New Staff Member Bolsters NMPF’s Efforts on Capitol Hill

ARLINGTON, VA – This week the National Milk Producers Federation (NMPF) welcomed a new staff member to its ranks with the addition of Jonathon Glueck, who will serve as the Manager of Government Relations.

In his new role at NMPF, Glueck will join Senior Vice President Dana Brooks and Director David Hickey in the Government Relations department. He will be assisting NMPF staff on a number of issues, including immigration, farm policy and trade, and management of NMPF’s Political Action Committee. Glueck will specifically be responsible for legislative issues regarding animal welfare and care.

A native of the Texas panhandle who grew up involved in the dairy industry, Glueck earned a B.A. in Agricultural Economics and Agricultural Leadership Development from Texas A&M University. After a short stint serving as an agricultural advisor to the military in Iraq, he most recently served as the Agriculture Legislative Assistant for Congressman Chet Edwards (TX).

Glueck’s first day at NMPF was this past Monday, January 10. He can be reached at jglueck@nmpf.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 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.

Dairy Groups Welcome U.S. Government’s First Step Towards Resolution on NAFTA Trucking Dispute

The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) today welcomed the release by the Department of Transportation of an “initial concept document” intended to allow for a long–haul, cross-border Mexican trucking program that prioritizes safety, while complying with the U.S. trade obligations to Mexico under the North American Free Trade Agreement (NAFTA). The concept document is aimed at rectifying a trade spat between the two countries that is hurting the U.S. dairy sector, among others.

 

In response to long-standing lack of U.S. compliance with its trucking obligations to Mexico under NAFTA, Mexico has been legally levying tariffs on a variety of U.S. exports since March 2009. Since August 2010, that retaliation list has included many U.S. cheeses.

“We see this announcement as a positive first step towards resolution of this long-running dispute,” said Tom Suber, USDEC president. “Since August, exports of the targeted cheeses to Mexico have plunged by 66% through November of last year. It is good that the United States recognized the heavy toll that retaliation is having on the many impacted sectors, such as America’s dairy industry, and has proposed to begin to move forward with working with Mexico to find a way to address this issue.”

Jerry Kozak, President and CEO of NMPF, concurred, adding, “Mexico is by far our largest export market and therefore absorbs sizable quantities of the milk U.S. dairy farmers produce. It is encouraging to see the U.S. initiate a path towards a permanent resolution of this transportation issue that has been negatively impacting the dairy industry, which has been caught in the resulting cross-fire of this dispute.”

NMPF and USDEC stressed the importance of the U.S. and Mexico governments working together from this starting point to craft a mutually agreeable final resolution to this issue, one that complies with U.S. trade commitments in order to avoid future upheavals. The organizations urged members of Congress to support this process and approve any resulting proposal from the negotiations between the U.S. and Mexican governments.

The U.S. Dairy Export Council (USDEC) is a non-profit, independent membership organization that represents the export trade interest of U.S. milk producers, proprietary processors, dairy cooperatives, and export traders. Its mission is to enhance international demand for U.S. dairy products and assist the industry to increase the volume and value of exports. USDEC accomplishes this through market development programs that build overseas demand for U.S. dairy products, resolving market access barriers and advancing the industry’s trade policy goals. USDEC activities are supported by staff in Mexico, Japan, South Korea, China, Taiwan, Hong Kong, Southeast Asia, South America, Middle East and Europe. Website: www.usdec.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 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.

111th Congress Comes to a Close; New Congress Begins This Week

The final month of the 111th Congress witnessed a flurry of last-minute activity, which included estate tax reform, a major reauthorization of the school lunch program, and landmark food safety legislation. As part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, Congress set the estate tax exemption level at $5 million ($10 million for couples), and the rate at 35 percent.

This development is vital for many of the nation’s farmers and ranchers, as the exemption level and rate were to reset at $1 million and 55 percent, respectively, in 2011. Congress also successfully passed a major child nutrition law to increase funding for the school lunch program and allow for nutritional standards to be set for all foods sold in schools, while also clearly recognizing the vital importance of milk consumption for our nation’s youth. Furthermore, Congress sent the FDA Food Safety Modernization Act to the President’s desk, marking the first significant reform since 1938 of the Food and Drug Administration’s oversight of the food supply. President Obama signed it Tuesday.

There were also a few key issues that were not tackled before the 111th Congress concluded. Even though there was a late push by the Administration and several key Congressional leaders, immigration reform was stopped short by procedural hurdles. Legislation to repeal 1099 tax provisions also fell a few votes short, leaving many farmers and ranchers vulnerable to new, burdensome tax filing requirements.

On Wednesday this week, Ohio Congressman John Boehner was sworn in at the new Speaker of the House, signaling the start of the 112th legislative session. NMPF will continue its efforts in the coming months to work with leaders in both parties to implement new dairy policy.

 

CWT Settles Lawsuit over Disposition of Cattle in Herd Retirement Program

Cooperatives Working Together (CWT) announced before the holidays that it had successfully reached an out-of-court settlement with the defendants in the civil action entitled Kessler v. Greenville Livestock, Inc., which was filed in the Circuit Court for St. Clair County, Illinois on September 1, 2010.

The National Milk Producers Federation (NMPF), which manages CWT, had joined with Illinois dairy farmer Kevin Kessler, and Kessler Dairy Inc., as a plaintiff in the action. The dispute involved transactions related to CWT’s herd retirement program.

By agreement with defendants, the terms of the settlement will not be disclosed. However, all parties are satisfied that the settlement resolves the case fairly. Jerry Kozak, NMPF President and CEO, said: “We have always fully investigated every report involving allegations about the proper operation of Cooperatives Working Together, and we felt, in this situation, that we needed to take legal action. The settlement agreement we have made with the defendants preserves the integrity of the CWT program and protects dairy farmers’ investment in CWT.”

 

Pollution Diet Set for Chesapeake Bay

Before the close of 2010, the Environmental Protection Agency (EPA) released its final plans for cleaning up the Chesapeake Bay. Known as a total maximum daily load (TMDL), EPA set a “pollution diet” for the Chesapeake Bay Watershed, a 64,000-square-mile region covering Delaware, Maryland, New York, Pennsylvania, Virginia, West Virginia, and the District of Columbia.

The plan requires the six Bay states and D.C. to implement plans that will lead to a reduction in the flow of certain nutrients – nitrogen, phosphorus, and sediment – into the Bay by 20 to 25 percent by 2025, with 60 percent of that goal to be met by 2017. In order to meet these goals, each jurisdiction must chart out a course of how they will meet the reductions prescribed by the EPA. After being rejected initially, these plans were ultimately approved by the EPA, with the exception of a few sectors.

In order to aid farmers in meeting these rigorous goals, several of these plans provide additional funding for agricultural programs, and new assistance for the development and implementation of manure-to-energy projects. Unfortunately, there are serious concerns with many aspects of these final plans, including a potential scenario where farmers may be faced with mandatory programs if goals aren’t realized, which could come as soon as 2013. There were a few instances where the EPA did not approve aspects of a submitted plan. In one instance, EPA crafted a targeted backstop for the agriculture sector in West Virginia. The federal agency also plans to apply additional oversight on Pennsylvania farmers.

 

EPA Begins Regulating Greenhouse Gases

In January 2011, the Environmental Protection Agency (EPA) officially started regulating greenhouse gas (GHG) emissions under the Clean Air Act (CAA). Industries that are the largest emitters of GHGs will be required to obtain CAA permits and implement cost-effective technologies and energy efficiency measures. EPA will exempt smaller sources from permitting requirements, which includes farms and ranches. However, the agency is set to reevaluate the permitting threshold in 2016. If the level is reduced to the CAA statute of 250 tons per year of GHGs, nearly 99% of U.S. dairy farms could be regulated.

Nevertheless, EPA officials could soon see their hands tied if several members of Congress are successful with efforts. With their attempts to halt the GHG regulations proving futile in the 111th Congress, several key leaders in the House of Representatives and the Senate expect to generate support once again, and this time they expect more members to join them. While it will be extremely difficult to overturn the rule that provides EPA the authority to regulate GHGs, Congress may look to defund the agency’s efforts for the foreseeable future. Without question, oversight of the EPA will be a major priority for many in the 112th Congress.

 

Dairy Groups Urge Immediate Passage of U.S.-South Korea Trade Agreement

In early December, the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) applauded the successful negotiations between the U.S. and South Korea aimed at resolving areas that had prevented advancement of the U.S.-Korea Free Trade Agreement.

The White House announced that the agreement had been finalized, after much hard work during the past several months to resolve issues maximizing the prospects of getting the FTA approved by Congress.

“This FTA will be the most significant for the dairy industry since the agreement with Mexico as part of NAFTA, and it will provide major benefits for U.S. dairy producers” said Jerry Kozak, President and CEO of NMPF. “By opening up a major dairy market to our products, this FTA will deliver, on average, an additional $380 million a year in benefits to U.S. dairy producers during the phase-in period of the agreement.”

Both organizations urged the Administration to send the U.S.-South Korea FTA to Congress for immediate action. NMPF and USDEC also reiterated their support for the U.S. FTAs with Colombia and Panama. The U.S. dairy industry hopes to ultimately see congressional approval of all three pending FTAs, as all would yield meaningful new opportunities for U.S. dairy exports and net benefits for the U.S. dairy industry.

 

Dairy Industry Gears Up for 2011 National Dairy Producers Conference

Dairy producers from around the country will pack their bags and head to Omaha, Nebraska for the May 15-17, 2011 National Dairy Producers Conference (NDPC). Formerly known as the National Dairy Leaders Conference, the NDPC will provide an in-depth discussion of the issues facing the dairy industry, with educational discussions on many of the key challenges looming in 2011.

“The NDPC gives dairy producer participants the opportunity to listen, learn, and lead,” said Jerry Kozak, President & CEO of the National Milk Producers Federation, which is organizing the conference. “It’s a way to critically analyze the status of the dairy industry now and discuss possible solutions for the future.”

The NDPC will include a farm policy outlook panel that will look at the development of the next Farm Bill and feature congressional staff, other national farm organizations, agricultural lenders, and dairy producers as speakers. A trade policy panel will address technical barriers for global dairy trade and market access and include a speaker from the U.S. Dairy Export Council, among others.

Another NDPC session will cover the dairy industry’s environmental concerns, such as carbon regulation, EPA’s Total Maximum Daily Load regulation, results from the National Air Emissions Monitoring Study, and the outlook for EPA’s Spill Prevention, Control, and Countermeasure program. Animal care challenges remains a concern for many dairy producers, and the NDPC will include a session that will feature speakers from major retailers and processors who will explain their expectations of animal care from farmers. Another NDPC session will address costs of production (such as energy and feed), and will focus specifically on managing change and risk.

The NDPC sessions will be preceded by optional farm tours that will take place on Sunday, May 15. Participants will be able to tour local dairy farms and visit a nearby ethanol production plant.

Although 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 on the NDPC will be posted online at www.nmpf.org/NDPC when it becomes available.

 

CWT Getting Closer to Achieving 75% Membership Goal for 2011

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.

 

The Rain in Spain

It used to be that forecasts for rain in Iowa and Illinois during the summer months could move crop markets: a little rain pushed prices down, but forecasts of too much rain could make traders nervous, and boost prices higher.

These days, rain in the forecast can still move markets…but the forecasts, in this case, have to do with prospects for precipitation in Argentina and Brazil. Such is the state of world grain trade that stormy weather in Asia, or South America, affects the value of a bushel of corn in Nebraska. And these days, the value of those bushels also affects the bottom line of dairy farmers across the country.

As we begin 2011, the weather forecast in the southern hemisphere isn’t the only stormy outlook. Milk futures have dropped from their peaks of recent months, and combined with rising grain and oilseed prices, dairy producers are again getting squeezed on both fronts. That’s not a great way to begin a new year.

On the other hand, the good news is that we continue to make progress in building a case for policies that address this kind of vise-like pressure on margins. I’ve written previously about the need for Foundation for the Future’s comprehensive changes in dairy policy, and in particular, a focus on how to indemnify farmers against not just low milk prices, but destructively-low margins. Current events – in the form of flooding in Australia and droughts in South America – are again demonstrating the value in this kind of approach.

We also have to acknowledge that our domestic biofuels policy is another factor behind the run-up in corn and soybean prices. Just before Christmas last month, Congress basically left intact the subsidy regime that helps create ongoing competition between ethanol distilleries and livestock producers. NMPF is concerned with ethanol’s impact on the livestock sector, but rather than focus our resources on rolling back ethanol policy – a long-shot prospect at best, particularly now that the new tax deal is signed, sealed and delivered – what we are doing is focusing on altering dairy policy to address the fact that corn and soybeans are not going back to price levels we saw 10 years ago. And that’s not just because of the growth of ethanol.

Agriculture markets and, ultimately, consumer markets have greatly evolved in the past decade. Asian demand for grain, and meat and milk, are roiling markets for all kinds of commodities. India and China today each has a middle class that is larger in size than the one we have in the U.S. Biofuels plants are an aggressive competitor compared with traditional uses for feedstocks. Lastly, the weather has gotten more volatile, creating price volatility with each change in the weekly forecast.

It would be folly to believe that the U.S. dairy industry will be insulated from the impact of these changes on the cost structure of the entire farm complex. We are now trying to revamp dairy policy to address margins, not just milk prices, precisely because input costs are going to be more volatile in the future, and our dairy program needs to reflect that reality.

Senate Passes Food Safety Bill, But Final Approval Still Pending

 

Senate Passes Food Safety Bill, But Final Approval Still Pending

The Senate passed major food safety reform this week by a three-to-one margin. S. 510, the FDA Food Safety Modernization Act, is the first comprehensive reform to food safety laws in seven decades.

S. 510 had been backed by NMPF prior to the inclusion of Sen. Jon Tester’s (D-MT) amendment which exempts small farms and business from certain safety and disease prevention control requirements. NMPF was successful including specific language recognizing the Pasteurized Milk Ordinance as compatible to the mandatory Hazard Analysis & Critical Control Points (HACCP) plan required in the reform.

The final approval of the bill is still in limbo, however, because of differences between what the Senate just approved, and the need to have its revenue-raising provisions reviewed by the House of Representatives. The House has not yet decided how to handle that procedural issue.

 

House Passes Child Nutrition Bill

 

House Passes Child Nutrition Bill

The bipartisan child nutrition bill, the Healthy, Hunger-Free Kids Act, was approved Thursday by the House of Representatives. The President should sign the bill into law before year’s end, as the White House and USDA have been on record in support of the measure. First Lady Michelle Obama has made this a priority in conjunction with her “Let’s Move” anti-obesity campaign. NMPF supported the bill as well.

“The health of the nation’s school children will be enhanced by the bill’s requirement that milk be served with each school meal,” said Jerry Kozak, President and Chief Executive Office of NMPF. “School meals provide an important venue to help assure that children are consuming three servings of low-fat or fat-free milk products that are recommended by the U.S. Dietary Guidelines. We are pleased that the bill will improve the nutrition environment in schools by encouraging consumption of healthier foods like milk and milk products.”

The bill reauthorizes the child nutrition programs for five years. The largest portion of the funding goes towards the school meal program and the special nutrition program for women, infants, and children, known as WIC. The bill increases the reimbursement rate for school meals by six cents costing an additional $4.5 billion. NMPF was successful in maintaining a variety of milk (both varying flavors and fat content) in the school meal program.