May is going to be a pivotal month in the crusade to create a better future for dairy farmers, as both the Senate and House Agriculture Committees will, in the next two weeks, begin marking up the five-year farm bill that stalled out at the end of 2012. Dairy farmers have a huge stake in how the farm bill gets resolved.

Unfortunately, our efforts to obtain an effective safety net for farmers, in the form of the Dairy Security Act (DSA), have been contested every step of the way by dairy processors. Their main goal in this process has been assuring themselves of an abundance of cheap milk, priced at levels that will harm farmers over the long term, and bankrolled by taxpayers. This is a recipe for disaster.

How did we reach this point? NMPF’s members have been working across the farmer community for four years to develop a better safety net, one that eliminates the ineffective and costly MILC, price support, and dairy export incentive programs. In their place, we are asking for the creation of a voluntary program to address not just milk prices, but margins: the gap between national average milk prices, and national feed costs. This insurance program allows up to 90% of a farm’s production to be covered by this risk management approach. Importantly, the Dairy Security Act contains a mechanism to temporarily adjust milk production when periods of low margins threaten farm balance sheets and – just as critically – threaten to drive up the cost of the insurance payouts to unsustainable levels.

Thus, the DSA has a market stabilization element that asks farmers who choose to enroll in this government program to trim their milk output by a few percentage points only when margins are severely compressed—as they have been on a handful of occasions over the last ten years. Now, there is no requirement that a participating farm actually cut milk production. It’s just that they won’t be paid on 100% of their output when the market is clearly indicating it doesn’t need all that milk. The idea is that it’s better to trim a slight amount for a short time, rather than suffer prolonged poor margins for months on end, as happened in 2009.

The DSA’s market stabilization component has processors and their allies using all manner of distortions and misrepresentations to attack it. The biggest ruse is that the stabilization program is a government assault on a farmer’s milk check. Remember, this is a voluntary approach to risk management, which offers producers the choice to participate. If they do, market stabilization makes the program more effective by reducing milk output to keep prices from hitting rock bottom. In reality, the program will improve farm income more quickly than without it, by better aligning supply with demand. Just as importantly, this approach saves taxpayers money.

The alternative endorsed by processors features no mechanism to curtail potentially excessive milk production. This is a great deal for them: it offers processors an over-abundant, cheap milk supply, ensuring that farmers are underpaid for the milk they produce, while taxpayers are asked to make up the difference.

We’ve seen spurious claims aplenty about the Dairy Security Act: it would kill exports (no, there’s a provision to suspend the market stabilization element if a misalignment between U.S. and world prices arises that could disadvantage U.S. dairy exports); it would stop the growth of the industry (no, the analyses done show that long-term growth is not hampered); the DSA would gouge consumers (hardly; an analysis by the University of Missouri said that farm-level milk prices will rise only ½ of one cent per gallon because of the DSA, not even noticeable given the monthly volatility of farmers’ milk prices – not that they set retail prices to begin with!).

One processor-affiliated group has even distorted a recent study of the DSA by Midwestern university economists by asserting that margin insurance by itself has a better net benefit. It reached that conclusion by claiming credit for the market-stimulating (and thus revenue-enhancing) effects of the stabilization program, even though such a program doesn’t even exist under a limited, margin insurance-only approach! And this assessment also assumes farmers will continue to produce and dump milk, even when they have two months advance notice to trim milk production and save on feed costs.

As has been noted since the days of the ancient Greek empire, when it comes to war, truth is the first casualty. The same observation applies to the processors’ war on the Dairy Security Act. The truth is, the dairy farmer-developed DSA is a better deal for farmers and for taxpayers. The real threat to the growth of our domestic dairy industry is not a market stabilization program that will only rarely activate; it’s the further damage to our dairy producer sector that would result from an ill-conceived processors’ dream plan to assure themselves a sea of taxpayer-subsidized milk. Congress should choose wisely, as truly the best and most honest approach is the Dairy Security Act.

From Jerry Kozak, President and CEO, NMPF:

“Goodlatte and Scott’s misnamed Dairy Freedom Act is nothing more than an unacceptable attempt by dairy processors to assure themselves access to a sea of taxpayer-subsidized cheap milk. Congress rejected this approach last year, and should do so again this year.

“What processors claim is a compromise is nothing more than a costly ruse that will hurt farmers and taxpayers alike.

“Because it features no mechanism to put the brakes on potential excess milk production, it offers dairy processors an over-abundant, cheap milk supply that will help their corporations’ bottom lines, while ensuring that farmers are underpaid for the milk they produce. Dairy processors are simply trying to have taxpayers make up the difference.

“The market stabilization program in the Dairy Security Act that was approved last year by both the House and Senate Agriculture Committees makes our program cost-effective. Creating an effective, voluntary participation program supported by dairy farmers from coast to coast most certainly is the business of the federal government. That program is the Dairy Security Act, not this dairy processor-backed Trojan Horse.”

 

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.

ARLINGTON, VA – A new analysis released today by a group of university economists demonstrates that the Dairy Security Act (DSA) – the farm bill proposal advocated by the National Milk Producers Federation (NMPF) – provides the most effective economic safety net for farmers. The DSA provides catastrophic risk insurance, helps enhance farmer revenue, and does so in a way that minimizes government outlays.

That assessment was generated by the Midwest Program on Dairy Markets and Policy, a team of six economists who specialize in farm bill analysis. It includes doctoral student John Newton (in the photo) and Dr. Cameron Thraen of Ohio State University; Dr. Marin Bozic of the University of Minnesota; Drs. Mark Stephenson and Brian Gould of the University of Wisconsin; and Dr. Christopher Wolf of Michigan State University.

“This new report provides independent corroboration of why the DSA is the best choice for saving dairy farmers while protecting taxpayers. Congress needs to heed this report and pass the Dairy Security Act in 2013 as part of the farm bill,” said NMPF President and CEO Jerry Kozak.

In particular, the report “debunks any concerns that the DSA’s market stabilization element will hinder the growth of our industry or detrimentally affect the future of the dairy business. This says those fears are unfounded,” Kozak said. “In fact, we need the DSA in order to give our farmers a future.”

The paper compares the dairy farmer-backed DSA, a voluntary program featuring margin insurance paired with a Dairy Market Stabilization Program, with an alternative approach that offers a smaller-scale, limited margin insurance program alone. The paper addresses four critical questions comparing the DSA to the margin insurance-only proposal offered last year by Reps. Bob Goodlatte and David Scott (G-S), members of the House Agriculture Committee. The paper estimates how the programs would operate in 2013.

The issues addressed in the report include the extent to which the DSA and G-S offer effective catastrophic risk insurance; whether they reduce government costs; and whether they present a long-term obstacle to the growth of farms wishing to expand.

After running a variety of milk price, feed cost, and participation scenarios, the academic report offered several conclusions:

• The Dairy Security Act does provide effective risk insurance, removing 66.6% of the catastrophic risk a typical farm would face in the future. It noted that the Goodlatte-Scott measure would force farms with growth plans to rely more  on private markets, rather than the farm bill, to effectively protect against catastrophic risks, because the G-S does not provide a means to insure future milk production;
• The DSA’s market stabilization plan helps reduce the frequency and severity of insurance indemnity payments, generating higher milk prices for farmers and reducing the taxpayer burden. The report notes that the main limitation on government financial liability in the G-S measure is achieved by limiting farmers’ ability to insure their production to 80% of a farm’s production history.
• The DSA’s market stabilization plan does not present a long-term obstacle to farm growth, even for those operations with a very aggressive farm growth plan.

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.

 

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.

From Jerry Kozak, President and CEO, NMPF:

“The National Milk Producers Federation welcomes an agreement on immigration reform reached by the Agriculture Workforce Coalition (AWC), the United Farm Workers (UFW) and key Senators engaged in the process. The framework and objectives of this agreement represent a positive step toward providing America’s dairy farmers access to a legal workforce now and in the future.

“The coalition is committed including an agricultural guest worker program and supporting the general framework negotiated in any final immigration reform package. As members of Congress begin the process of drafting legislative language, we look forward to working with them to ensure that the bill details reflect the goals and intent of this framework agreement.

“The AWC, of which NMPF is a member, appreciates the efforts of Senators Dianne Feinstein, Marco Rubio, Orrin Hatch and Michael Bennet in helping to foster this agreement between agriculture employers and farm workers.

“For many farmers across the country, finding a sufficient number of workers to harvest crops or care for animals is the biggest challenge they face in running their businesses. There is a shortage of U.S. workers willing and able to perform farm work. Securing a reliable and competent workforce for our nation’s farms and ranches is essential to ensuring that American consumers continue to enjoy abundant and affordable food on their grocery store shelves.”

Additional information on the AWC can be found on its website: www.agworkforcecoalition.org.

 

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 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.