NMPF Hosts Board Members, Young Cooperators for Capitol Hill Meetings

In conjunction with the March Board of Directors meeting, NMPF board members and Young Cooperators (YCs) participated in a joint Capitol Hill fly-in. The purpose was to meet new staff and educate members of Congress on the pressing dairy issues of the day. During the one-day event, there were more than 100 meetings on both the House and Senate sides of Congress. While most of the focus was on promoting Foundation for the Future, other issues, including trade, energy, environment, and the agriculture budget were also discussed.

Most of the 25 YCs who attended the spring fly-in had already been to Washington, DC, in June 2010, when they first met with their members of Congress and lobbied for NMPF. This year’s spring fly-in gave them the opportunity to follow up with their representatives and observe the progress made on the issues they discussed last summer.

Photos from NMPF’s March board meeting and the Capitol Hill fly-in are publicly available on NMPF’s Flickr account.

 

In the photo: Senator Michael Bennet (CO – second from right) met with NMPF board member Les Hardesty and YC brothers Greg and Craig Pearson to discuss important dairy industry issues.

 

USDA Finalizes Regulation to Apply Promotion Assessment to Foreign Dairy Products

After many years of delay, the U.S. Department of Agriculture (USDA) issued a final rule applying the long-delayed promotion checkoff on dairy imports, a development hailed by NMPF.

NMPF first worked with Congress to include a provision in the 2002 Farm Bill to expand the promotion checkoff to imports, but the expansion was blocked due to objections that the domestic checkoff was not applied to farmers in all 50 states, only the continental 48. So, NMPF again worked with Congress as it wrote the 2008 Farm Bill to ensure that the checkoff was applied in every state. However, implementation of the measure has languished for the past three years in regulatory limbo – until now.

On March 18, 2011, a final rule was released by USDA. It extends the checkoff to all 50 states and Puerto Rico as of April 1st, and starting on August 1st, it assesses the equivalent of 7.5 cents per hundredweight on all dairy-based imports, including cheese and butter products, as well as dry ingredients such as casein and milk protein concentrates. The money will be collected by the National Dairy Board to be used for nutrition research, consumer education, issues management, and other programs that build demand for dairy consumption.

“It’s been a long time in coming, but we’ve finally achieved a degree of fairness in the area of dairy promotion between domestic milk production and imports. Dairy importers, who benefit from the world’s largest dairy market, need to help pay to expand that market, the same way that our farmers do,” said Jerry Kozak, President and CEO of NMPF. “We appreciate the efforts of Agriculture Secretary Tom Vilsack to recognize how important it was to finally resolve this issue.”

Under the new import assessment, regional and state promotions, including those in Wisconsin and California, will continue to drive demand for dairy products, and the program will, in all substantive respects, continue to run as it has. The USDA has stated that the dairy import assessment will be administered so as to continue to permit state and regional promotions.

NMPF released a document of Frequently Asked Questions to help clarify the impact that this assessment will make on the dairy industry.

CWT Progressing in Achieving Membership Goal

Cooperatives Working Together (CWT) continued to make progress towards its membership goal of getting a minimum of 75% of the nation’s milk supply investing in CWT for 2011 and 2012.

CWT announced last week that Bongards Creameries, in Bongards, Minnesota, has joined as a new cooperative member for the 2011-2012 membership period. This brought the total number of CWT members to 35 cooperatives (listed below), and 134 independent producers. With Bongards Creameries on board, the current level of total participation rose to 67% of eligible milk. The 2¢ investment will not be initiated until the 75% goal is reached.

Agri-Mark, Inc.
Arkansas Dairy Cooperative Association
Bongards Creameries *
Cooperative Milk Producers Association
Cortland Bulk Milk Producers Cooperative
Dairy Farmers of America, Inc.
Dairylea Cooperative Inc.
Farmers Cooperative Creamery
First District Association *
Foremost Farms USA
Jefferson Bulk Milk Cooperative, Inc.
Land O’ Lakes, Inc.
Lone Star Milk Producers
Lowville Producers Dairy Cooperative
Magic Valley Quality Milk Producers Inc. *
Maryland & Virginia Milk Producers Cooperative Association
Michigan Milk Producers Association
Midwest Dairymen’s Company *
Mount Joy Farmers Cooperative Association
National Farmers Organization
Northwest Dairy Association (Darigold)
Oneida Madison Milk Producers Cooperative
Prairie Farms Dairy, Inc. *
Preble Milk Cooperative Association, Inc.
Premier Milk Inc. *
Schoharie County Cooperative Creamery
Snake River Dairymen’s Association
South New Berlin Milk Cooperative, Inc.
Southeast Milk, Inc. *
St. Albans Cooperative Creamery, Inc.
Swiss Valley Farms Company *
United Ag Services Cooperative, Inc.
United Dairymen of Arizona
Upstate Niagara Cooperative, Inc.
Zia Milk Producers, Inc.
* New CWT Members in 2011

 

Court Issues Opinion on CAFO Rule

On March 15th, the United States Court of Appeals for the 5th Circuit in New Orleans issued a unanimous ruling that the Environmental Protection Agency (EPA) cannot require livestock farmers to apply for Clean Water Act (CWA) permits unless their farms actually discharge manure into United States waters. In the ruling, the Court concluded: “The CWA provides a comprehensive liability scheme and the EPA’s attempt to supplement this scheme is in excess of its statutory authority.”

According to the ruling, non-discharging confined animal feeding operations (CAFOs) do not need permit coverage. In addition, CAFOs cannot face separate liability for “failure to apply” for permit coverage, as EPA’s rule provided. Instead, where a CAFO does not seek permit coverage, the CWA imposes liability only for discharges that occur from the unpermitted CAFO. The National Milk Producers Federation was a participant in the lawsuit.

Agriculture Committee Chairperson Senator Stabenow Kicks of 2012 Farm Bill Hearings

Agriculture Committee Chairperson Senator Stabenow Kicks of 2012 Farm Bill Hearings

The first “2012 Farm Bill” hearing of the 112th Congress will begin on April 9th. Senator Debbie Stabenow, Chairwoman of the Senate Agriculture, Nutrition and Forestry Committee, is hosting a field hearing in her home state of Michigan. The hearing will be at the Kellogg Center on the Michigan State University campus in Lansing from 9:30 am to 12:30 pm. More information about the location is available at www.kelloggcenter.com/about/location.html.

Written testimony may be submitted for the record to the Senate Agriculture Committee no later than April 16, 2011. Send your testimony or questions to aghearing@ag.senate.gov or to:

US Senate Committee on Agriculture Nutrition and Forestry
328A Russell Senate Office Bldg.
Washington, D.C. 20510

NMPF will be submitting testimony for the record.

National Dairy Producers Conference Registration Deadline Two Weeks Away

There is still time to take advantage of the early-bird registration rate for the National Dairy Producers Conference (NDPC) in Omaha, Nebraska from May 15 – 17. After April 13, the cost of registration will go up, and hotel rooms and farm tour spots will only be confirmed on a space and rate-available basis.

Secure your meeting registration, hotel reservation, and farm tour spot online at www.registration123.com/NMPF/2011NDPC. Although participants are encouraged to register online, conference registration forms submitted through the mail with credit card or check payment will also be accepted.

Formerly known as the National Dairy Leaders Conference, the NDPC gives dairy producer participants the opportunity to listen, learn, and lead. It provides a way to critically analyze the status of the dairy industry now and discuss possible solutions for the future.

Even though 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 business, state and federal regulators, promotion organization executives, and academics.

More information about the NDPC, including the agenda and details about the conference’s location, is available at www.nmpf.org/NDPC.

Time Running out for Dairy Grad Students Applying for Scholarship Program

Graduate students currently pursuing dairy-related fields of research in Master’s or Ph.D. programs only have until Easter to submit their applications for NMPF’s National Dairy Leadership Scholarship Program. Applications will no longer be accepted after April 21.

Each year, NMPF awards at least four scholarships to outstanding graduate students who are conducting research that would benefit NMPF member cooperatives and the U.S. dairy industry at large.

Interested students are encouraged to submit an application (applicants do not need to be members of NMPF to qualify). 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.

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 must be received no later than Thursday, April 21, 2011. For an application or more information, please visit the NMPF website or call the NMPF office at 703-243-6111.

The Long and Winding Road

Finally.

At long last, the U.S. Department of Agriculture has finished a marathon that started back in 2001, when NMPF first asked Congress to extend the dairy promotion checkoff to imports. After two farm bills, a glacial, three-year regulatory review, countless rhetorical salvos, and the figurative cloud of dust always kicked up by prolonged skirmishes, the finish line is now in sight.

I’m going to start this column by reiterating why the import assessment is appropriate, and why we pushed for it in the first place. It’s also worth asking an equally important question – why not?

First, the rationale for extending the domestic dairy checkoff. When the national dairy promotion program was initially created back in 1983, imports were a smaller portion of domestic consumption than they are today. Overall global dairy trade was much smaller. So not only was the checkoff not applied to imported products, it wasn’t even applied beyond the continental 48 states.

But times have changed. Import shares have grown as a portion of the entire domestic U.S. dairy market, which has also grown. U.S dairy farmers have spent billions over the past 27 years to build a compelling case for the consumption of cow’s milk, in its various forms. Importers of foreign cheeses, as well as specialty ingredients, have benefited from the huge surge in per capita cheese consumption. They’ve also benefited from all of the other nutritional studies, ingredients R&D, public relations campaigns, processor and retailer alliances, and related activities funded by checkoff dollars. Consumer advertising has given way to strategic marketing initiatives that work to lift dairy consumption overall.

And yet, not a single dollar has been spent by importers to help in these efforts. They are the classic example of the free-rider phenomenon. Foreign dairy products profit from our market, but rely on U.S. dairy farmers to promote it. In two successive farm bills, Congress has said that it’s time to end this free lunch for foreign dairy interests.

Even setting aside the fact that other commodity checkoffs created since 1983 apply their levies to foreign imports ranging from cotton to pork, it’s a matter of basic fairness that those who are enjoying a seat at the table need to help cover the tab. Maybe not proportionally – the new import assessment is certainly not proportional, unfortunately – but nonetheless, they need to contribute something. Anything less is the perpetuation of an injustice. The whole concept of mandatory checkoffs is that they allow for a shared contribution on the part of those who ultimately have a stake in a shared, successful economic outcome. What’s more, importers will be given representation on the National Dairy Board so their perspective is recognized.

These are the arguments that we made, repeatedly – at times ad nauseum – to lawmakers on Capitol Hill, as well as agricultural and trade regulators in two different administrations. Finally, this perspective has prevailed. To his great credit, Agriculture Secretary Tom Vilsack recognized the need to resolve this issue, and he and his staff pushed the import assessment through to fruition.

And why shouldn’t this have been achieved far earlier? That’s the real question. Opponents’ arguments centered on far-fetched fears about trade battles and retaliations, although, as mentioned earlier, identical assessments on imports of meats, fruits, and fiber, have invoked no court challenges, nor a single protest in the WTO. Opponents argued that it would be unfair to ask some products subject to tariff rate quotas to pay the assessment, even though many of our dairy imports, such as milk protein concentrates and certain cheese varieties, have no TRQs whatsoever.

The biggest fairness issue is whether asking importers to pay a rate half that of the domestic checkoff is equitable. It’s not, but that’s the decision that Congress arrived at: the choice in the most recent farm bill was between the proverbial half a loaf, or none at all. Such is the nature of politics, which is ultimately what decided the fate of this issue, after all the arguments, pro and con, were made.

In the end, this final resolution is not about equity, necessarily, but justice. And although justice in the matter of the dairy import assessment was long delayed, at least it has not been denied.

NMPF Board of Directors Approves Proposal to Improve Federal Milk Marketing Order System as Part of Foundation for the Future

ARLINGTON, VA – The National Milk Producers Federation’s Board of Directors agreed today to support a series of major reforms in the Federal Milk Marketing Order program, intended to renovate the economic structure of the U.S. dairy sector. The changes will be packaged as part of the Foundation for the Future program that NMPF has been developing during the past 18 months.

The proposal:

  • Replaces end product pricing formulas with a competitive milk pricing system;
  • Incorporates two classes of milk – fluid (Class I) and manufacturing (formerly Class II, III and IV product uses);
  • Maintains the higher of for establishing the fluid use (Class I) minimum base price;
  • Maintains current Class I regional differentials;
  • Maintains the number and basic structure and provisions of Federal Orders.

“In order to create a truly comprehensive transformation for the betterment of the dairy industry, we needed to adopt these specific changes as part of Foundation for the Future,” said Jerry Kozak, President and CEO of NMPF. “Our Board’s vote today is a critical, necessary step toward significant reform of the entire regulatory structure of the dairy sector.”

The changes approved Tuesday – which were developed by a committee of dairy policy experts from across the industry – maintain the basic framework of the Federal Milk Marketing Order system, but eliminate some of the most contentious elements from the current structure, such as make allowances, which are the result of the end product pricing formulas now used to price farmers’ milk.

Kozak said that the Federal Order reforms will be incorporated into legislative language and submitted to Congress to review, as part of the overall Foundation for the Future package. He said that the proposal will be shared with other stakeholders in the dairy sector, including processors, in an effort to build consensus around the changes.

“There has long been a shared notion that change is needed; now we’ve taken a big step toward defining what that change should look like,” Kozak said. “We are looking forward to explaining to everyone, from farmers to processors to lawmakers, how a competitive pricing system, and shifting the pricing basis to two classes of milk, will make the Federal Order system more flexible and sensible.”

Kozak said that NMPF will continue to build support for the other, previously-approved elements of Foundation for the Future, which include a new Dairy Producer Margin Protection Program to help protect farmers when their margins are compressed by low milk prices and/or high feed costs, and establishing a Dairy Market Stabilization Program to help address periodic imbalances in milk production and demand.

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.

 

NMPF Statement on Dairy Industry Advisory Council Vote on March 3rd from Jerry Kozak, President and CEO of NMPF

ARLINGTON, VA – “The vote taken Thursday by the U.S. Department of Agriculture’s Dairy Industry Advisory Committee is a welcome development, in that many of the recommendations in the report approved by the Committee are reflected in the Foundation for the Future program already developed by NMPF.

“Foundation for the Future is all about protecting farmers’ margins, stabilizing marketplace imbalances, reforming the Federal Milk Marketing Order system, and allowing future growth. The concepts endorsed this week by the DIAC are, in many respects, similar to or even identical with the philosophy behind FFTF. [A draft copy of that DIAC report is available online.]

“NMPF will continue to drive the process of reforming dairy policy using Foundation for the Future as its platform. It’s good to see that other industry experts looking at the challenges facing the dairy sector – and examining possible future actions – are coming to the same conclusions that our members reached in the past year.

“We will have more to say once the formal report is issued by Agriculture Secretary Tom Vilsack. We greatly appreciate Secretary Vilsack’s leadership in creating an inclusive, deliberative method to thoroughly examine current dairy policy, and explore what changes are needed. He has helped foster a once in a generation opportunity to make some badly-needed improvements.”

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.

 

NMPF Analysis Shows IDFA-Funded Informa Study Miscalculated Impact of Foundation for the Future Program

The Informa Economics review of the National Milk Producer Federation’s Foundation for the Future dairy policy proposal was extremely limited in its scope and failed to take into consideration how producers would have cut their milk production in response to a reduction in their milk checks, according to a new analysis by NMPF relf.org/fileseased on Wednesday.

The NMPF analysis of the processor-funded Informa study shows that under the Dairy Market Stabilization program, dairy farmers would have received at least $3 billion more revenue had the stabilization program been in place in 2009. That finding is corroborated by a separate, new analysis done by Dr. Scott Brown at the University of Missouri’s Food and Agricultural Policy Research Institute.

NMPF has proposed a series of new programs for the U.S. dairy industry as part of itsFoundation for the Future dairy policy package, including the Dairy Market Stabilization Program (DMSP). That program is designed to reduce dramatic swings in market conditions that ultimately result in negative margins, such as those experienced by dairy farmers in 2009. The DMSP is activated only when margins become compressed, due to low milk prices or high feed costs. When they do, the program reduces the amount that farmers are paid, to encourage them to temporarily reduce their milk marketings. That, in turn, results in increased producer margins. The money collected under the DMSP is to be used to stimulate demand, through product purchases.

In January, Informa Economics issued a report, commissioned by the International Dairy Foods Association (IDFA), asserting that the Dairy Market Stabilization program, had it been in place in between 2000 and 2009, would have reduced farmers’ pay prices by $626 million (with $390 million of that total in 2009 alone). However, the Informa study made no attempt to estimate how producers would have altered their milk output, or how cheese purchases would have helped producer incomes, had the program been active during that period. Had it done so, the study would have found that the DMSP program would ultimately have increased total farm revenue, according to NMPF.

“The purpose of the Informa study was transparent. Its sole intent was to pit producer against producer, in region by region, by focusing on the differences in the total dollar reductions producers in various states would have experienced,” said Jerry Kozak, President and CEO of NMPF. “But the Dairy Market Stabilization Program treats all producers equitably; they are all subject to the same required production reduction percentages.”

In addition, the Informa report was incredibly one-dimensional, in that “it didn’t make any effort to acknowledge that when pricing signals are bad, farmers react fairly quickly,” said Kozak. “Real-world experience tells us that farmers respond to incentives and penalties, like all rational economic actors. If they know they’ll get paid less for their milk in the next month or two, they’ll act accordingly. But you won’t find any acknowledgment of that reality in the Informa study.”

In fact, the Informa report briefly admits that “it’s likely that farmers…will try to limit production” during months when the program is active, but then the report says that “it’s nearly impossible to say exactly what the impact on milk production will be.” In essence, it only applied the structure of the DMSP plan on activities that had already occurred, without any modeling of how people would have responded, according to Kozak.

In order to present a dynamic model of how the Market Stabilization program would actually affect milk production, NMPF’s Vice President for Economic Policy, Dr. Peter Vitaliano, estimated the behavior of dairy producers during the months when the program would have been triggered in the past two years. NMPF’s own econometric analysis shows that had the DMSP program been in place in 2009, the average U.S. all-milk price would have been $1.90/cwt. higher during 2009, raising farm revenue by $3 billion.

NMPF’s assessment is corroborated by an independent analysis of the entire Foundation for the Future program, prepared Dr. Scott Brown, of the Food and Agricultural Policy Research Institute at the University of Missouri. His report, located on the FAPRI website, found that producers would have received an increase of $3.4 billion in cash receipts as the DMSP program would have kicked in during 2009, reducing milk output and ultimately bolstering prices.

 

CWT Continues Export Efforts in February

The CWT Export Assistance program provided assistance in February to four CWT member cooperatives selling 11.2 million pounds of Cheddar and Monterey Jack cheese to 10 countries on four continents. The product is scheduled to be shipped from March through June 2011. Add to that the 22.7 million pounds of CWT-assisted 2010 cheese sales scheduled to be shipped in the first six months of 2011, and the Export Assistance program will be making a significant contribution to expanding overseas sales.

The 52 million pounds of cheese exports assisted by CWT and shipped in 2010 account for 13.6% of total U.S. cheese shipments. The 17 million pounds of butterfat (in the form of butter and anhydrous milk fat) CWT assisted and shipped in 2010 equaled 14.1% of total butterfat exports. These CWT sales produced an additional $398 million of revenue, adding an average of 18 cents per hundredweight to U.S. producers’ milk checks in 2010.

Some producers have questioned why CWT provides export assistance when the cheese price is $2.00 a pound. The purpose of CWT is to help maintain the role of the U.S. as a consistent, reliable exporter of value-added dairy products, which is not a role that American suppliers have played historically. In the past, the tendency of U.S. manufacturers was to export only what the domestic market would not absorb. By 2008, the export arena became a major buyer of U.S. milk solids, with total sales of 11%.

In 2009, a combination of factors resulted in U.S. dairy product exports dropping 15.5%, the equivalent of 1.7% of total U.S. milk solids produced. However, it was in products that most impact producer milk prices where the biggest drops occurred – cheese exports down 50 million pounds, butter exports down 126 million pounds, and skim milk powder (protein standardized nonfat powder) down 314 million pounds.

In order to prevent a re-occurrence of 2009 in the coming year, CWT must continue to assist U.S. cheese sales in the world marketplace. When the participation in CWT reaches the 75% level necessary for the 2¢ assessment to begin, CWT will be able to add to the products receiving export assistance and maintain U.S. dairy producers’ world market share and reasonable margins.