News for Dairy Co-Ops

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.

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.

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.”

NMPF and the U.S. Dairy Export Council (USDEC) submitted comments to the U.S. Trade Representative (USTR) on Oct. 28 in response to the agency’s request for more information on foreign obstacles to trade and investment for its annual National Trade Estimate (NTE) report.

Over the last several years, the U.S. dairy industry has been put at a disadvantage by a lack of ongoing free trade agreement (FTA) negotiations and uneven enforcement of existing agreements. This inaction especially hurts American producers at a time when global demand for dairy products is rising. Given the great importance of exports to the success of the industry, NMPF called for the Administration to negotiate new FTAs and otherwise expand market access for U.S. exporters.

The comments also summarized country-specific barriers that governments around the world are implementing to impede U.S. dairy exports. Those measures include traditional tariffs, the misuse of geographical indications and overly burdensome health and safety regulations that target dairy products. In total, the comments outline trade issues with 37 countries or regions, as well as concerns related to Codex, World Health Organization and World Trade Organization issues.

Through its work with industry partners, NMPF will continue to encourage Congress and the Biden Administration to stand up for U.S. dairy and negotiate trade deals that support American dairy farmers.

In a letter to lawmakers, NMPF on Nov. 17 urged support for increased domestic infant formula production as shortfalls that stripped store shelves of necessary infant formula have eased. Given the improved situation, tariff waivers that could discourage the production of a safe, secure domestic infant formula supply should be allowed to expire at end of this year as scheduled, NMPF said in the letter to the chairmen and ranking members of the Senate Finance Committee and House Ways and Means Committee.

“Given that the temporary production shortfall that gripped American families in need of formula earlier this year has abated, we urge Congress to ensure that the unique, unilateral tariff benefits granted to our trading partners under the Formula Act and the Bulk Infant Formula to Retail Shelves Act end as scheduled at the close of this year,” said NMPF Chairman and CEO Jim Mulhern in the letter. “We respectfully request your opposition to any effort to extend these preferential tariff benefits beyond the end of this year.”

A strong, diversely sourced domestic infant formula production industry ensures the highest quality, safest products while supporting rural jobs and domestic producers.

NMPF called on the U.S. Food and Drug Administration on Nov. 16 to use existing legal authority to modernize its regulations allowing for faster approval of animal-feed additives that reduce greenhouse gas (GHG) emissions, submitting comments to the agency highlighting the need for urgent action to enhance dairy’s role as a climate solution.

Published in 1998, the FDA requested comment on its “Policy and Procedures Manual 1240.3605, Regulating Animal Foods with Drug Claims” to evaluate how the policy could be updated to reflect evolving scientific knowledge and promote innovation.

NMPF in its comments urged FDA to modernize the policy, which will allow for pre-market approval for important feed additive products like those which reduce enteric methane. Enteric emissions directly from cows currently account for roughly one-third of all GHG emissions from dairy farms and present an important area of opportunity for methane reductions. While animal-feed additives are a promising path toward a net-zero future for dairy as outlined in industry goals, their pace of approval lags that of competitors such as the European Union due to current FDA processes. Modernizing the process and allowing feed additives to be treated as foods rather than as drugs, can help the United States maintain and advance its global leadership in sustainability. Embracing new practices and technologies are key to making America’s dairy farmers an environmental solution while providing wholesome and nutritious dairy products to the U.S. and the world.

The feed additive comments were one of several NMPF submitted to federal agencies in November, with others including:

• Comments to USDA Agricultural Marketing Service National Organic Program (USDA-AMS-NOP) on the proposed rule Organic Livestock and Poultry Standards, submitted Nov. 10 (USDA-AMS-NOP-21-0073-0001). USDA-AMS-NOP has proposed to amend the organic livestock and poultry production requirements by expanding and clarifying existing requirements covering livestock care and production practices and mammalian living conditions;and
• Comments to the USDA Animal and Plant Health Inspection Service, submitted Nov.7, on the new approach to indemnity value determination and a new framework for the indemnity regulations.

The National Dairy FARM program Oct 24. released Version 1 of the FARM Everyday Biosecurity manual, one of the key deliverables tied to 2020 National Animal Disease Preparedness and Response program funding to develop FARM Biosecurity. The manual focuses on everyday steps dairy farmers should take to protect herd and employee health. Taking a building block approach, the manual outlines key focus areas that include:

• Animal health and disease monitoring
• Animal movements and contact
• Animal products, vehicles and equipment
• Personnel, cleaning and disinfection; and
• Line of separation.

Operations just getting started in biosecurity should focus on animal movements and contact, animal health and disease monitoring and personnel, the FARM Biosecurity task force recommends. FARM Biosecurity is the newest pillar of the FARM program and participation is voluntary. In addition to everyday biosecurity mentioned above, enhanced biosecurity for the Secure Milk Supply Program  focuses on the steps that need to be taken in the event of a Foot and Mouth disease outbreak.

CWT member cooperatives secured 52 contracts in November, adding 6.2 million pounds of American-type cheeses, 348,000 pounds of whole milk powder and 1.2 million pounds of cream cheese to CWT-assisted sales in 2022. In milk equivalent, this is equal to 69 million pounds of milk on a milkfat basis. These products will go to customers in Asia, Central America, the Caribbean, Middle East-North Africa, Oceania and South America, and will be shipped from November through May 2023.

CWT-assisted 2022 dairy product sales contracts year-to-date total 92.1 million pounds of American-type cheese, 657,000 pounds of butter, 8.8 million pounds of cream cheese and 30.7 million pounds of whole milk powder. This brings the total milk equivalent for the year to 1.157 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.