During the August recess, NMPF urges farmers to contact their Members of Congress about the Trans-Pacific Partnership (TPP) Free Trade Agreement, and specifically, about why the dairy producer community opposes the inclusion of trade between the U.S. and New Zealand in that agreement.

It is also important at this stage to encourage Congress to demand that that the U.S. Trade Representative (USTR) handle tariff agreements with each country separately, so that dairy producers’ concerns about New Zealand can be properly addressed, while at the same time maximizing any broader U.S. export interests that may exist in the overall agreement.

Talks on this TPP agreement continue to move forward rapidly. USTR is negotiating again with the TPP countries in mid-August, and could be soon making decisions about the structure of the agreement that would negatively impact our ability to get the type of outcome dairy producers urgently need.

Key components of the National Dairy FARM Program: Farmers Assuring Responsible Management are now available in Spanish. That announcement was made at the National Milk Producers Federation (NMPF) Board of Directors meeting last month, where producers and industry leaders from across the country were provided an update on the on-farm animal well-being program.

 

Created by NMPF, with support from Dairy Management Inc. (DMI), the National Dairy FARM Program is a voluntary, nationwide program designed to bring consistency and uniformity to animal care through education, on-farm evaluations and objective third-party verification.

“Since U.S. dairy production involves a number of native Spanish speakers who are responsible for animal care on a day-to-day-basis, the National Dairy FARM Program recognized the need for animal care materials to be available in Spanish,” said Betsy Flores, NMPF Director of Regulatory Affairs.

The materials now available in Spanish are the Animal Care Manual (Manual de Cuidado Animal) and Animal Care Quick Reference User Guide (Cuidado Animal Guía de Referencia Rápida para el Usuario).

For more information on the National Dairy FARM Program, contact Betsy Flores (BFlores@nmpf.org) at (703) 243-6111, or visit to www.nationaldairyfarm.com.

At their summer meeting on June 9, NMPF's Board of Directors overwhelmingly agreed to move forward with a variety of changes in federal dairy policies that will better protect dairy producers, and position them more favorably in an increasingly volatile global marketplace.

The NMPF Board voted to support the package of concepts contained in the Federation’s approach to reforming dairy policy entitled “Foundation for the Future.” NMPF President and CEO Jerry Kozak said that package will be used as the basis for the future direction of the dairy provisions in the next Farm Bill, or in some other form of federal legislation that Congress may consider in the future.

“If there is anything good that has come out of the past 18 months of economic struggle, it’s the shared feeling among NMPF’s members that we can use this experience as the catalyst to make needed changes in dairy policy,” said Randy Mooney, NMPF Chairman and dairy farmer from Rogersville, MO. “’Foundation for the Future’ is a carefully and meticulously prepared set of programs that not only will help our industry prevent a repeat of what happened in 2009, but also provide for a most prosperous future for dairy producers and their cooperatives.”

The features of NMPF’s plan include: transitioning the existing safety nets of the Dairy Product Price Support and Milk Income Loss Contract programs into a new Dairy Producer Margin Protection Program to guard against periods of severe financial pressures; establishing a Dairy Market Stabilization Program to help address periodic imbalances in milk production and demand; and reforming the Federal Milk Marketing Order program.

“It’s clear we need a new safety net that focuses on margins, not just milk prices,” said Kozak. “It’s also clear we need a system that sends timely, unmistakable signals to farmers that less milk is needed during periods of relative imbalance. The Foundation for the Future addresses both of those key issues, and it does so in a fiscally responsible, politically‐realistic fashion.”

The Federation’s proposal to revamp the federal safety net involves creating an insurance program tied to the margin between the national average cost of feed, and the national average all‐milk price. After farmers choose to enroll in the base level of the Dairy Producer Margin Protection Program at no cost to them, they would receive indemnity payments during periods when their margins are severely compressed, as they were for most of 2009. In addition, farmers would have the option of purchasing supplemental coverage to protect a higher margin level between feed costs and milk prices.

Another key element of the Foundation for the Future will be a Dairy Market Stabilization Program that sends a signal to producers that an imbalance in the marketplace could result in lower farm‐level margins. Like the Dairy Producer Margin Protection Program, the Stabilization Program is tied to farmers’ margins that could be reduced either by low milk prices and/or high feed costs.

The Stabilization Program was shaped by some key principles: that it allows for the growth of U.S. production, doesn’t encourage imports or hinder exports, and keeps government intervention at a minimum.

Lastly, the Foundation for the Future also calls for changes in the Federal Milk Marketing Order program to create a competitive milk price, maintain Class I differentials, and eliminate unpopular aspects of the current system, such as make allowances. The changes in the Federal Order system are intended to be revenue neutral so that farmers’ milk checks are not adversely impacted.

Kozak said that NMPF will now begin a comprehensive education effort to inform the entire dairy producer community, as well as policymakers, about the merits of Foundation for the Future.

Young Cooperators (YCs) from around the country descended on Washington, DC early last month to attend the 2010 YC Dairy Policy and Legislative Forum, held in conjunction with NMPF's Board of Directors meeting.

After listening to a legislative update, the YCs trekked to Capitol Hill where they stopped by the offices of their members of Congress to inform them about the latest dairy issues important to them and their farms.

2010 YC Chaircouple Marty and Lisa Burken with Swiss Valley Farms met personally with Senator Chuck Grassley from their home state of Iowa (in the upper left photo), and they were fortunate to also visit with Iowa's other senator Tom Harkin. Other YCs were successful in their congressional visits as well.

When the congressional visits were complete, the YCs headed for NMPF's annual Capitol Hill Reception, where they mingled with members of Congress, Hill staffers, NMPF board members, and other guests while sampling cheese and other hors d'oeuvres.

The next morning, NMPF was given an update from Congressman Leonard Boswell (D-IA), who spoke at the Political Action Committee (PAC) Breakfast. YCs sat in on the Board of Directors meeting following the breakfast, and the meeting concluded with a luncheon for all in attendance.

For more information on NMPF's YC Program, please visit www.nmpf.org/about-nmpf/young-cooperators. Photos from the YC and board meeting are available at www.flickr.com/photos/nmpf.

CWT announced on May 27th that it would carry out its tenth herd retirement since the CWT program was initiated in 2003. The action was taken because a review of a number of economic factors indicated that a herd retirement at this time should result in adding positive momentum to the milk price recovery that is underway.

Bids had to be postmarked no later than June 25th to be considered during the bid selection on July 7th. CWT farm auditors will begin visiting selected dairies on July 12th, and all bidders will be notified no later than July 30th if their bid was selected.

An audited financial statement of CWT’s 2009 activities, along with a 2010 financial statement through April 30th, is now available on the CWT website. Visit www.cwt.coop for more information.

On June 24, the Federal Register published a correction to USDA’s June 14 final decision on the “fluid milk product” definition. This definition determines what products are priced at Class I, and which are required to pay the Class I price to the pool. The decision substantially adopts NMPF’s recommended dairy protein standard for defining fluid milk products, but it also includes a disappointing and unjustified exemption for yogurt drinks and kefir.

Under the old rules, a dairy beverage with less than 6.5% nonfat milk solids was exempt from Class I pricing, even if it contained as much milk protein as regular milk; and whey solids were not counted as dairy solids in defining these products. The original hearing was held five years ago to consider proposals to reform this milk content accounting, including NMPF’s proposal to define milk drinks on the basis of their protein content and to include all dairy proteins in defining a beverage as Class I. Following the June 24 correction of a technical error (caught by NMPF staff), USDA’s decision achieves this reform by including beverages in Class I on the basis of either protein or skim solids content, and by counting all dairy ingredients toward these standards. This result is largely consistent with NMPF’s hearing testimony and comments on the proposed rule.

However, USDA made the unfortunate and puzzling decision to give yogurt drinks and kefir a blanket exemption from Class I. This was proposed by yogurt makers, who claim, in effect, that these drinks are not drinks. NMPF made clear arguments against this at the hearing and in its comments, demonstrating that “yogurt drinks” are clearly “drinks,” have nearly the identical composition and form as many flavored milks, and are clearly sold to be consumed in the same manner as milk. NMPF also pointed out that kefir has no meaningful definition to distinguish it from other (Class I) cultured milk drinks. Nevertheless, USDA’s final decision exempts both yogurt drinks and kefir from Class I. This is both disappointing and inconsistent with decades of practice and principle in the Federal Order system.

USDA intends to complete the referenda for this decision by July 26, although it may take several months to implement, since it will require the establishment of administrative guidelines. NMPF hopes to work with USDA to help ensure that the guidelines for protein accounting are fair and consistent, and looks forward to the next opportunity to address the inequitable yogurt drink and kefir exemption.

Contact Roger Cryan in the NMPF offices if you have any questions. The rule can be found at the links below.

June 14 rule

PDF format: http://edocket.access.gpo.gov/2010/pdf/2010-12771.pdf
Text format: http://edocket.access.gpo.gov/2010/2010-12771.htm

June 24 correction

PDF format: http://edocket.access.gpo.gov/2010/pdf/2010-15296.pdf
Text format: http://edocket.access.gpo.gov/2010/2010-15296.htm

NMPF commended the U.S. Environmental Protection Agency (EPA) for taking a sensible approach to regulating dairy farms under the Spill, Prevention, Control, and Countermeasure (SPCC) regulations by pushing back the deadline for farms’ compliance with those regulations.

In a letter to NMPF dated June 9th, the EPA committed to finalizing the SPCC exemption for bulk milk storage “as expeditiously as possible …to have that process completed by early 2011.” In addition, EPA will be extending the compliance deadline for dairy producers until that time.

Last month, NMPF requested EPA to take such actions to provide certainty in the SPCC regulations so that dairy producers could appropriately make decisions on their need for regulatory compliance. EPA first proposed to exempt milk containers and associated piping and equipment constructed according to current applicable 3-A Sanitary Standards and subject to the current, applicable Grade "A" Pasteurized Milk Ordinance (PMO), or an equivalent state dairy regulatory requirement, from the SPCC regulations on January 15, 2009.

The goal of the SPCC program is to prevent oil spills into waters of the United States and adjoining shorelines. A key element of the program calls for farmers and other facilities to have an oil spill prevention plan, called an SPCC plan. The SPCC plans are required for farms which have an aggregate storage capacity of oil products of 1320 gallons, or more, for every storage container larger than 55 gallons. This storage does not include vehicle storage capacity, but it does potentially include bulk milk tanks, as the butterfat in milk is regarded under the law as a form of oil.

A farm with less than 10,000 gallons of total storage capacity and no single storage greater than 5,000 gallons can self-certify their SPCC plan. Farms that do not meet this exemption must have a plan certified by a professional engineer. NMPF’s concern is that this regulation could require a significant number of farms to require outside certification of their facilities.

“The commitment to finalize the bulk milk storage exemption and extend the compliance deadline for America’s dairy farmers demonstrates EPA’s desire to have commonsense regulations,” said Jamie Jonker, NMPF Vice President of Scientific and Regulatory Affairs. “Milk should not fit in the same category as oil and fuels.”

NMPF continues to work hard to maintain existing markets around the world – most notably in Europe and China – and to work to help expand opportunities as well in places like Cuba. First, NMPF has played defense in both China and Europe.

NMPF has continued to work closely with our government as it has worked to propose new certificate language to China to address China’s professed concerns with the current food-grade dairy health certificate and its perceived lack of adequate food-safety-related assurances. (Please see this month’s CEO's Corner column for more information on this issue.) The tenuous market situation is such that no formal approval exists for the acceptance of the current certificate, but China has indicated that it does not plan at this time to enforce a market closure. This puts shipments at risk, however, of later enforcement efforts by China that could conceivably negatively impact product already en route to China. USDA’s Under Secretary Miller and USTR’s Ambassador Siddiqui have remained personally involved in the ongoing certificate negotiations. A letter from them to Chinese authorities will accompany the latest certificate proposal this week.

Meanwhile, in Europe, NMPF remains concerned by the impending plans by the E.U. to begin requiring U.S. dairy exporters to test for compliance to the 400,000 SCC limit at the individual farm level, rather than at the tanker or silo levels, as had customarily been the practice. The lack of scientific justification for this requirement and concern that the E.U. is seeking to impose unfounded and onerous product quality and/or animal health requirements on the U.S. has driven NMPF’s response to this situation. NMPF joined with the U.S. Dairy Export Council to write to FDA Commissioner Margaret Hamburg last week about these concerns and to urge FDA to work appropriately with the other relevant U.S. agencies and with appropriate EU counterparts to address the negative economic impact this could have on many coops and farmers, as well as the scientific and W.T.O.-compliant justifications for a requirement of this nature.

In a related vein, NMPF has also been partnering with USDEC and the International Dairy Foods Association to combat ardent efforts by the European Union to claw back generic cheese names like “parmesan” and “provolone.”

This effort came to light late last year, as details of the EU-South Korea FTA became public. All indications over the past several months have been that the EU is pursuing an aggressive strategy with all its FTA partners (including U.S. existing or prospective FTA partners such as Peru, Central America, Colombia, and Canada) to get protection for geographical indications like “Parmigiano Reggiano.” In the EU’s eyes, this would prohibit anyone outside of the Parma, Italy, region from selling a cheese labeled as “parmesan” into those FTA markets – which would allow the EU to commandeer for its own use commonly used cheese name categories. Many generic cheese names used in the U.S. could be impacted by such as push, which is why NMPF has been working closely with our government to develop strategies for combating this blatant market share grab by the EU.

NMPF has also played offense on experts, urging Congress to open new opportunities in Cuba. The House Agriculture Committee held a hearing on June 30th to consider the Travel Restriction Reform & Export Enhancement Act (H.R. 4645), which would ease agricultural payment restrictions limiting U.S. competitiveness, as well as permit travel by all Americans to Cuba. The Committee narrowly approved the legislation, which will move in the coming weeks to a vote by the full House.

As NMPF and USDEC noted in a joint letter to House Agriculture Committee members this week, “Economists at Texas A&M University estimated the impact of eliminating U.S. financial constraints on agricultural exports to Cuba, and allowing U.S. citizens to travel to Cuba, at $50 million a year in additional dairy exports.” Given these anticipated gains in new export avenues for the U.S. dairy industry, NMPF has strongly supported this legislation.

The Senate last month failed to pass Sen. Lisa Murkowski’s (R-Alaska) Resolution of Disapproval that would have prevent the Environmental Protection Agency from moving forward with greenhouse gas regulations under the Clean Air Act. Those potentially regulated could range from the largest textile factory and coal-fired power plants, to possibly even small dairy operations. In fact, if these efforts ultimately move forward, nearly 99% of all U.S. dairy farms could be hit with the new EPA regulations.

With the new regulations now looming, many in Congress are looking to move ahead with Sen. Rockefeller’s legislation (S. 3072), a bill that would delay the EPA’s climate regulations for stationary sources for two years. While halting the agency’s efforts to regulate stationary sources, the bill would allow for other actions to still move forward, including vehicle emissions standards. Rockefeller currently has six Democrats joining him in support of the bill. Rep. Nick Rahall (D-W.V.) has introduced a companion bill (H.R. 4753) in the House of Representatives. Another potential option could be through the appropriations process; however, it is unclear if Congress will even get as far as subcommittee markups this year.

It is also unclear if the Senate will take up a comprehensive energy package this summer, which could include language to mitigate GHG emissions. Senators on both sides of the aisle are jockeying for what the legislation will ultimately look like if it were to reach the Senate floor. Several related bills, including the American Clean Energy Leadership Act which passed the Senate Energy and Natural Resources Committee last year; the American Power Act, a climate change bill introduced by Sen. John Kerry (D-Mass.) and Sen. Joe Lieberman (I-Conn.); the Carbon Limits and Energy for America's Renewal (CLEAR) Act (S.2877); and the Practical Energy and Climate Plan Act of 2010 (S. 3464), have all been mentioned as potential vehicles to see action this year.

NMPF applauded Congress for unanimously passing the bipartisan resolution recognizing June as National Dairy Month. The measure was passed on the evening of June 14, 2010. Seventy-nine members of the House of Representatives co-sponsored the resolution introduced by Rep. Joe Courtney (D-CT). Since 1939, June has been celebrated as National Dairy Month, honoring the important role the dairy industry has played in the economic and nutritional well-being of Americans.

“As Congress prepares to reauthorize the Child Nutrition Act (CNA) and the United States Department of Health and Human Services and the United States Department of Agriculture review the Dietary Guidelines for Americans, it is timely that milk and dairy products are being recognized for their role in the diets of Americans,” said Dr. Beth Briczinski, NMPF Director of Dairy Foods and Nutrition. The CNA and Dietary Guidelines serve as the basis for federal food and nutrition education and feeding programs.

Arriving on the heels of June Dairy Month, members of the dairy industry will now turn their attention to the celebration of National Ice Cream Month. Started in 1984, then-president Ronald Reagan designated July as the official time of year to acknowledge the importance of ice cream in the U.S. He also declared the third Sunday of the month (July 18 this year) as National Ice Cream Day. Reagan recognized ice cream as a fun and nutritious food that is enjoyed by 90% of the nation's population.

After a debate that captured national attention, Wisconsin Governor Jim Doyle last month vetoed legislation that would have allowed raw milk sales directly to consumers in that state.

Doyle’s office announced that because of public health concerns, he was vetoing state senate bill 434. That decision came a week after NMPF and the International Dairy Foods Association (IDFA) issued a statement expressing concern that, absent Doyle’s veto, Wisconsin would join other states in allowing further distribution of raw milk, a product which “remains a demonstrable threat to people of all ages in every state.”

Federal law prohibits the interstate sale of raw milk, but allows states individual discretion to regulate raw milk sales within their borders. Several states in recent years have loosened restrictions on the sales and marketing of raw milk, even as the product has been repeatedly linked to serious illnesses from coast to coast.

“Many other state dairy organizations in Wisconsin, along with the health professional community, made a major effort in the past week to provide some badly-needed perspective on the potentially deadly consequences if the state were to have passed this bill,” said Jerry Kozak, President and CEO of NMPF. “On behalf of the national dairy producer sector, we appreciate the statement that Gov. Doyle is making by vetoing this bill.”