In a December 4, 2009 letter to Agriculture Secretary Tom Vilsack, NMPF asked the agency to implement the mandatory product inventory reporting program required by a law passed nearly a decade ago. The request to USDA was prompted by the revelation that the USDA’s National Agricultural Statistics Service made unexpected revisions to its estimate of cheese inventories, raising concerns that market prices may have been depressed by inaccurate data.

NMPF’s analysis was that the reporting errors didn’t have a significant impact on farm-level prices, but the episode again raised concerns about the inadequacy of the current reporting system, which relies on unaudited and voluntary surveys, despite a decade-old statute calling for mandatory dairy product inventory reporting.

NMPF’s letter urged the USDA to direct the Agricultural Marketing Service to undertake the mandatory dairy product inventory reporting program required by law, using the full electronic reporting program for prices and inventories that is authorized by the same statute.

In comments made last month to USDA, NMPF praised USDA’s recommended decision to limit the producer-handler exemption to smaller plants as a substantial improvement over the status quo, and praised the agency for sticking to their new congressionally-mandated timelines.

However, NMPF urged USDA to add criteria for producer-handlers, including unique labeling and independent ownership requirements, that could help prevent the multiplication of exempted producer-handlers within a larger operation. In addition, NMPF pointed out flawed language in USDA’s draft that would make the limit ineffective by allowing producer-handlers to have unlimited sales of packaged milk to other plants.

NMPF’s comments were submitted on December 21, in response to the recommended decision published by USDA’s Agricultural Marketing Service in the October 21 Federal Register. This decision would only allow producer-handlers with less than three million pounds of route sales of packaged fluid milk to qualify for the current exemption from pricing and pooling requirements under the Federal Order. NMPF and the International Dairy Foods Association (IDFA) had initiated last year’s hearing by petitioning for the elimination of the producer-handler provisions, and the expansion of the exempt plant definition to allow smaller plants to maintain their exemption. NMPF had also proposed grandfathering producer-handler plants with less than three million pounds of sales, and with the marketing and ownership conditions that NMPF now urges USDA to reconsider for the general producer-handler exemption.

Links to most of the documents from the hearing can be found on the USDA website at www.ams.usda.gov/dairy. If you have questions about NMPF’s position, call Roger Cryan at the NMPF office.

USDA has issued checks for nearly all of the $290 million that Congress provided for direct payments to dairy farmers. The $290 million was divided among, roughly, all the MILC-eligible milk produced from February through July of 2009. That came out to about 64¢ per cwt. on milk from that time period, or 32¢ per cwt. after USDA doubled the volume to estimate an annual production total. This works out to a maximum payment of about $19,200 on annual volume capped at six million pounds (or three million pounds for February through July production), and a payment of about $11,000 for the average licensed dairy herd of 170 cows.

New producers, producers who have not been paid, and producers who believe there is an error in their payment should contact USDA’s Danielle Cooke in Washington, D.C., at Danielle.Cooke@wdc.usda.gov. They may be required to submit a request for DELAP by January 19. For more information, see USDA’s REVISED fact sheet on the DELAP (http://www.fsa.usda.gov/Internet/FSA_File/delap09.pdf).

A decade after it first asked the federal Food and Drug Administration to crack down on the misappropriation of dairy terminology on imitation milk products, NMPF last week sent another petition to the FDA, asserting that the practice has gotten worse in the past 10 years.

In its petition submitted April 29th, NMPF contended that not only have the terms “soy milk” and “soymilk” continued to proliferate, but also other dairy-specific terms like “yogurt,” “cheese,” and “ice cream” are now being used by products made out of a wide variety of non-dairy ingredients.

“The FDA has allowed the meaning of ‘milk’ to be watered down to the point where many products that use the term have never seen the inside of a barn,” said Jerry Kozak, President and CEO of NMPF. “You don’t got milk if it comes from a hemp plant, you can’t say cheese if it’s made from rice, and faux yogurt can’t be made from soy and still be called yogurt,” he said.

This matter was originally brought to the attention of the FDA in February 2000, when NMPF sent a letter asking that the agency make clear to manufacturers of imitation dairy products that product names permitted by federal standards of identity, including dairy terms such as “milk,” are to be used only on foods actually made from milk from animals like cows, goats, and sheep. The FDA has failed to act on that petition, so NMPF “is again asking our regulators to defend the letter and the spirit of regulations intended to prevent false and misleading labeling on consumer products,” Kozak said.

NMPF’s petition cites examples including imitation milks made from hemp, rice, almonds, and other plants, legumes and vegetables; yogurts made from soybeans and rice; and cheeses made from soy, rice, and nuts. In some cases, marketers use superficial word changes, such as “cheeze,” in an apparent attempt to skirt the standards of identity regulations.

Non-dairy products “can vary wildly in their composition and are inferior to the nutrient profile of those from dairy milk – although they are marketed as replacements for foods that consumers are familiar with and which have a healthful image,” Kozak said. “Although some phony dairy foods may have a passing resemblance to their authentic counterparts, they are very different in nutritional value, composition, and performance from standardized dairy products.”

Examples of products that exploit the lax enforcement of dairy product labeling can be found here:www.facebook.com/theydontgotmilk. Consumers who have examples of what they believe are improperly-labeled imitation dairy products can post examples at that Facebook page. Additionally, consumers can use a webform on the NMPF website to send examples directly to the Food and Drug Administration and/or urge the agency to take action on the matter at: www.nmpf.org/fda-form.

Lauren Mosemann testified on April 20th before the House Agriculture Committee in Harrisburg, PA, on behalf of member cooperative Maryland & Virginia Milk Producers and the National Milk Producers Federation (NMPF) in April. Lauren and her husband, Mark, farm with his family at Misty Mountain Dairy in Warfordsburg, PA.

The hearing was focused on the dairy industry and future policy. With dairy farmers in the United States having experienced their worst financial year in memory in 2009, NMPF encouraged Congress to focus on solutions that address the underlying problems that caused the crisis and will help the industry avoid recurrences of this situation in the future.

The testimony highlighted that last year, NMPF created a Strategic Planning Task Force to seek consensus across the dairy producer community and create a solid “Foundation for the Future.” Mosemann further explained that the goal has been to analyze and develop a long-term strategic plan that will have a positive impact on the various factors influencing both supply and demand for milk and dairy products. Mosemann outlined the different aspects of the NMPF proposal and emphasized that both the Dairy Product Price Support Program and the MILC program are inadequate protections against not just periodic low milk prices, but also destructively low profit margins that occur when input costs, especially feed prices, rise rapidly. More specifically, it was emphasized that the Price Support Program, in particular, seems to have outlived its usefulness and now hinders the ability of U.S. and world markets to adjust to supply-demand signals. Neither program was designed to function in a more globalized market, where not just milk prices, but also feed costs and energy expenses, are more volatile and trending higher.

In closing, Mosemann addressed other issues of importance to dairy including immigration and estate tax reform. As other hearings are scheduled in the coming weeks and months, NMPF will seek further opportunities to advocate for much-needed dairy policy reform.

The U.S. Department of Agriculture convened the first meeting of its Dairy Industry Advisory Committee April 13th through the 15th. The 17 members of the committee included producers and producer representatives, processors, state government, retail, and academia. In total, NMPF member representatives included five member producers and two cooperative CEOs.

USDA Secretary Vilsack opened the meeting by saying that the group’s genesis was in the dairy crisis of 2009. He stated that the industry “needs to get control of itself” and challenged the committee to come up with a common-sense solution. His charge to the committee was to come up with something within a year.

Following comments by the committee members, a series of background reports from USDA staff, and Dr. Scott Brown of FAPRI, were presented to the committee.

USDA staff reports continued the morning of the second day, including a review of the Dairy Options Pilot Program, and the Livestock Gross Margin Insurance Program.

Jim Tillison, NMPF Senior Vice President, gave a report on the Cooperatives Working Together (CWT) program activities from its inception in 2003 to the present. NMPF President and CEO Jerry Kozak presented an overview of Foundation for the Future, and answered a number of questions from committee members primarily focused on the Dairy Producer Income Protection Plan. Connie Tipton, CEO of the International Dairy Foods Association (IDFA), presented her members’ thoughts and concerns regarding future dairy programs. She was followed by representatives from the Milk Producers Council of California, who discussed its Dairy Price Stabilization Plan.

More information on USDA’s Dairy Industry Advisory Council can be found athttp://www.fsa.usda.gov/FSA/webapp?area=about&subject=landing&topic=dia-mt.

The new rules for producer-handlers were published in the Federal Register on April 23, following successful producer referenda in all Federal Order markets, and will take effect on June 1. Under the new rule, vertically integrated bottlers with over three million pounds of fluid milk sales will be required to participate in the Federal order pool just like any other large bottler.

Before this, subject to certain conditions, a large bottler with its own farm production could avoid contributing to the Federal Order pool in its market, and thus received a significant pricing advantage against other bottlers. The new rules are based on proposals made by the National Milk Producers Federation and the International Dairy Foods Association last year. A successful result on this issue was one of NMPF’s major goals of 2009. This change will add millions of dollars to the Federal Order producer pools. More importantly, it will prevent further erosion of producer prices through what had become a loophole for large producer-handlers.

The new rules can be found at this site: /sites/default/files/2010-9402.pdf. If you have questions, please call Roger Cryan in the NMPF offices.

Many NMPF members expressed concern over the April 22nd announcement by China that it planned to stop accepting the current U.S. dairy health certificate for food-grade shipments as of May 1. Sales to China are considerable, and future opportunities for making further inroads for our cheese and dairy ingredients there are even larger.

We were happy to receive confirmation last week that China has granted a 30-day delay in its plans, and therefore will continue accepting the current U.S. dairy health certificate until June 1. USDA’s Foreign Agricultural Service is seeking clarity on whether product shipped prior to June 1 but arriving after the 1st will also be permitted entry using the current U.S. certificate.

NMPF will continue to work with USDEC on this issue, as we work to ensure that technical engagement is given the appropriate degree of priority required to achieve resolution and agreement on a new certificate by June 1.

In the five weeks since CWT reactivated its Export Assistance program, it has assisted member cooperatives in making sales overseas that total nearly 22 million pounds of Cheddar cheese and Monterey Jack cheese. Using the milk to Cheddar cheese yield factor of 10 pounds of milk to make one pound of cheese, it will take 220 million pounds of milk to make the 22 million pounds of cheese. Put another way, the milk equivalent of those sales is the annual milk production of nearly 10,000 cows.

Using the Export Assistance program to build sales overseas can arguably have a greater and longer term impact than retiring cows. Independent analysis showed that the impact of retiring cows can last three years but at a steadily declining rate. Building markets for U.S. dairy products overseas with the help of CWT export assistance can have a longer term impact at a constant or growing rate.

As a follow-up to their June 2009 visit to Washington, DC in conjunction with the NMPF Board of Directors meeting, more than 30 Young Cooperators (YCs) returned to the area in April 2010 to talk to their congressional offices about dairy industry issues and increase the visibility of dairy producers on Capitol Hill.

During the two-day event, YCs were briefed by NMPF staff on important topics the industry is currently facing. The briefing was followed the next day by visits to offices of various Representatives and Senators so that the YCs could urge them to exclude U.S. dairy trade with New Zealand in the Trans-Pacific Partnership, and increase milk consumption in schools, among other things.

A new group of YCs will visit in June during NMPF's Board of Directors meeting that will take place June 7th through the 9th.

In the photo: YCs Dan and Rachel Gallagher had a chance to visit with Senator Patrick Leahy (right) from their home state of Vermont.

This week David Hickey joined the NMPF staff as the Director of Government Relations.

David was previously with the National Association of State Departments of Agriculture (NASDA) as Manager of Legislative and Regulatory Affairs. His portfolio includes dairy, energy, climate change, rural development, farm safety net, crop insurance, and disaster assistance. He was actively engaged in the drafting and reporting of legislation during the 2008 Farm Bill and Energy Acts.

Prior to working at NASDA, David was a Legislative Correspondent for Sen. Norm Coleman (R-MN) from May 2006 – Jan. 2009.

Originally from Minnesota, David holds a degree in Political Science from Arizona State University. He can be reached at dhickey@nmpf.org.

Cooperatives Working Together (CWT) reactivated its Export Assistance program to boost sales of U.S.-made cheddar cheese. Block cheese prices have risen by 25 cents per pound since the announcement on March 18.

Last used in 2008, CWT's Export Assistance Program assists member cooperatives with exporting eligible dairy products and establishing overseas markets for their members' milk. While the program had, in the past, exported whole milk powder, butter, and butterfat, the focus in the short-term was on cheddar cheese, as this would have the most impact on farm-level milk prices.

“After conducting a thorough economic analysis, it was clear that implementing the Export Assistance program and focusing on cheddar cheese could provide the most immediate positive signal to address continuing low producer milk prices,” said Jerry Kozak, President and CEO of NMPF, which manages CWT. “Given the smaller spread between U.S. and global cheese prices, and given the sizeable inventories of cheese that are hampering a recovery in milk prices, using CWT’s export program will be expedient and effective.”

While the program had previously exported 186 million pounds of dairy products to 55 countries, CWT advised its members that it would provide additional incentives for sales to the target markets of Japan, Algeria, Egypt, Saudi Arabia, and Australia. CWT believed these were prime markets for sales of significant quantities of cheddar cheese, although it would consider bids for sales to other markets as well.

Cooperatives seeking assistance submit a bid specifying the product to be exported, the quantity of product, the end customer, the country in which the customer is located, and the amount of assistance per metric ton of product needed to make the sale. CWT and U.S. Dairy Export Council (USDEC) staffs evaluate each bid received against world market conditions and the world product prices. If they determine that the assistance requested is reasonable, the bid is accepted. The cooperative does not receive payment from CWT until paperwork is submitted showing that the product has been delivered to the customer.