NMPF Executive Vice President Jaime Castaneda discusses efforts to expand dairy market access at recent World Trade Organization meetings in Abu Dhabi in an interview with the Red River Radio Network. Castaneda also discusses trade relations with India and the importance of the NMPF-led Cooperatives Working Together program for the future of U.S. dairy exports.
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The Class I Mover Needs to Move
By Paul Bleiberg, Executive Vice President, Government Relations, NMPF
Even as an election looms on the horizon, USDA will soon develop its Federal Milk Marketing Order (FMMO) modernization recommendations after months of proceedings. Meanwhile, Congress is preparing to advance a farm bill. U.S. dairy farmers and their cooperatives have a stake in both. But regardless of the policy landscape of the moment, one pressing priority that unites producers from coast to coast in every way, shape, and form is the need to restore the “higher of” Class I mover.
Since it was implemented five years ago, the current “average of” Class I mover has cost dairy farmers nationwide more than $1 billion in Class I skim revenue, with losses continuing to pile up monthly. This, of course, was not intended — but neither were the repeated price inversions that upended decades of data and showed the new mover is poorly adapted to dairy’s present and future in a variety of economic climates.
Congress changed the mover during the last farm bill to respond to fluid processor requests for risk management, but that was with the expectation that it would be revenue neutral for the dairy producer. Unfortunately, the new mover has been anything but revenue neutral, and it’s been so in a way that has overwhelmingly favored processors, who are not the epicenter of the FMMO system. The new mover has underperformed repeatedly, to the detriment of dairy farmers, in 2020, 2022, 2023, and again, month by month, in 2024. The current formulation has harmed farmers so consistently that it would have been nowhere close to revenue neutral even setting aside the calamity of 2020.
In an attempt to remedy an intolerable situation (everyone, even processors, agrees on that point, at least), several concepts have been put forth that are bandages to the problem but aren’t true solutions. Modifying the current formula, for example, to retroactively recoup producer losses would still fail to send timely price signals to farmers. The argument that this modified version would have paid more to farmers at some point just yet again exposes the problem with the “average of,” which is that it causes farmers to suffer losses when they should have been paid based on market signals and instead distorts the true market by paying them back later. That approach also provides little help to the many family dairy producers who don’t have years to be made whole, a fact underscored forcefully by continued trends toward farm consolidation.
The solution to this problem comes down to priorities. The current mover may have been a fair experiment to test, but with its performance now having been assessed, continuing the “average of” formulation can be to nothing except the detriment of dairy farmers who have lost more than $1 billion dollars of ongoing disorderly marketing of milk.
The right solution is the previous “higher of” mover. That tried-and-true approach, one that served farmers well for decades, responds quickly to and accurately reflects the marketplace, encouraging the orderly marketing of milk that provides the rationale for the FMMO system, and it helps dairy farmer cash flow when it counts. The “higher of” Class I mover must be reinstated.
This column originally appeared in Hoard’s Dairyman Intel on March 4, 2024.
2023 Annual Report
CWT Assists with 5.2 Million Pounds of Dairy Product Export Sales
ARLINGTON, VA – Cooperatives Working Together (CWT) member cooperatives accepted 41 offers of export assistance from CWT that helped them capture sales contracts for 4.4 million pounds (1,970 MT) of American-type cheese and 827,000 pounds (375 MT) of cream cheese. The product is going to customers in Asia, Central America, the Caribbean, Middle East-North Africa and South America, and will be delivered from March through June 2024.
CWT-assisted member cooperative year-to-date export sales total 24.5 million pounds of American-type cheeses, 112,000 pounds of anhydrous milkfat, 7.1 million pounds of whole milk powder and 2.2 million pounds of cream cheese. The products are going to 24 countries in five regions. These sales are the equivalent of 298 million pounds of milk on a milkfat basis. Over the last 12 months, CWT assisted sales are the equivalent of 968.4 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 the dairy farmers’ milk prices and margins.
NMPF Testifies on Common Names
NMPF Executive Vice President for Policy Development & Strategy Jaime Castaneda testified on the need for greater action from the U.S. government to proactively negotiate common names protections with trading partners, during a Feb. 21 hearing hosted by the U.S. Trade Representative’s (USTR) office.
The hearing highlighted the agency’s annual Special 301 process, which seeks to identify intellectual property trade abuses around the world and set up USTR’s IP priorities for the following year.
NMPF and USDEC submitted joint comments in January that complemented a more comprehensive submission from the Consortium for Common Food Names. All three organizations emphasized the urgency of the issue and highlighted the damage done to American cheesemakers when they are not allowed to use the generic terms that consumers have known and loved for generations.
NMPF Letters Urge New Market Access
NMPF helped coordinate a pair of letters in February urging policymakers to prioritize new market access, as U.S. agriculture continues to lag behind competitors in the global economy.
NMPF, USDEC and other agricultural organizations signed a Feb. 15 letter to Congress that detailed how the lack of new market access is threatening food and agriculture industry profitability. The letter called for Congress to work with and press the current and future Administrations to open more doors for U.S. agriculture exports.
Meanwhile, the newly launched Ag Trade Caucus, created by Farmers for Free Trade with support from NMPF, sent a Feb. 20 letter to U.S. Trade Representative Ambassador Katherine Tai and U.S. Department of Agriculture Secretary Tom Vilsack, urging the administration to continue to pursue agreements that address the trade barriers that are most harmful to U.S. dairy.
FARM Program Launches New Look, Features for Database
The FARM Program launched a new user interface for its database Feb. 20.
The FARM database is used by FARM Program evaluators and participant managers to conduct evaluations and track farm progress over time within the FARM Program Areas. The new database features allow FARM Program evaluators and managers to navigate dashboards more easily as well as manage certifications, farm data and action plans. A new search feature with enhanced filtering options streamlines users’ ability to find information.
FARM will host Zoom demo sessions for evaluators and managers to walk through the new site navigation and have their questions answered in real-time. FARM database users can access the database with their existing login credentials.
NMPF Represents U.S. Dairy at WTO Ministerial
NMPF Executive Vice President for Policy Development & Strategy Jaime Castaneda and Trade Policy Director Tony Rice advocated for U.S. dairy in Abu Dhabi, capital of the United Arab Emirates, Feb. 26-29, seeking improved market access and pro-dairy policies at the World Trade Organization Ministerial.
As a recognized non-government representative at the Ministerial, NMPF joined the U.S. Coalition for WTO Reform to advise U.S. government negotiators throughout the meeting, meet with the WTO Secretariat and likeminded delegations, and raise the profile of U.S. agricultural trade priorities.
Important issues at stake include:
- Negotiations to reform the dispute settlement system.
- The establishment of a work plan on agriculture that includes market access as a priority.
- Pushing back against attempts to weaken WTO agricultural rules related to public stockholding subsidies and special safeguard mechanisms that would distort trade.
Castaneda also spoke at a U.S. Chamber of Commerce organized event on the importance of WTO dispute settlement reform and highlighted the outcomes that U.S. agriculture is prioritizing at the ministerial. Castaneda and Rice also met with U.S. Dairy Export Council international staff to receive the latest updates on barriers to trade in the Middle East and North Africa regions.
Ag Groups Oppose Proposed Rodenticide Policy Changes
NMPF and other agriculture groups submitted comments to EPA on Feb. 13 strongly opposing any policy in the “Draft Biological Evaluation for the Rodenticides and the Rodenticide Strategy” that involves making rodenticides restricted-use products.
NMPF and the agriculture groups strongly supported enhancing rodenticide stewardship to mitigate risks to non-target species while raising concerns about the effectiveness of EPA’s proposed strategy.
“We are deeply concerned that assumptions made and errors in the Agency’s analysis do not support the Agency’s finding that the rodenticides are likely to adversely affect even a single individual plant or animal,” the groups said in their comments.
The groups cautioned against designating rodenticide products as restricted-use items and warned of potential hazards on farms and ranches. The comments also emphasized the critical importance of maintaining effective and affordable rodent control measures to safeguard animal welfare and food safety while preventing substantial environmental and financial losses in grain and feed.
NMPF, alongside other farm groups including the American Farm Bureau Federation and the National Pork Producers Council, emphasized EPA’s need to collaborate with rodenticide manufacturers and agricultural stakeholders to conduct comprehensive studies on how specific uses of rodenticides and potential pathways of exposure could adversely impact endangered species.
NMPF has actively participated in this issue for several years alongside fellow agriculture groups opposing the proposed rodenticide ban.
NMPF Against Emissions Reporting for Manure under EPCRA
NMPF filed its own comments Feb. 13 and joined with other agriculture groups in coalition comments to EPA’s Advanced Notice of Proposed Rulemaking weighing in on the reporting of air emissions from manure under the Emergency Planning and Community Right-to-Know Act (EPCRA).
Both sets of comments assert that Congress, the emergency response community, animal agriculture groups and the Coast Guard think that reporting air emissions from manure under a statute designed to address serious, life-threatening chemical spills is ill-advised and unnecessary. NMPF also said reporting would invade farmers’ privacy and put them at risk of being targeted by activist groups such as the Animal Liberation Front, which has been labeled a terrorist organization by the FBI.
Air emissions reporting under EPCRA has been an ongoing battle. NMPF and other agriculture groups were able to quash the notion that ammonia and hydrogen sulfide from manure were reportable under EPCRA and the Comprehensive Environmental Response, Compensation, and Liability Act through a legislative fix in 2018 and a regulatory fix in 2019.
In January 2021, the Biden Administration issued an Executive Order instructing EPA to review and rethink its regulations. Later that same year, EPA requested a court, where legal action was ongoing, to send the rule back for review without nullifying it so the rule would remain in effect while undergoing review.
The agency’s plan to revoke the exemption it granted in 2019 was abandoned after pushback from NMPF and other agriculture groups. NMPF is cautiously optimistic that the common-sense exemption will be retained. On Feb. 14, Representatives Nick Langworthy, R-NY, and Jim Costa, D-CA, led a letter signed by 44 of their colleagues urging EPA to retain the current exemption.
CWT Task Force Explores Program’s Future
NMPF’s task force of farmers and cooperative leaders met several times in recent weeks to consider a range of ideas as the program faces renewal this year. The task force, formed earlier this year to consider how the CWT export assistance program should evolve in the future to better meet the needs of its members, is generating ideas to present a series of potential extensions of CWT’s current operations to the NMPF Board of Directors for consideration and approval.
Ideas discussed so far include support to develop new products in new markets, expand the range of products exported and sold in overseas markets, and improve the shipping and logistics capabilities needed to export U.S. dairy products. The task force will continue to meet virtually in the spring to flesh out concepts and propose detailed proposals to the NMPF Board.
CWT February Committed Product Volume
January DMC Margin Inches Up Just Four Cents Over December
The January Dairy Margin Coverage program margin remained mired below the $9.50/cwt maximum Tier 1 coverage level, gaining just 4 cents over December to come in at $8.48/cwt and generating a payment of $1.02/cwt for that maximum coverage.
The national average All-milk price in January dropped $0.50/cwt from December to $20.10/cwt, while a $0.54/cwt drop in the DMC feed cost calculation offset that decline to result in the margin’s small improvement. The feed-cost decline was mostly driven mostly by a falling soybean meal price, assisted by slightly lower corn and premium alfalfa hay prices.
End-of-February futures-based forecasts indicated that DMC margins would remain mostly above the $9.50/cwt maximum Tier 1 coverage level for the rest of 2024.
