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NMPF’s Bjerga on Dairy’s Continued Consumer Strength
Despite the disruptions of the pandemic era, consumer dairy sales keep climbing, even after the turbulence of 2020 is taken into account, NMPF Senior Vice President of Communications Alan Bjerga says in an interview with RFD-TV. Butter, cheese and yogurt sales are all over 2019 levels, and even though fluid milk declined, whole milk — in other words, milk that tastes like milk — increased.
Dairy Grows Through Family and Faith, CDI’s Vander Woude Says
Despite policy challenges, family-run dairies continue to grow and succeed through dedication and faith, California dairy farmer Simon Vander Woude, the chairman of California Dairies Inc., first vice-chair of NMPF and a member of its executive committee, says in an NMPF podcast released today.
“We begin every day acknowledging that what we have is not our own, it’s a gift from the Lord, and we have to be good stewards of the gifts that He’s blessed us with,” Vander Woude said. “We’ve been very blessed here.”
That stewardship is expressed in many ways, from caring for the environment to seeking new opportunities to serve consumers in the United States and worldwide, he said. Vander Woude, who testified before a congressional subcommittee last year on the need to expand global market access, said that while domestic consumers continue to want dairy products, overseas sales are the key to harnessing dairy’s growing productivity and international demand.“If 20 to 30 percent of our milk products are going overseas today and our domestic market is pretty stable, it’s growing at a smaller pace than what we can grow our milk markets,” said Vander Woude, who also sits on the board of the U.S. Dairy Export Council. “We need to continue to explore trade agreements with countries that will benefit the U.S. dairy industry.”
The full podcast is here. You can find and subscribe to the podcast on Apple Podcasts, Spotify, Google Podcasts and Amazon Music under the podcast name “Dairy Defined.” A transcript is also available here. Broadcast outlets may use the MP3 file. Please attribute information to NMPF.
Dairy Market Report – January 2022
Pandemic Market Volatility Assistance Program Payments Are on Their Way
Through the Pandemic Market Volatility Assistance Program (PMVAP), USDA will provide up to $350 million in pandemic assistance payments to dairy farmers early this year. This initiative will partially reimburse producers for unanticipated losses created during the COVID-19 pandemic when federal dairy food box purchases weighted heavily toward cheese, combined with a change to the Class I mover formula created the unintended consequence of significant financial losses.
Payments will reimburse qualified dairy farmers for 80 percent of the revenue difference per month on up to 5 million pounds of milk marketed and on fluid milk sales from July through December 2020. The payment rate will vary by region based on the actual losses on pooled milk related to price volatility. As part of the program, handlers also will provide virtual or in-person education to dairy farmers on the program and other dairy topics.
What are the eligibility requirements?
Producers who ship to handlers, including cooperatives, and are regulated under the Federal Milk Marketing Order (FMMO) system will be eligible for PMVAP reimbursements if their average Adjusted Gross Income (AGI) is less than $900,000 or if 75 percent of their AGI comes from farming and ranching activities.
How are payments calculated?
The amount of money from USDA due to a cooperative is determined by the volume of the cooperative’s milk regulated by the FMMO during July to December 2020. The monthly payment rate during that time is 80 percent of the difference between the previous and the current Class I price formulas. Because prices change every month and there are 11 FMMOs, USDA is using 66 different payment calculation rates to determine how much money is due to producers.
Many variables affect an individual producer’s actual payment. A program-wide, uniform producer payment rate is impossible because so many variables go into a producer’s payment. And significantly, eligible milk per producer or farm entity is limited to 5 million pounds of milk marketed, or 833,000 pounds per month during the period of July through December 2020. Milk produced beyond this cap is not eligible for payment. Other variables include:
- Total pounds of pooled milk
- Producer AGI eligibility
- Producer participation declination
- Applicable Order-specific monthly rate
- How a cooperative originally paid its producers
USDA is working closely with cooperatives and other handlers to determine producer payments based on the factors described above. In addition, USDA will verify that each handler made producer payments correctly.
How and when will money be distributed?
USDA is establishing individual agreements with cooperatives and other handlers, who are responsible for paying dairy farmers. Once a handler receives their PMVAP payment from USDA, they have 30 days to disburse monies to producers. USDA anticipates that eligible dairy farmers will receive PMVAP payments during the first quarter of 2022.
What’s next?
Significant issues remain with how payments are distributed, making additional funding necessary to close gaps in the program, which arose from the efforts of NMPF and its member cooperatives but fell short of what the organization advocated. Caps on the production amount covered by the program will limit assistance in ways that create inequitable outcomes among dairy producers. NMPF is engaged in efforts with Congress to remedy this shortfall. At the same time, NMPF is continuing discussions about the Class I mover to end the disproportionate risk borne by dairy farmers under the current formula that creates disorderly market conditions.
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NMPF’s Bjerga on Dairy Sales, Gruyere
NMPF Senior Vice President for Communications Alan Bjerga discusses positive trends in retail dairy sales, along with the broader implications of a recent court win for U.S. cheesemakers, on WEKZ radio. Grocery-store sales of cheese, butter, yogurt and other dairy products are up over pre-pandemic levels, as a consumer return to reliable, high-quality products during the pandemic takes deeper roots.
Dairy Defined: Despite Disruptions, Dairy Keeps Going, and Growing
Another year, another flavor of COVID-related disruptions, this time the Omicron variant that’s spreading rapidly and disrupting schools and workplaces. But it isn’t 2020 all over again – too many lessons learned, too much resilience has been built up to see a full return to the massive economic and social dislocations of the past.
That’s especially true in dairy, where, despite all the marketplace challenges, demand has only kept growing.
The data don’t lie: Per-capita dairy consumption in the U.S. has been growing and is at the highest levels since 1960. Exports in 2021 are on pace for a record. We already knew that. Now, with last year’s retail sales data available, we can see that 2020’s gains in grocery-store purchases weren’t just a rechanneling of lost school and restaurant business toward at-home consumption. By comparing 2021 with 2019, we can see that dairy’s gains are built to last, according to data from industry researcher IRI.
Cheese is up. Butter, up. Yogurt and sour cream, up. Fluid milk declined as consumers shift toward dairy in other forms, but even that category had bright spots. Because grocery-store milk prices have increased, actual fluid-milk revenues rose nearly $900 million over the past two years. That’s actually a bigger gain than plant-based beverages, which saw sales of their more-expensive products rise only $513 million.
And fluid’s decline wasn’t uniform across all categories: Whole milk consumption increased 0.5 percent over the past two years and is now well-established as the most popular variety of conventional milk, showing that fluid milk is more popular when it tastes more like milk.
The facts show it, once again: Dairy is alive, well and growing. The products dairy farmers and cooperatives labor to create every day are only increasing in importance to U.S. consumers, and even more so worldwide. The trend is so consistent that restating it is almost becoming tiring to say.
But it’s 2022. Being tired doesn’t mean you stop.
NMPF’s Bjerga on the State of Dairy Labeling
With a new FDA commissioner nearing confirmation, NMPF Senior Vice President for Communications Alan Bjerga discusses the state of dairy labeling in the U.S., on RFD-TV. Bjerga also talks about U.S. dairy’s recent win over the European Union on gruyere cheese, which a court ruled is a common name not subject to geographical indication trade restraints.
Dairy Defined Podcast: Price Forecast Positive for Dairy, NMPF’s Vitaliano Says
Dairy prices for 2022 are projected at an eight-year high, with supply adjustments and booming exports across a wide range of products shoring up farmer balance sheets that have struggled with volatility during the pandemic era, NMPF Chief Economist Peter Vitaliano says in an NMPF podcast released today.
Due to tight supplies “not only is the outlook for milk prices the best in eight years, but that’s also the case for the individual dairy products,” Vitaliano said. Peter Vitaliano. “The big question is, with milk prices this good and feed prices not going up as fast as they were last year, how long is that tightness going to continue? And how soon will it be before we see some expansion of milk production again?”
Vitaliano, who also writes NMPF’s monthly Dairy Market Report, also encouraged farmers to sign up for the Dairy Margin Coverage program, which has a deadline of Feb. 18 for 2022 assistance. “The futures markets look very good at the moment, but there are many months to go. The history of dairy farmers second-guessing the markets, even based on the futures, is not very good. And again, given how inexpensive coverage is, our recommendation continues to be you should sign up for the program.”
NMPF resources on the Dairy Margin Coverage Program can be found here.
The full podcast is here. You can find and subscribe to the podcast on Apple Podcasts, Spotify, Google Podcasts and Amazon Music under the podcast name “Dairy Defined.” A transcript is also available here. Broadcast outlets may use the MP3 file below. Please attribute information to NMPF.
NMPF’s Morris on U.S. Dairy’s Trade Win Over Canada
Shawna Morris, Senior Vice President for Trade with the National Milk Producers Federation and the U.S. Dairy Export Council, discusses U.S. dairy’s win over Canada in the first trade dispute ever brought before the USMCA’s dispute settlement panel on RFD-TV. The panel ruled against Canada in a case brought by the United States over its unfair allocation of quotas that limited U.S. dairy access to Canada agreed to as part of USMCA.
Judge Rules “Gruyere” is a Common Food Name and Not a Term Exclusive to Europe
A judicial ruling has determined that “gruyere” is a generic style of cheese that can come from anywhere. The decision reaffirms that all cheesemakers, not just those in France or Switzerland, can continue to create and market cheese under this common name.
In the judicial decision made public yesterday evening, the Consortium for Common Food Names (CCFN), U.S. Dairy Export Council (USDEC), National Milk Producers Federation (NMPF), and a coalition of other dairy stakeholders prevailed in their sustained fight to preserve the ability of all actors in the U.S. marketplace to use generic terms.
Senior Judge T. S. Ellis III of the United States District Court for the Eastern District of Virginia upheld the August 5, 2020, precedential decision of the U.S. Patent and Trademark Office’s (USPTO) Trademark Trial and Appeal Board.
“Not only is this a landmark victory for American dairy farmers and cheese producers who offer gruyere, this win sets a vital precedent in the much larger, ongoing battle over food names in the United States,” said Jaime Castaneda, executive director for CCFN. “The European Union has tried for years to monopolize common names such as gruyere, parmesan, bologna or chateau. This verdict validates that we’re on the right path in our fight on behalf of American food and wine producers to preserve their ability to use long-established generic names.”
According to the Court’s decision, the arguments of the French and Swiss associations were “insufficient and unconvincing” and CCFN presented “overwhelming evidence that cheese purchasers in the United States understand the term GRUYERE to be a generic term which refers to a type of cheese without restriction as to where that cheese is produced.”
Meanwhile, Europe continues its aggressive and predatory efforts to confiscate names that entered the public domain decades ago. The latest attack was launched by the French and Swiss gruyere associations which had sought to register “Gruyere” as a certification mark in the United States, thereby enabling them to prevent use of the generic term by others in the U.S. marketplace. The USPTO determined last year that the application should be denied, in the process upholding the widespread generic use in the U.S. of the term “gruyere.”
“French and Swiss gruyere producers already have access to the U.S. market and the use of distinctive trademark logos,” noted Castaneda. “In fact, the Swiss association has already registered a logo certification mark with the USPTO for ‘Le Gruyère Switzerland AOC’ to help it uniquely brand Swiss gruyere. Despite this, both foreign associations appealed the USPTO’s ruling to the federal court last year.”
With support from USDEC and NMPF, their member companies, and non-member companies that contributed to supporting the opposition, CCFN dedicated extensive time and resources throughout the appeal process to demonstrate the extensive use of gruyere in the U.S. marketplace and persuasively argue that all cheesemakers and their customers should retain their rights to continue to produce and sell gruyere in the United States.
“This is a huge victory for common sense and for hard-working manufacturers and dairy farmers,” said Krysta Harden, USDEC president and CEO. “When a word is used by multiple companies in multiple stores and restaurants every day for years, as gruyere has been, that word is generic, and no one owns the exclusive right to use it. We are gratified that Judge Ellis saw this straightforward situation so clearly and upheld the USPTO Trademark Trial and Appeal Board’s finding that gruyere is an established generic term.”
“NMPF continues to firmly oppose any attempt to monopolize generic names like gruyere and to reject blatant European market-share grabs designed to limit competition,” said Jim Mulhern, NMPF president and CEO. “Today’s announcement is a landmark win for American dairy farmers and the commonly named cheeses they produce and sell around the world.”
CCFN, USDEC, and NMPF support valid geographical indications (GIs) – compound names associated with specialized foods from regions throughout the world – when used in good faith rather than to establish unfair trade barriers to the sale of common name foods and beverages.
CWT-Assisted Dairy Export Sales for 2021 Reach Nearly 1.5 Billion Pounds
Despite not taking bids for two weeks during December breaks, CWT member cooperatives secured 41 contracts in December adding 3.5 million pounds of American-type cheeses, 105,000 pounds of butter, 44,000 pounds of whole milk powder, 767,000 pounds of cream cheese and 300,000 pounds of anhydrous milkfat to CWT-assisted sales in 2021. These products will go customers in the Caribbean, Asia, Middle East-North Africa and South America, and will be shipped from December 2021 through June 2022.
CWT-assisted dairy product sales contracts for 2021 total 53.1 million pounds of American-type cheese, 16 million pounds of butter, 6.4 million pounds of anhydrous milkfat, 12.2 million pounds of cream cheese and 45.1 million pounds of whole milk powder. This brings the total milk equivalent for the year to 1.447 billion pounds on a milkfat basis.
Exporting dairy products is critical to the viability of dairy farmers and their cooperatives across the country. Whether or not a cooperative is actively engaged in exporting cheese, butter, anhydrous milkfat, cream cheese, or whole milk powder, moving products into world markets is essential. CWT provides a means to move domestic dairy products to overseas markets by helping to overcome U.S. dairy’s trade disadvantages.
The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT will pay export assistance to the bidders only when export and delivery of the product is verified by the submission of the required documentation.
