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NMPF, IDFA Push for WIC Fix to Flawed Proposal That Potentially Limits Dairy

Posted on by Theresa Sweeney

Representing dairy farmers, cooperatives, and processors, NMPF and the International Dairy Foods Association (IDFA) issued a joint statement Nov. 17 responding to proposed USDA changes to the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) released that day.

“It is unfortunate for WIC participants that the proposed rule would decrease access to dairy products and the unique nutrient profile they provide, especially considering the current Dietary Guidelines for Americans (DGA) note that a staggering nearly 90 percent of the U.S. population does not consume enough dairy to meet dietary recommendations,” the groups said in their statement. “At a time of rising food costs and high food insecurity, we should focus on increasing access to a wide variety of healthful, nutrient-dense, and affordable foods, including both fresh produce and dairy products. It’s disappointing that the proposed rule would limit WIC family purchasing power for nutritious dairy foods, particularly at a time like this.

The dairy organizations commended USDA for expanding options for yogurt and cheese varieties and proposing WIC participants have wider purchase options and also lauded its support for nutritional equivalence in substitute products as recommended in the Dietary Guidelines for Americans. That said, the overall plan fell short, NMPF and IDFA argued.

“IDFA, NMPF, and our members will advocate against reducing the amount of nutritious dairy foods provided through WIC in USDA’s final rule because we are committed to reducing food insecurity, malnutrition, and diet-related disease while improving health outcomes by making it easier for all Americans to access healthy, affordable foods, including nutritious dairy products. We hope USDA will work to achieve these same objectives.”

No DMC payments for October as Prices Rise

Posted on by Theresa Sweeney

The U.S. average all-milk price rose $1.50/cwt in October from a month earlier, boosting the month’s DMC margin well above the $9.50/cwt maximum coverage level needed to trigger program payments, after two months of payouts.

The October margin was $10.71/cwt, $2.09/cwt higher than September’s margin. The DMC feed cost dropped by $0.59/cwt in October, driven entirely by a sizeable drop in the price of corn.

Another small payment for $9.50/cwt Tier 1 coverage may be triggered in December, based on current projects. Payments this year under the program, for August and September, together total the equivalent of about $0.19/cwt on an annualized basis and would be enough to cover the annual premium for a farmer enrolled in DMC at the $9.50 coverage level.

Dairy Engaged in Busy Lame-Duck Congressional Session

Posted on by Theresa Sweeney

Congress is working to finish several key measures before adjourning for the year, one with special urgency for Democrats as Republicans take control of the House of Representatives in January.

While Republicans netted enough House seats to flip the chamber as a result of November’s elections, they did not win as many seats as they were expected and did not reclaim control of the U.S. Senate, making any shifts in the upcoming 118th Congress potentially less dramatic than some analysts anticipated before the election. Members are hoping to wrap up business that includes dairy farmer and cooperative priorities. Among highlights:

  • Getting ag labor reform across the finish line. The Senate is currently working on its own ag labor measure, refining and improving upon the reforms provided by the Farm Workforce Modernization Act, a bipartisan House-passed measure that would provide permanent legal status for current farm workers and their families and reform the H-2A agricultural guest worker program to include dairy and other year-round workers. Senators in both parties have been seeking to strike agreement on a compromise version that can garner 60 Senate votes. NMPF continues to work closely with Senate negotiators to seek a path forward for any such final measure.
  • Passing a fiscal year 2023 spending bill to fund the government. NMPF continues to advocate for enhanced funding for the Food and Drug Administration to review and approve animal feed ingredients that can reduce enteric methane emissions from livestock by as much as 30 percent, which will be critical as dairy seeks to reach its goal of achieving a net zero greenhouse gas footprint by 2050.
  • Another key dairy priority in appropriations is securing additional funding for dairy farmers whose reimbursements under USDA’s Pandemic Market Volatility Assistance Program were limited by the program’s five-million-pound per producer cap, as well as those farmers unable to receive program funds because their milk was not pooled on a Federal Milk Marketing Order but still endured similar price losses. USDA created the program last year to partially reimburse farmers for unintended COVID-19 pandemic losses caused by the heavy weighting of federal dairy purchases toward cheese combined with a change to the Class I mover formula in the 2018 Farm Bill.

CWT Assists with 2.3 Million Pounds of Dairy Product Export Sales

Posted on by Theresa Sweeney

Cooperatives Working Together (CWT) member cooperatives accepted 17 offers of export assistance from CWT that helped them capture sales contracts for 1.6 million pounds (734 MT) of American-type cheese and 717,000 pounds (325 MT) of cream cheese. The product is going to customers in Asia, Central America, Middle East-North Africa, and Oceania, and will be delivered from December through May 2023.

CWT-assisted member cooperative year-to-date export sales total 92.1 million pounds of American-type cheeses, 657,000 pounds of butter (82% milkfat), 30.7 million pounds of whole milk powder and 8.8 million pounds of cream cheese. The products are going to 21 countries in six regions. These sales are the equivalent of 1.157 billion 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.

Bipartisanship Advances Dairy as New Congressional Landscape Forms

Posted on by Theresa Sweeney

With Congress’s “lame-duck” session underway and last month’s elections almost fully settled, it’s clear how quickly political fortunes can turn and conventional wisdom can be upended.

The Congress that’s seated next month will have a Democratic-led Senate, regardless of the outcome in the Georgia run-off, and a Republican-led House of Representatives. That’s after an election cycle in which Republicans achieved a narrow House majority but fell short of the red wave that many pundits expected. It’s yet another cycle where actual voters didn’t behave as predicted. In 2020, Republicans made solid gains in the House despite President Biden’s victory. And of course, everyone knows just how significantly the biggest upset of 2016 has affected American life.

These realities of uncertain futures and fast-changing fortunes only reinforce a principle central to the National Milk Producers Federation’s policy successes: We strive to be a studiously, emphatically, bipartisan organization. We believe in tangible, lasting gains for our members, which comes through successes that can’t be undone by an executive order or tempt an out-of-power party to overturn it the next time it’s in power again. The paths we chart in farm bills, the durable regulatory certainties we strive for our members, and the goals we pursue as the policy voice of dairy farmers and their cooperatives do not waver based on short-term political gains. We take a longer view of building bridges, not burning them, and of fostering positive relationships on both sides of the aisle rather than succumbing to toxic Washington partisanship.

This approach affords us confidence in our opportunities both in the current lame-duck session and in the upcoming 118th Congress. Immigration reform, a decades-long priority for our members, is gaining intense attention as the current Congress attempts to smooth the path for the next one. Thanks to our strong relationships on both sides of the aisle, we’re hopeful that the approach we endorsed in the imperfect, but essential, Farm Workforce Modernization Act can be improved in the Senate and signed into law. We’re working overtime to make it happen – you can get involved too by visiting the Call-to-Action found on our website.

At the same time, we’re confident that the sustainability gains we made in last August’s Inflation Reduction Act, including a critical new investment tax credit for methane digesters, can be furthered in the next Congress. Even though the larger bill was passed by the narrowest of partisan votes, our tax credit proposal had strong bipartisan support in both the House and Senate on its way to being signed into law. New Republican leadership undoubtedly will have its own approach to issues such as sustainability, and divided government always presents challenges when building the consensus needed to build bipartisan solutions.

But we also know that we have strong relationships with critical dairy advocates like incoming House Agriculture Committee Chairman Glenn “GT” Thompson of Pennsylvania, Senate Agriculture Committee Chairwoman Debbie Stabenow of Michigan, and others. And that puts our priorities and goals in a good position to advance in the next Congress as lawmakers work on issues ranging from the 2023 Farm Bill to trade policy and supply chain challenges.

Such lasting success only comes from the mutual respect and strong relationships we’ve built – and continue to build — in both parties. At a time when trust in Washington is low and fatigue over bitter partisanship is high, we’re excited for what lies ahead. We know we can make a difference for dairy because we’ve done it, are doing it, and will do so in the future regardless of the partisan alignment at any given time. Whatever twists the policy road may take, we’re well-prepared to travel it because of our own principles of service and progress.

That would have been the case regardless of whatever the electoral outcomes watched so closely in November had turned out to be. That’s behind us now. It’s time to focus on the months ahead.

President and CEO, NMPF

NMPF’s Galen on DMC Signup

Posted on by Alan Bjerga

 

NMPF Senior Vice President Chris Galen reminds farmers of the upcoming Dec. 9 deadline to enroll in the Dairy Margin Coverage Program in an interview with the National Association of Farm Broadcasters. This year’s payments under the program — the result of high input costs eating into record prices — show the wisdom of DMC’s design, Galen said.  “As we head into 2023, we know that milk prices aren’t going to be as strong,” Galen said. “We know that input costs are still going to be significant.”

NMPF Calls on Congress to Act to Avert Dairy-Devastating Rail Strike

Posted on by Theresa Sweeney

From NMPF President and CEO Jim Mulhern:

“Congress needs to take immediate action to avert a nationwide rail strike that would damage dairy producers and deprive consumers of critical nutrition. Dairy is a 24/7 industry producing a highly perishable commodity. Any disruption of national transit networks not only keeps products from moving efficiently to markets; it deprives farmers and their processing cooperatives of everything from the feed they need for their animals to the supplies needed to continue production.

“A rail strike also would bring chaos to agricultural supply chains, as its ripple effects on trucking and other industries would complicate transport of goods everywhere from grocery stores to export markets, all the while adding another cold blast of inflation to consumer expenses this winter as products inevitably become scarce.

“With a strike looming in mere days, now is the time to act. We urge Congress to make prevention of this strike today’s top priority.”

China’s Dairy Demand May Be Sluggish in ’23

Posted on by Alan Bjerga

By Stephen Cain, Director of Research and Economic Analysis, NMPF.

Outside of cheese, China is the number one importer of essentially every major dairy product. Globally, the world’s most populated country purchases 27% of all traded dairy products on a milk solids basis. China accounts for roughly 20% of all U.S. dairy exports and nearly half of all U.S. dry whey exports.

All of this makes China an unquestionably important market; yet, over the last year, Chinese demand has been down significantly. Chinese milk solids imports over the last 12 months are down 16%, and they’re heavily down in skim milk powder (-20%), dry whey (-17%), and whole milk powder (-24%). Two key pieces that have led to the pullback are high stockpiles and COVID-19 lockdowns.

Following the onset of the pandemic and wanting to ensure adequate supplies on hand, China built up some impressive stocks, especially in skim milk power and dry whey. From mid-2020 through mid-2021, Chinese milk solids imports climbed 32% over the preceding 12 months. For the same time period, skim milk powder and dry whey imports rose 32% and 50%, respectively.

This high purchase volume outpaced demand and led to stock build up. These high stocks, coupled with then-high global prices, led China to pull back from the global market and instead work down its stockpiles. That largely kept Chinese purchasing depressed over the past year. Encouragingly, stocks are now approaching more normal levels, which supports China returning to the market, especially for skim milk powder and dry whey.

More COVID-19 lockdowns throughout China are also plaguing demand. While the rest of the world moves on from the pandemic and reverts to pre-COVID-19 life, China seems to be charging in the opposite direction. The zero-COVID policy in China has led to extreme measures in the country, with huge swaths of the population being locked down as the country continues its losing battle against the disease.

Earlier this year, Shanghai, the largest city in China with roughly 25 million residents, was put in lockdown for two consecutive months. Since then, lockdowns have only increased in number and severity, with some estimates as of late October stating there were more than 200 million people affected by lockdowns nationwide.

While many agree China relaxing its zero-COVID approach would be beneficial, rising cases in the country suggest that’s unlikely to occur. The country is facing the highest rate of new cases since the start of the pandemic, which means lockdowns and tough restrictions are only going to become more commonplace. That’s hitting dairy demand. Restaurants and the food service sector are hugely important to dairy consumption in China, but that consumption avenue is being restricted as consumers are increasingly unable to leave their homes. Until lockdowns and restrictions ease, Chinese dairy demand will continue to be challenged.

Source: USDEC, Our World in Data

Dairy is only one part of a Chinese economy that’s facing headwinds. A limited gross domestic product (GDP) growth outlook, a teetering real estate sector, and depressed, COVID-19-driven demand from lockdowns are creating a challenged economic outlook. The 2022 GDP forecast is estimated at 3.2%, which would make for one of the worst performances in nearly half a century; 2023 looks only slightly better, with forecast growth of around 4.4%.

Similarly, Chinese dairy demand in 2023 is likely to see similar sluggish growth. Despite the melancholy economic outlook and lockdown projections, Chinese imports in 2023 will likely be up, but not at substantial volumes, and certainly not same at the growth rate we saw in 2021. As stocks are depleted and domestically produced products (which are largely more expensive than imports) fail to meet demand, China will have to return to the global market. The biggest swing factor, though, remains COVID-19 lockdowns. If China doubles down on lockdowns, demand will likely continue to be depressed and imports will be challenged. Should they ease, China will certainly need product, and greater imports will follow — and that would be good news for U.S. exporters.

 

This column originally appeared in Hoard’s Dairyman Intel on Nov. 28, 2022.

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IDF World Dairy Summit a U.S. Dairy Opportunity

Posted on by Theresa Sweeney

The International Dairy Federation (IDF) World Dairy Summit brings unique opportunities for U.S. dairy as the host nation for the Chicago event, to be held next Oct. 16-19. The global conference returns to the United States for the first time in three decades, at a moment when rising exports and world-leading sustainability gives the U.S. industry a great story to tell, according to three leaders in organizing next year’s events.

“It’s a really exciting time for our industry, and we think that there’s a tremendous opportunity, a tremendous amount of potential that dairy, globally, has here,” said Shawna Morris, Senior Vice President for Trade at the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC). “Looking at how we tap into that together is what we’re focused on doing through the conference.”

“Bringing all of these folks to the United States creates an opportunity to get folks into facilities, to get them out to farms, to really show the rest of the global dairy industry what the U.S. dairy industry is all about,” said Nick Gardner, chairman of the U.S. International Dairy Federation, the Senior Vice President for Sustainability and Multilateral Affairs at USDEC, and with Morris the co-chair of next year’s summit.

“This is an excellent opportunity for the U.S. dairy industry to highlight its world leading dairy production from the farm through our cooperatives and processors and out to the consumers,” said Jamie Jonker, NMPF’s chief science officer and chair of IDF’s Science Program Coordinating Committee. “It’s a way for us to step on the world stage, reintroduce U.S. dairy, its innovation and technology to the global marketplace, and demonstrate how we are world leaders.”

Morris, Gardner and Jonker also discuss how the dairy community can get involved with supporting the event, already highlighted by platinum-level sponsor Dairy Management Inc., as planning for it is already in full swing. More in the summit can be found here. You can find the podcast on Apple Podcasts, Spotify, Google Podcasts and Amazon Music.

Happy Thanksgiving! There’s Plenty of Butter

Posted on by Theresa Sweeney

First, the bad news (for consumers): Heading into the holiday baking season, butter prices are, indeed at an all-time high. That’s for a few reasons. The biggest one is simple demand. Americans love butter, with the highest per capita consumption since the 1960s leading to the highest overall demand ever for the nation’s pre-eminent spread and ubiquitous baking ingredient. Overseas markets are also getting in on the act, with another record year for dairy trade possible in 2022.

Meanwhile, butter supplies haven’t, as of yet, been able to keep up with that demand enough to stabilize prices. That’s especially been the case in the past couple months, when retailers traditionally stock up in anticipation of the holidays. And of course, once you get past the actual cost of making butter itself and then add transportation, packaging, labor, and all the other the costs that are making everything else more expensive too, you have a recipe for record butter prices on the grocery shelf. And that’s making consumers (and media) notice.

But are higher prices the same thing as a “shortage”? We posit, not. Are store shelves empty? There’s always some one-off instances somewhere, but with those exceptions, no. Are crowds of consumers lining up for blocks outside local supermarkets to buy out rationed supplies, like early-COVID toilet paper? (Everyone stand six feet apart, please!) No again. And is anyone who wants to buy butter currently being deprived of anything other than $5 should they choose a four-pack, maybe a little extra if it’s extra-creamy European Style?!?? (And often less is you catch a good sale.)

That’s three strikes, and still, no one’s out of butter.

It’s easy to understand the concern: Butter is, after all, nature’s most perfect sandwich spread, the ingredient that makes a top-quality croissant worthy of a nasal-sounding French pronunciation. And even with all this, the underlying concern that’s fueled the “shortage” worries is itself showing signs of fading. Milk production is on the rise again, and with that, butter futures traded on commodities markets are declining. While some product prices rise and stay that way, butter goes up and down. Take a look at this chart — a dozen years of butter-price history that includes both the value of butterfat to a farmer (blue line) and the cost at the grocery store (orange line). See how they move together – and see where the blue line’s expected to go in 2023.

“What goes up, must come down” applies to butter. Production chases prices, and eventually higher production pushes prices down. That’s not always so great for farmers, by the way – and one nice thing for them about current pricing is that it’s helping farmers smooth out a challenging few years and rebuild the balance sheets they need to thrive. So be patient if you’re feeling sticker shock, and in the meantime, feel good that you’re helping a farmer.

But above all, don’t feel like you’re at risk of a butterless Christmas. The food chain, and the law of supply and demand, are ensuring that doesn’t happen. The holidays would be less happy without butter, but it just ain’t gonna happen. So Happy Thanksgiving. And here’s to, um, butter days ahead.