CEO's Corner:
Embracing Change Brings Dairy’s Bright Future
November 7, 2022
Note: This column is adapted from NMPF President and CEO Jim Mulhern’s remarks at NMPF’s annual meeting, Oct. 25 in Denver.
This year is finally starting to feel like the new normal has arrived. The masks are fewer, offices are more full, consumers have returned to restaurants, and kids are back in schools. But in reality, we’ll never return to where we were, and the changes in our industry are impossible not to notice.
This year, we’ve enjoyed record prices. But we’re also experiencing record costs. Dairy exports are at an all-time high, even as supply chains are less reliable than any of us have ever experienced. We’re seeing unparalleled innovation that’s helping enhance our stewardship of land and our animals, but we’re also facing increasing pressure and skepticism from a public and, in some parts of the world, from governments toward how well we’re doing as an industry on these very things. The good news is for us, as all parts of agriculture face similar problems, these challenges play to our strengths. We in dairy have a proven track record of proactively moving and establishing ourselves as a leader in meeting these challenges head on.
That doesn’t just happen. It’s because of the leadership and the vision shown by the farmers, industry professionals and the entire U.S. dairy community. This leadership is only going to become more important in the next few years, as we see even greater pressure from consumers, from customers, and government to show progress on the issues they care about. It won’t be easy. But we know that we can do it, because of the incredibly strong base we’ve built over the last 15+ years of forward leaning engagement on sustainability and climate issues. These are global challenges. But because of our foresight and engagement, we’re in a much better position than our dairy colleagues around the world.
Recently, I was in The Netherlands attending a Global Dairy Platform conference along with several dairy leaders from across Europe, Asia, and New Zealand. I spent a lot of time talking to some of the large dairy players in the world, and what struck me most was the difference in how we’re all dealing with the same challenges. For some of our counterparts, there’s almost a sense of inevitability that dairy production and consumption will decline in the face of the environmental issues before us, almost a sense of resignation and acceptance that consumers were going to consider plant-based substitutes equal to milk, acceptance that dairy products would come from a lab, acceptance that government regulations limiting not just carbon or methane, but ammonia emissions and other environmental concerns. The best that could be done, they seemed to believe, was to manage the decline.
I talked to Dutch dairy farmers wondering if it’s their farm or their neighbor’s that will have to shut down as the country phases in binding limits on ammonia emissions. One farmer I talked with wondered whether it would be his farm or his neighbors – or several neighbors – that will go out of business in the next five, 10 years, because of these ammonia limits. Those same pressures are affecting dairy and all ag production throughout Europe.
In New Zealand, farmers took to the streets to protest a carbon tax that will hit dairy very hard. Nearly half of New Zealand’s greenhouse gas emissions come from agriculture. Of those, about 85% are methane emissions, much of it from dairy. That compares to about 10% of greenhouse gas emissions coming from agriculture here in the U.S., with less than 2% of total emissions from dairy. Across Europe and New Zealand, the future for dairy is being limited, and while dairy producers there are trying to play catch-up to deal with this new reality, my sense is, they don’t see a lot of options.
I don’t accept that as our industry’s future. But I do believe it’s a danger that could easily occur if we don’t keep pushing forward on our proactive efforts and do the right things. Our biggest ally is the consumer. As USDA just reported, per capita dairy consumption in this country is at the highest since 1959. That is an incredible endorsement of your hard work, and it’s come because in the U.S., some of the negative assumptions that consumers and regulators elsewhere have about dairy haven’t taken root.
But they will, if we don’t continue to prove every day, both in our accomplishments and in our actions, that dairy is part of a sustainable, innovative future of which we can all be proud. This important point is underscored in the findings in Purdue University’s Consumer Food Insights Report. Its most recent monthly survey of consumers showed the top six attributes that impact consumers’ food buying choices are, in order of importance, taste, nutrition, affordability, availability, environmental impact, social responsibility. Look at that list. Talk about a list of opportunities and challenges for dairy. It’s right there. Look at the first four. Taste, nutrition, affordability, availability. That’s what dairy is all about, and it’s why per capita consumption is at record levels of our lifetime.
Most people love and want to continue loving dairy. Our task, our goal is to make sure the consumers feel as good about dairy’s contributions on sustainability as they do about dairy’s taste and nutrition. That’s the effort we started over 15 years ago, a journey that created the FARM program and our Net Zero Initiative — our industry-wide sustainability commitments. We focused on this because we recognized the potential threat to us, but also because of the potential opportunity. We made the case effectively that the path of progress is through programs and efforts based on voluntary action and economic incentives for producers, not farm-killing government regulations that are limiting dairy elsewhere.
That’s kept us ahead of other parts of the world, and increasingly, it’s helping us build promising and important market opportunities. U.S. dairy this year is poised to ship a record percentage of our milk overseas. Even with that, we are still number three in the world behind the European Union and New Zealand, and I’ve talked about what they’re experiencing. Who will nourish the world? The U.S. has an incredible opportunity, but only if we don’t face the same limits as our competitors, and that’s only if, in this critical period before us, we pick up the pace on our proactive work to make sure the pitfalls that our competitors are facing don’t become forces that limit the good work we do.
That means taking the goals we’ve set for ourselves and turning them into tangible realities. We’re already forcefully rising to meet this challenge. USDA’s $2.8 billion funding for 70 projects under the Partnerships for Climate-Smart Commodities Initiative announced in September include four of our member cooperatives: CDI, DFA, Land O’Lakes, Maryland & Virginia Milk Producers led or partnered on specific projects that could receive up to $245 million in funding. Other dairy projects were funded as well. That’s leadership, and we’ll need more of it because regardless of which party is in office or who controls the levers of power at any individual moment.
Efforts like these have made us a leader within all of agriculture, and it’s the pathway we need to stay on. What we’ve received from both the Congress and USDA is a signal that if we continue to step up and lead, we will have the resources and the tools needed for success.
We have a great product, one that the world wants and needs. We can be, and I firmly believe will be, the world’s provider of choice. It is a great time to be in dairy, and it’s only a potentially troubling time if we fail to address the dangers ahead. I am very confident that we’re going to chart our way forward and not fall prey to the doom and gloom that paralyzes others. We’ll do it together, and we can all be proud to be part of it.
Thank you very much for the important part you play in this critical journey for our industry. As always, we’re headed toward brighter horizons.
President & CEO, National Milk Producers Federation
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