Dairy’s Certainties Help Guide the Industry
December 1, 2021
Note: This is an abridged version of NMPF President and CEO Jim Mulhern’s speech at the organization’s annual meeting on Nov. 16 in Las Vegas.
One of the greatest challenges dairy faces today is the incredible amount of uncertainty in the world we live in. We didn’t have to worry that much about supply chains or closed restaurants and schools just two years ago, but now they mean dollars and cents to our bottom lines. And as our industry grows larger, the dollars and cents involved only get bigger.
But along with the uncertainty, we’ve learned a lot as well. In some cases, we have perhaps even more certainty than we had two years ago.
The first, most basic certainty is this: People want our product because they love its taste, and they know they need it. In a year when store shelves were emptied of milk across the country, schools shuttered nationwide, restaurants closed and cheese prices hit records, U.S. dairy consumption increased three pounds per person last year — to the highest consumption level since 1960.
We also know from the past year that exports more than ever are not only dairy’s future, they’re dairy’s present. U.S. dairy farmers can serve these markets more sustainably than anyone else in the world, and other countries are increasingly recognizing that. So we know that customers here and overseas support us. But we also know a lot more than that.
NMPF is the voice of dairy farmers in our nation’s capital. We’re well positioned to meet the many challenges that lie ahead. Here are a few numbers that show what we’ve done and point at what needs to be done:
$6 billion. It’s a big number, but it’s the amount of federal aid we’ve been able to procure for the dairy industry as needed assistance during the pandemic.
And here’s an individual, farm-level number that in some ways best illustrates our efforts to make a challenging policy climate work for our members: $750,000. It reflects the extent to which the federal government committed important resources to help individual dairy farmers all across this country. It’s also six times larger than what USDA first announced as the payment limit for dairies and all of agriculture under the Coronavirus Food Assistance, or CFAP program. When USDA announced CFAP, it said there would be a payment limit of $125,000 per commodity or person. We knew that was too little to be meaningful for many farms, so we went to work, and we got the maximum raised to $750,000.
$400 million. That’s the money allocated for the new Dairy Donation Program, an effort we conceived and shepherded through the legislative process, working closely with our partners in the food bank community who provide food to folks in need every day. The Dairy Donation Program connects our nutritious products to the families who ask for dairy more than anything else from their local food banks. Again, we worked hand in glove with lawmakers from both parties to get this through.
$1 billion and counting. That’s what’s been paid out this year under the Dairy Margin Coverage Program. The program is fast, it’s market-responsive, and we’ve continued to work to improve it. Changes we helped make happen this year will give us more dedicated federal funding to work within the next farm bill as we seek further improvements for producers of all sizes.
But DMC is only part of a suite of programs we’ve made better. Dairy Revenue Protection, LGM Dairy — These programs worked better because the funding caps that hobbled past dairy risk management efforts were eliminated thanks to our work. We’re proud to have led those efforts.
One final number. $750 million. That’s the amount of money that due to the wild market gyrations of the pandemic we lost with that change in the Class I pricing formula made in the 2018 Farm Bill. The data is clear and so is the cause. When USDA began the pandemic food box purchases, they were heavily weighted toward cheese, creating disorderly markets.
We warned USDA this would happen, but we also knew that if there were no purchase program, many dairies would not survive. We can’t ignore the lessons learned from the unintended consequences of the government’s actions. The Class I mover needs to be fixed. The losses violated the spirit of our revenue-neutral agreement between farmers and processors that we’re working to make right. We’ve recovered $350 million of our losses. But as we all know, it’s not a complete win. We’ve been working with members of Congress since the announcement of this program, to try to get up to an additional $400 million, funding that beyond what we’ve already been able to achieve, that would cover the balance of the losses.
It’s still a work in progress. We will fight for every dollar we can to make every dairy receive its fair compensation. Beyond that, we also need to tackle thorny issues related to the Federal Milk Marketing Order system, which has gone two decades without a thorough re-examination. This won’t be easy, but as the only dairy organization with the depth and breadth of membership to lead the industry on this issue, we move forward with confidence.
Our work for the industry goes beyond numbers. When our producer community has a concern about a regulation, we respond. Our regulatory work ranges from policy improvements to serving as a resource for farms concerned about everything from water regulations to workplace safety rules.
And our work goes beyond Washington policy to our efforts to ensure that customers and consumers understand and trust our industry and our on-farm practices through our FARM Program. As the threat of climate change and the importance of sustainable food production become increasingly important, we’re guiding Washington’s priorities in ways that will help our dairy farmers be part of the solution. The Net Zero Initiative is a model, one that other agriculture sectors are starting to follow.
Dairy’s been blessed with great leadership from the farm to the boardroom, but it only works through collaboration, honest communication and good-faith awareness of each other’s needs. These are a few of the certainties we can share today. We have much to look forward to. It’s a tribute to the work we’ve done, and it shows that we have the strength we need to achieve what we need. Let’s keep harnessing that strength and move forward together.