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FMMO Modernization Needs to Move – And So Does the Class I Mover

Posted on by Theresa Sweeney

The long, patience-testing — and absolutely necessary – Federal Milk Marketing Order hearing is nearly over.

The longest-ever USDA federal order hearing ended last Tuesday, after roughly 12,000 pages of testimony and nearly two dozen separate proposals considered. Through it all, NMPF’s impressive unity never faltered – our plan remains the most comprehensive, coherent, and compelling plan for modernization of a system that’s showing its creaks after a generation.

Now, the next phase of the arduous process of amending federal orders begins, as USDA begins considering the hearing record and hearing participants have 60 days to elaborate and defend their positions. USDA, of course, will have the final say in crafting its own proposal, but we’re confident our plan will remain the basis of progress, and we look forward to adding information and reinforcing our own arguments in the weeks to come. It’s critical to keep in mind that any plan designed to have national support needs to address diverse interests. That’s why our comprehensive plan covers areas ranging from the Class I price surface and make allowances to component pricing formulas and forward contracting.

One area that’s so important that we’re seeking resolution in the quickest manner possible is the Class I mover, which sorely needs to go back to the “higher-of” formula that served farmers well before the current “average of” approach took effect in 2019.

Processor interests aggressively pushed for the change to the mover in the 2018 Farm Bill. At the time, the adjustment seemed reasonable for farmers too, based on data going back to 2000. However, the lessons of the COVID-19 pandemic, and the current prolonged spread between the Class III and Class IV prices, have shown how poorly the current mover works for farmers in today’s agricultural environment. Milk producer losses are growing, with the amount of money taken from their milk checks soon to surpass $1.2 billion by April – all because of a system that now limits risks for processors while putting potentially unlimited losses on farmer backs.

This is unacceptable, a reality the hearing only made more obvious. While processors continually talked about how important the current mover is for their risk management strategies, no one in months of testimony ever presented definitive proof that such risk management is occurring at any meaningful level. Meanwhile, the processors continue to rake in dollars that would have gone to farmers – and will keep raking it in, by the way, until the mover is changed, a potentially huge financial incentive to work against positive changes for dairy farmers.

Knowing that the current mover isn’t defensible, these groups have suggested a modification to the current approach that’s largely based on a proposal that NMPF developed in 2021 under dire straits, but processors rejected. Their plan would adjust the mover in a backward-looking fashion that would allow farmers to recoup losses years after the fact. That reduces losses over the long term, but it’s cold comfort to farmers whose operations are struggling to live month-to-month and don’t have two years to be made right again. Moreover, it’s now clear that the losses farmers suffered in 2020 were not a one-off fluke.

And thus, given the current difficult times on dairy farms, we’re now pushing hard for the return to the higher-of. It responds quickly to the marketplace, it helps farmer cash flow, it’s simple to understand, and it would have no real impact on processors who are using the formula to boost their immediate balance sheets, not manage future risk as they claim.

Dating to NMPF’s first internal discussion, our path toward FMMO modernization is now nearly three years old. This final year, which, should all required timelines be met, would result in a producer vote roughly one year from now, is the most critical. It’s when, after all the research and talking, USDA will propose a new approach – and farmers will decide. These decisions are likely to shape the future of dairy for the next generation. We are excited to continue our leadership in this critical area, and will, as always, fight for the best approaches to ensure that dairy farms prosper.

Gregg Doud

President & CEO, NMPF

 

NMPF’S Cain sums up USDA milk pricing hearing

Posted on by Chris Galen

 

NMPF’s Stephen Cain provides Dairy Radio Now listeners a summary of what USDA will do now that its five-month-long national milk pricing hearing concluded at the end of January. NMPF and other parties will soon submit post-hearing briefs, and the USDA is expected to then weigh the evidence presented by witnesses and issue a draft proposal by mid-summer.

NMPF’s Bjerga on the Urgency of Changing the Class I Mover

Posted on by Alan Bjerga

NMPF Executive Vice President for Communications & Industry Relations Alan Bjerga speaks with RFD-TV about the need to change the Class I mover in a way that ends losses to dairy farmers that have totaled $1.2 billion since 2019. The mover is in the spotlight with the conclusion of USDA’s Federal Milk Marketing Order hearing in Carmel, IN.

 

NMPF Statement at FMMO Hearing Conclusion

Posted on by Theresa Sweeney

From Gregg Doud, President and CEO, National Milk Producers Federation:

“NMPF spent more than two years preparing for USDA’s Federal Order hearing, and that preparation paid off. Our proposals, unanimously supported by our Board of Directors, reflect farmer unity and a good-faith effort to build industry consensus. After five months, 12,000 pages of testimony, and almost two dozen separate proposals considered, our plan remains the most comprehensive, coherent, and compelling framework for modernizing a system that’s badly in need of improvement.  We look forward to working with USDA and the entire industry in the weeks and months to come, noting that any plan USDA designs will by necessity require complex analysis to result in a proposal that serves diverse farmer needs well.

“In the meantime, we’ll continue to advocate for badly needed changes in areas such as the Class I mover. The current formula has cost farmers $1.2 billion in losses since its implementation after the 2018 farm bill, with additional losses expected in the coming months. It needs to change back to the previous “higher-of’ formula that served farmers best. The higher-of responds quickly to the marketplace, it helps farmer cash flow, it’s simple to understand, and it would have no real impact on processors who are using the formula to boost their immediate balance sheets, not manage future risk as they claim.

“Dating to NMPF’s first internal discussions, our path toward FMMO modernization is now nearly three years old. This final year is the most critical. We are excited to continue our leadership in this critical area, and will, as always, fight for the best approaches to ensure that dairy farms prosper.”

FACTS ABOUT NMPF’s FMMO PROPOSAL:

 

NMPF supports the federal legislation that authorizes the FMMO system, as well as improvements that increase clarity and producer understanding of milk pricing and ensure an orderly market and fair prices for dairy farmers.

NMPF’s proposed changes to the Federal Milk Marketing Order System include:

  • Returning to the “higher of” Class I mover;
  • Discontinuing the use of barrel cheese in the protein component price formula;
  • Extending the current 30-day reporting limit to 45 days on forward priced sales on nonfat dry milk and dry whey to capture more exports sales in the USDA product price reporting;
  • Updating milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas;
  • Developing a process to ensure make-allowances are reviewed more frequently through legislation directing USDA to conduct mandatory plant-cost studies every two years;
  • Updating dairy product manufacturing allowances contained in the USDA milk price formulas; and
  • Updating the Class I differential price system to reflect changes in the cost of delivering bulk milk to fluid processing plants.

For more information, visit here.

CWT Assists with 5.4 Million Pounds of Dairy Product Export Sales

Posted on by Khadija Gibson-White
ARLINGTON, VA – Cooperatives Working Together (CWT) member cooperatives accepted 36 offers of export assistance from CWT that helped them capture sales contracts for 5 million pounds (2,300 MT) of American-type cheese, 309,000 pounds (140 MT) of whole milk powder and 150,000 pounds (68 MT) of cream cheese. The products are going to customers in Asia, Central America, the Caribbean, Middle East-North Africa and South America, and will be delivered from January through July 2024.

CWT-assisted member cooperative year-to-date export sales total 11.5 million pounds of American-type cheeses, 6.9 million pounds of whole milk powder and 381,000 pounds of cream cheese. The products are going to 10 countries in four regions. These sales are the equivalent of 159.3 million pounds of milk on a milkfat basis. Over the last 12 months, CWT assisted sales are the equivalent of 920.4 million pounds of milk on a milkfat basis.

Assisting CWT members through the Export Assistance program positively affects all U.S. dairy farmers and cooperatives by fostering the competitiveness of US dairy products in the global marketplace and helping member cooperatives gain and maintain world market share for U.S dairy products. As a result, the program has helped significantly expand the total demand for U.S. dairy products and the demand for U.S. farm milk that produces those products.

The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT pays export assistance to the bidders only when export and delivery of the product is verified by required documentation.

 

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The Cooperatives Working Together (CWT) Export Assistance program is funded by voluntary contributions from dairy cooperatives and individual dairy farmers. The money raised by their investment is being used to strengthen and stabilize dairy farmers’ milk prices and margins.

 

Whole Milk Ready for Breakthrough Year

Posted on by Theresa Sweeney

With consumer choice, scientific research and congressional legislation all going its way, 2024 promises to be a breakthrough year for whole milk, NMPF’s Head of Nutrition Policy Claudia Larson and Regulatory Affairs Director Miquela Hanselman said in a Dairy Defined Podcast released today.

The variety that shoppers prefer is poised to return to school lunch menus given the bipartisan approval of the Whole Milk for Healthy Kids Act in the House of Representatives, and it will figure prominently in consideration for updated federal Dietary Guidelines that are due next year.

“This is important to our students, this is important to our schools, this is important to our parents,” said Larson, a senior director of government relations at NMPF. “Reach out to your senators, let them know that this is important to you and your children in your community and ask them to please co-sponsor the bill.”

NMPF has a call to action urging lawmakers to support the Whole Milk for Healthy Kids Act here. The full podcast is here. You can also find the podcast on Apple Podcasts, Spotify and Google Podcasts. Broadcast outlets may use the MP3 file below. Please attribute information to NMPF.

CWT Assists with 3.6 Million Pounds of Dairy Product Export Sales

Posted on by Khadija Gibson-White

ARLINGTON, VA – Cooperatives Working Together (CWT) member cooperatives accepted 39 offers of export assistance from CWT that helped them capture sales contracts for 3.2 pounds million (1,500 MT) of American-type cheese and 353,000 pounds (160 MT) of whole milk powder. The product is going to customers in Asia, Central America, the Caribbean and Middle East-North Africa, and will be delivered from January through July 2024.

CWT-assisted member cooperative year-to-date export sales total 7.2 million pounds of American-type cheeses, 6.6 million pounds of whole milk powder and 231,000 pounds of cream cheese. The products are going to 10 countries in four regions. These sales are the equivalent of 116.1 million pounds of milk on a milkfat basis. Over the last 12 months, CWT assisted sales are the equivalent of 918.9 million pounds of milk on a milkfat basis.

Assisting CWT members through the Export Assistance program positively affects all U.S. dairy farmers and cooperatives by fostering the competitiveness of US dairy products in the global marketplace and helping member cooperatives gain and maintain world market share for U.S dairy products. As a result, the program has helped significantly expand the total demand for U.S. dairy products and the demand for U.S. farm milk that produces those products.

The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT pays export assistance to the bidders only when export and delivery of the product is verified by required documentation.

 

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The Cooperatives Working Together (CWT) Export Assistance program is funded by voluntary contributions from dairy cooperatives and individual dairy farmers. The money raised by their investment is being used to strengthen and stabilize dairy farmers’ milk prices and margins.

Whole and Lactose-Free Milk Shine Bright

Posted on by Alan Bjerga

By Alan Bjerga, Executive Vice President, Communications & Industry Relations, NMPF

This is shaping up to be an exciting year for both whole and lactose-free milk, two growing segments of fluid milk consumption that are poised for further gains in grocery aisles as well as Washington, D.C. policy circles.

First, the facts: Even as fluid milk continues its decades-long challenge of eroded consumption as beverage markets diversify and consumer preference shifts to other forms of dairy, both whole milk and lactose-free varieties are bucking that trend. According to data from Circana Inc., which tracks retail sales, whole milk sales rose slightly (up 8 million gallons, or 0.6%) in 2023 over 2022. Because overall fluid sales declined, whole milk now makes up 45.4% of total fluid volume sold and is easily the most popular variety.

Lactose-free milk, meanwhile, reached a milestone. By climbing 6.7% to 239.2 million gallons last year, it surpassed the sales volume of almond beverages, by far the most popular plant-based milk alternative beverage. Almond’s annual decline of 9.8% is a big part of an overall consumer move away from plant-based alternatives, which have now seen two straight years of sales volume drops. Buyers are emphatically rejecting years of misleading claims that these beverages are a worthy substitute to dairy.

What’s next?

The National Milk Producers Federation is pushing for full congressional passage of the Whole Milk for Healthy Kids Act, which overwhelmingly passed the House in December and stands good prospects of passage in the Senate — if the right legislative vehicle can be found in a jam-packed election year. Bringing whole and 2% milk back to school meal menus is a great way to improve the nutrition of the next generation of milk drinkers. We have a call to action on our website urging senators to take up the bill.

Lactose-free milk is becoming the industry’s spearhead in ensuring equitable access to milk across diverse populations in federal nutrition programs. It is simply asinine federal policy to do what some vegan activists are proposing — increase access in federal programs to plant-based beverages that are both nutritionally inferior and now falling out of favor with consumers — when a beverage exists that circumvents lactose intolerance and offers all of milk’s benefits because it is, after all, milk. You will be hearing more about this in upcoming months as we strive to make 2024 a year when people become more broadly aware of just how critical lactose-free milk can be for effective and fair nutritional choices.

In what’s been a challenging time for the industry, what can the success of whole and lactose-free milk tell us? It shows that, for all the proliferation of alternatives, consumers like milk that’s most like milk, in taste and composition. They also like milk that’s accessible for everyone who wants its benefits. Quality and diversity are promising building blocks for a prosperous future. That’s plentiful in dairy, and this year, what consumers are choosing also can inform better federal policy.

This column originally appeared in Hoard’s Dairyman Intel on Jan. 18, 2024.

NMPF’s Bleiberg Explains Federal Funding Process to Avert Government Shutdown

Posted on by Chris Galen

NMPF’s Paul Bleiberg tells Dairy Radio Now listeners about the latest developments in efforts on Capitol Hill to fund the government in 2024 before certain agencies run out of money.  He also explains the impact of the funding fight on efforts to pass a new Farm Bill in the spring months, before time runs out as the political focus shifts to the fall election campaign.

 

Milk’s Lead Rises as Plant-Based Beverages Sink

Posted on by Theresa Sweeney

The final numbers are in, and they confirm what we’ve anticipated all year. In 2023, consumers emphatically turned away from plant-based beverages at an accelerating rate that caused the category to lose market share to milk, where whole milk and lactose-free varieties are thriving and surpassing their competitors.

The numbers give even more reason to put a stake in all that overprocessed hype – and to push even harder for integrity in labeling beverages that are being abandoned by consumers tired of inferior alternatives to dairy.

With full year data now available from Circana Inc., which tracks grocery-store spending, plant-based beverage consumption in 2023 fell 6.6 percent to 337.7 million gallons. It’s the second straight year of declines and the lowest consumption since 2019.

Sales volumes for almond drinks, the biggest plant-based category, fell 10 percent, and the soy beverages that vegan activists weirdly want in school lunches declined 8 percent. Even the once-Next-Big-Thing, oats, only rose 1.4 percent last year.

Sorry, Oatly – the froth has left your latte, and all that’s left is the drain.

Meanwhile, fluid milk – the real kind – keeps chugging away. To be fair, like plant-based, its consumption also declined, and like plant-based, its sales volume number starts with a 3. However, that 3.137 is followed by the word billion – not million, which is where plant-based is stuck – and the drop was 2.7 percent, less than half the rate of decline for plant-based beverages. That means fluid milk last year lengthened its lead over plant-based. In 2022, fluid milk had 89.9 percent of the pie. In 2023, it rose to 90.3 percent.

Beyond the overall number, fluid milk had more good news. Sales of whole milk, the most popular variety (and the one we need back in schools), rose last year, and lactose-free milk – the one tailor-made for people with dairy sensitivities – jumped 6.7 percent to 239.2 million gallons. With that, lactose-free milk surpassed almonds; it’s now a bigger category on its own than any plant-based alternative.

(You’ll hear a lot about that in the next year. We’ll make certain of it.)

The idea that milk was losing market share because consumers were turning to plant-based alternatives was always off-base. Now, it’s just a lie. And the decline of plant-based beverage isn’t likely to be an aberration: Once the initial hype is gone, and the sustainability claims are debunked, and the nutrition fallacies are exposed, what, exactly, does over-processed sugar water have going for it?

Oh, right, their misleading labels.

For now.