exporting dairy products to benefit all dairy farmers. Last month, CWT accepted requests for export assistance totaling 4.6 million pounds of Cheddar and Monterey Jack cheese to six different countries in Asia, North Africa, and the Middle East. The product will be delivered in 2011.

That brings the total cheese that CWT has provided assistance for in 2011 to 62.3 million pounds of cheese export sales. When combined with the export sales it assisted in 2010 that have been or will be delivered in 2011, a total of 86 million pounds of cheese will be leaving the domestic market in 2011. That’s equivalent to 860 million pounds of milk, or the annual production of over 40,000 cows.

CWT will continue to assist CWT member cooperatives in building overseas markets of U.S. cheese through the remainder of 2011.

The program also continues to build membership participation for 2012-13 with a goal of achieving the 70 percent level. As of August 31st, 16 cooperatives representing 41 percent of the nation’s milk production have joined CWT for the next two years.

There is no question that moving the equivalent of 860 million pounds of milk overseas enhances the milk price every dairy farmer receives. That’s why every cooperative, whether they export dairy products or not, should be making the two-cent per hundredweight investment in CWT.

The United States and Mexico signed a Memorandum of Understanding (MOU) on July 6, 2011 formally outlining a pilot program to allow Mexico-domiciled motor carriers to operate throughout the United States.

Despite concern raised in a recent report by the Inspector General of the U.S. Transportation Department, the Federal Motor Carrier Safety Administration (FMCSA) is ready for implementation of the U.S. – Mexico cross border trucking program. Some areas of concern in the Transportation Department IG’s report are: clarification of how it will accomplish compliance reviews inside Mexico’s borders, site specific plans for verification of drivers and trucks at the border, implementation plans for electronic on board recorders for pilot program trucks, and training for inspection personnel for the pilot program.

In addition, Department of Transportation (DOT) has stated that approximately 46 Mexican carrier companies will need to participate in the pilot cross-border trucking program before it terminates in three years. A Federal Register notice stated that this “statistically valid sample” must be achieved by the pilot program before a longer-term cross-border trucking program can be implemented. However, analysts suggest that, absent a longer-term cross-border trucking program, Mexico is entitled under NAFTA to re-impose “retaliatory tariffs” on US goods previously lifted.

Registration is open for those wishing to attend the 2011 annual meeting that NMPF hosts jointly with the National Dairy Promotion and Research Board and the United Dairy Industry Association. This year’s meeting will be held November 14 – 16 at the Town and Country Resort & Convention Center in San Diego, CA.

With the theme of “Navigating a New Course,” the meeting offers attendees several days of informative programming in addition to opportunities to interact and network with dairy producers and industry leaders from across the country. Dairy producers, cooperative staff, Young Cooperators (YCs), industry suppliers, trade press, and others from within the dairy sector are all invited to attend.

Individual and group meeting registration, along with hotel reservations, can be made online at www.dairyevents.com. Although online registration is preferred, a registration form may also be filled out and submitted via mail or fax. Online, mail, and fax registration must be submitted with payment by Monday, October 24. Visit www.nmpf.org/nmpf-joint-annual-meeting for more information about the annual meeting.

ARLINGTON, VA – Dairy farmers of all sizes will benefit from the risk management opportunities featured in the Foundation for the Future (FFTF) dairy policy program, designed by the National Milk Producers Federation (NMPF), and drafted into legislative form by Rep. Collin Peterson (D-MN).

In particular, the Dairy Producer Margin Protection Program (DPMPP) presents farmers with the opportunity to proactively insure up to 90 percent of their milk production against catastrophically low margins, due either to low milk prices, high feed costs, or the combination. Because the financial stability of dairy operations increasingly depends on operating margins, rather than milk prices, giving farmers a way to protect their operation’s equity when margins are tight is a huge improvement over the status quo government safety net programs, which are solely focused on milk prices, according to NMPF.

“It’s always being said that farmers are price takers, not price makers, but under this new safety net, dairy producers will have the option of making a smart investment to prepare for the type of worst-case scenario like what we experienced in 2009,” said Doug Nuttelman (left), a dairy farmer from Stromsburg, NE, and a member of the NMPF task force that developed the DPMPP.

Nuttelman explained that the DPMPP offers a Basic level of margin insurance at no cost to producers; all they will have to do is sign up for it, once the Foundation for the Future program is implemented. Under the congressional draft, 75 percent of a farm’s milk production history will automatically be eligible for protection at $4 per hundredweight margin (defined as the gap between the all-milk price, and a national average of feed costs).

But the real opportunity for farmers to manage risk comes under the Supplemental option of the DPMPP, according to Nuttelman, because up to 90 percent of a farm’s production history can be insured in increments up to an additional $4/cwt. The cost of this optional, additional insurance will be shared between the USDA, and producers who elect for Supplemental coverage.

“This gives farms of all sizes the chance to indemnify themselves at a level up to eight dollars per hundredweight, meaning that if the milk price is $14, and feed costs are above $6 per hundred, the insurance program will pay them the difference between the actual margin and $8 on almost all of their production that particular month. Or, if milk prices are $20, and feed costs are above $12, they’ll get paid,” Nuttelman said. If producers don’t want that level of protection, the Supplemental program offers a sliding scale of options, in 50 cent per hundredweight increments.

And the real attractiveness of this program to smaller-scale operators is that “the margin insurance program allows for risk management regardless of whether you produce 100,000 pounds of milk per month, or one million,” he said. “Many other types of private risk management tools require a minimum volume of milk in order to enter into a contract. But the DPMPP is open to everyone, large or small. This brings a new degree of protection to even the smallest dairies,” Nuttelman said.

He also noted that the DPMPP is compatible with other risk management programs already in use, such as forward contracts. That type of program allows farmers to lock in a future price that may be attractive and profitable to them, whereas the DPMPP allows producers to insure against an unattractive scenario where poor margins may bleed away their equity.

For Nuttelman, whose multi-generational Nebraska farm involves two sons, having insurance against equity loss “would make it easier for us to sit down with the banker, because if he sees that we are protected against the downside, both he and I can invest more confidently in the future of our farm.”

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 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.

ARLINGTON, VA – The Foundation for the Future (FFTF) dairy policy program has been designed to allow the U.S. to build on its burgeoning role as a consistent global exporter of dairy products, according to the National Milk Producers Federation, which helped design the proposal.

The U.S. is on pace to export 13 percent of its milk production in 2011 – the highest portion ever – and many overseas markets for dairy products are expected to continue growing at a faster rate than the U.S. market. Thus, any changes to current dairy policy “must not place the U.S. farmer at a competitive disadvantage,” according to NMPF board member Les Hardesty (left), a dairy producer from Windsor, Colorado.

In order to make the U.S. more competitive globally, the multi-faceted approach of FFTF eliminates the Dairy Product Price Support Program, Hardesty said. Currently, the price support program acts as a government-funded buyer of last resort for commodities including cheese, butter and nonfat dry milk powder. But the program also can act as a disincentive to export, when, during periods of low price, product manufacturers have greater incentive to sell surplus commodities to the government, rather than on the world market. Such was the case in 2009, when U.S. dairy exports dropped and government price support purchases surged.

“Once this program is eliminated, markets, during periods of surplus, will clear more quickly,” Hardesty said. This will be in contrast to what happened in 2009, when global dairy sales didn’t drop, but the U.S. portion of those sales did, because products were sold to the government, rather than commercially, Hardesty said.

Some critics have alleged that Foundation for the Future’s Dairy Market Stabilization Program (DMSP), if and when it activates, will so greatly reduce domestic production that exports will be choked off. But Hardesty disputed that, saying that the DMSP “only activates when margins are extremely low, and would not be active when domestic or international demand is sending strong signals for more milk output.”

Also, the Foundation for the Future proposal contains a provision that prevents the DMSP from kicking in if U.S. prices are 20% or more above world prices for cheddar cheese and skim milk powder. This clause will ensure that any market stabilizing slowdowns in milk production don’t unintentionally distort the relationship between U.S. and world prices, creating an imbalance that could incentivize more imports, and/or hinder exports.

“American dairy farmers have invested millions of dollars in building and fostering an export capability, through the creation and continued funding of both the U.S. Dairy Export Council (USDEC), and the Cooperatives Working Together program,” Hardesty noted.

“We are fully aware that foreign sales of U.S.-made dairy products are crucial to the current and future health of our industry, and don’t want policies that would detrimentally affect our export capabilities.”

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 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.

ARLINGTON, VA – The new legislative draft of National Milk Producers Federation’s (NMPF) Foundation for the Future program adheres closely to two key principles: that it be national in scope, and apply equally to all producers, the organization said today.

Those key objectives were established two years ago when NMPF Chairman Randy Mooney, a dairy farmer from Rogersville, MO, formed a task force to examine how best to improve dairy policy.

“The task force had to generate policies that were national in scope, meaning that because they would apply to all dairy farms across the country, they must treat all regions equitably – and any policy changes must not discriminate among producers in any way, especially with respect to the size of their farms,” Mooney said. The Foundation for the Future (FFTF) package “follows those principles because it treats each producer fairly and equally.”

As a result of volume caps, current dairy safety net programs contain a major shortcoming in that they do not protect the majority of U.S. milk production, leaving large segments of the industry exposed to the inherent, unique financial risks associated with dairy farming. This exposure threatens not only dairy farmers, but also American consumers by undermining the ongoing ability of producers to produce a reliable supply of nutritious, wholesome, and affordable dairy products, according to Mooney.

FFTF’s Dairy Producer Margin Protection Program (DPMPP) guards against the economic hardship resulting from poor margins caused by low milk prices and high feed costs, and provides for a basic level of no-cost insurance coverage for all producers (and a larger share of the U.S. milk supply). It also incorporates an additional measure of risk management for those producers looking for supplemental protection – but largely at their own cost. In addition, by allowing farmers of all sizes to choose their own level of supplemental margin protection, the DPMPP gives smaller producers access to a form of self-directed risk management that previously had been unavailable to them.

For the same reason of fairness, Mooney said that NMPF rejected any consideration in its DPMPP of adjustments to feed costs that would contain regional considerations or biases. DPMPP also places no limitations on individual producers’ ability to participate in the program as a result of their production volume.

“NMPF recognizes that just as farmers of all sizes, and in all regions, contribute equally to the dairy promotion and research checkoff (fifteen cents for every hundred pounds of milk produced), they should also share equally in the benefits of sensible dairy policy reform,” Mooney said.

Another member of the NMPF task force that created the Dairy Producer Margin Protection Plan said that while each farm has different feed costs, those differences are minimal when margins are greatly compressed, as they were in 2009.

Ken Nobis, a producer from St. Johns, MI, noted that “while operational costs will always differ among producers – even within states or local regions – these differences should have no bearing in the establishment of a safety net provided by the federal government. The Dairy Producer Margin Protection Program and the other elements of Foundation for the Future recognize this, and were designed to be available to all without bias.”

To learn more about Foundation for the Future, including the Dairy Producer Margin Protection Program and the Dairy Market Stabilization Program, visit www.futurefordairy.com.

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 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.

ARLINGTON, VA – “The National Milk Producers Federation has long supported a mandatory, national animal identification and traceability system as a means of safeguarding the health of the nation’s livestock. However, the U.S. Department of Agriculture (USDA) has struggled for years to create a national system that would permit 48-hour traceback and rely on currently-available technology, such as RFID tags.

“Today, the USDA said it was ready to move forward with a revised approach, one that recognizes that various types of animal identification techniques, and various approaches already in use in states and tribal areas, can still help achieve a national system of disease traceability.

“We believe today’s announcement by Secretary Vilsack is an important development, one that allows the entire livestock industry, both private parties as well as the government, to collectively focus on what is possible. Rather than dwell on past efforts that didn’t work out, it is vital that we now focus on a new system that will help the livestock sector be better prepared in the case of a disease outbreak.

“We look forward to reviewing the proposal and working with the USDA to ensure the dairy industry is at the animal ID forefront as a collective insurance policy in the event of an animal disease emergency.”

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 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.

Commentary from Jerry Kozak, President and CEO of NMPF

ARLINGTON, VA – Dairy producers realize that the status quo protections offered by current federal policies have failed them during the past decade – especially in 2009 – yet some may understandably be apprehensive about advocating comprehensive reform of those policies.

The Dairy Product Price Support Program (DPPSP) and the Milk Income Loss Contract (MILC) program combined constitute nearly 80 percent of the dairy budget baseline over the next ten years, according to the Congressional Budget Office. However, the DPPSP has become an ineffective safety net for farmers, and has created an unintended outcome whereby the U.S. has become burdened with balancing the world’s milk supply.

The MILC program also has been ineffective in providing a safety net for farmers, and treats farms and entire regions of the country unequally. More specifically, it does not address the rise in volatile feed costs, and has not prevented the exodus of farms during its decade of existence. In 2001, there were 97,460 U.S. dairy farms, but by 2010, that figure was 62,500 – a loss of 36 percent of the nation’s dairy farmers, almost all of which were small to medium-size operations of 500 cows or less. This clearly demonstrates the inadequacy of the current program and the need for better dairy policy.

The policy proposals contained in the National Milk Producers Federation’s Foundation for the Future (FFTF) eliminate the DPPSP and MILC programs, and create a more efficient and effective safety net in the form of a Dairy Producer Margin Protection Program, the costs of which are shared by dairy farmers and the federal government. FFTF also establishes a Dairy Market Stabilization Program to prompt producers to respond more quickly to economic signals from the marketplace and at no cost to the government.

Existing farm programs, including the dairy title within the Farm Bill, are expected to undergo further cuts as part of the new federal budget deal passed by the House and Senate. FFTF was created to achieve better economic protection for farmers, while also yielding a budget savings – compared to current baseline spending levels – precisely because farm safety nets are going to shrink in the future. The Congressional Budget Office says FFTF will save $166 million over the next five years, at a time when Congress has now pledged to cut more than a trillion dollars from federal spending.

Dairy producers have acknowledged that shrinking federal resources are the reality. Keeping the status quo is not an option, either economically, as the best safety net to producers, or fiscally, due to budget demands. Producers have been calling for something better for the past two years. We can’t stay where we are and change is needed, which is why Foundation for the Future was developed.

To learn more about Foundation for the Future, including the Dairy Producer Margin Protection Program and the Dairy Market Stabilization Program, visit www.futurefordairy.com.

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 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.

Today’s consumers want to know that the food they purchase is safe, wholesome, nutritious, and produced with integrity. U.S. milk producers are demonstrating that commitment by enrolling at a rapid pace in the National Dairy FARM Program: Farmers Assuring Responsible Management (FARM). In fact, since enrollment began in September 2010, 45 percent of the nation’s milk supply now comes from farmers, cooperatives, and proprietary processors implementing the FARM program.

Voluntary and open to all producers, FARM is a national dairy animal care, third-party verified program designed to demonstrate dairy farmers’ commitment to outstanding animal care and a quality milk supply. Independent dairy producers, proprietary processors, and cooperatives are quickly coming on board.

“Telling this story is essential at a time when consumers want to know how their food is produced,” said John Miles, Land O’Lakes FARM implementation leader. “The FARM program helps us reach out to customers, consumers, and the entire marketing chain. It sends a strong message that Land O’Lakes member producers work hard caring for their animals and producing quality milk.”

FARM was created by the National Milk Producers Federation (NMPF), along with support from Dairy Management, Inc. FARM provides thorough animal care education for producers, on-farm evaluations, and objective third-party verification, giving customers and consumers the assurances they deserve.

Participating producers are provided comprehensive training materials and undergo an on-farm evaluation conducted by a trained veterinarian, extension educator, co-op field staff member, or other FARM-trained professional. Evaluators then provide a status report and, if necessary, recommendations for improvement.

To protect the integrity and credibility of the program, a certain number of participating dairy farms will be randomly selected for objective third-party verification. Validus, an Iowa-based certified auditing company with more than 10 years of experience verifying on-farm animal care, has been selected to conduct all third-party evaluations and will begin that process this summer.

A complete list of participants and all training materials in both English and Spanish can be found at www.nationaldairyfarm.com.

On June 29, 2011, the Food and Drug Administration’s (FDA) San Francisco District office sent a warning letter to CytoSport^TM, Inc., Benicia, CA, concerning alleged misbranding of some of the company’s Muscle Milk^® products.

FDA reviewed the labels for the company’s Chocolate Muscle Milk^® Protein Nutrition Shake, Vanilla Creme Muscle Milk^® Light Nutritional Shake and Chocolate Peanut Caramel Muscle Milk^® products, and concluded that these products are misbranded because the labels are false or misleading. The warning letter pointed to the “Contains No Milk” statement on the front of the package, which contradicted the presence of milk-derived ingredients in the ingredient statement and in the allergen statement. FDA’s warning letter also noted that Muscle Milk^® Shake products were misbranded because they purported to be milk – based on the prominence of the word “Milk” on the front of the package – but did not conform to the standard of identity for milk according to the ingredient statement.

NMPF, whose own past efforts to draw attention to misbranded imitation dairy products have specifically cited Muscle Milk^® products, welcomed FDA’s warning letter to CytoSport^TM.

“We hope that FDA’s recent warning letter to Muscle Milk^®’s CytoSport^TM is an indication the agency is finally going to flex some of its own muscle against brands and products that misappropriate dairy terms on their labels,” said Beth Briczinski, NMPF’s Director, Dairy Foods and Nutrition.