News for Dairy Co-Ops

The National Milk Producers Federation on Jan. 11 called for changes to the so-called Class I fluid milk price mover to recover losses dairy producers have faced from the extreme price disruptions caused by the coronavirus pandemic, part of a suite of policies essential to advancing the well-being of dairy farmers and the entire industry in response to challenges brought to light by the COVID-19 pandemic.

“We are seeking consensus across the dairy industry for changes to the Class I mover that remedy economic damage to dairy farmers who have disproportionately suffered as a result of this pandemic,” said Jim Mulhern, President and CEO of NMPF, after a meeting of NMPF’s Executive Committee that discussed policy approaches. “The intent behind the current mover was a revenue-neutral solution to the concerns of fluid milk processors about hedging their price risk. With that balance severely upended due to the pandemic, a modified approach is necessary. We need a solution that provides more equity and balance between farmers and processors.”

The current Class I mover used to price fluid milk in federal milk marketing orders took effect in 2019. It applies a $0.74/cwt adjuster to the monthly average of Class III and IV prices. That replaced the previous Class I formula, which was based on either the Class III or IV price each month, whichever was higher – an approach that worked for farmers but made it more difficult for fluid milk handlers to hedge milk prices using the futures market. The 2019 change was intended to be revenue-neutral and was widely supported across dairy when it was implemented. But the significant gap between Class III and IV prices that has developed during the pandemic has exposed dairy farmers to asymmetrical losses not experienced by processors.

Dairy farmers may lose roughly $800 million in revenues under the current Class I mover, making its re-examination necessary.

The Executive Committee also supported a motion directing the organization to explore, with other industry stakeholders, updates to the pricing formula that better protect dairy producers. The committee also discussed other dairy-pricing improvements as part of an ongoing in-depth NMPF examination of important issues related to Federal Milk Marketing Orders. NMPF leadership directed staff to convene NMPF’s Cheese Pricing Task Force to further refine proposals involving both public and private sector organizations that could help address ongoing imbalances in the pricing of block and barrel cheese.

“These issues are challenging and complex, but also crucial to face if we are to best promote prosperity among dairy farmers, their cooperatives, and the entire industry,” Mulhern said.

The monthly margin under the Dairy Margin Coverage (DMC) program dropped by $3.09 per cwt in November to $8.78 per cwt in December, mostly driven by lower milk prices, generating payments to producers under the USDA’s flagship risk-management program.

The all-milk price declined by $2.80 per cwt for the month, mostly because of a substantially lower December cheese price. The DMC margin was further lowered by a $0.29 per cwt boost in the feed cost added to it. On a per hundredweight of milk basis, the higher feed cost consisted of cost increases of 19 cents, 7 cents and 3 cents for corn, soybean meal, and alfalfa hay, respectively.

The December margin will generate a payment of $0.72 per cwt for $9.50 per cwt coverage that month; for the year, average DMC payments were $0.73 per cwt per month.

Current futures prices indicate that the monthly all-milk price in 2021 won’t rise above the December level until late summer, while corn and soybean meal prices will remain above December levels at least that long. That means monthly DMC payments will remain above the 2020 average for many months to come.

NMPF in January joined with a large coalition of U.S. food and agricultural organizations in urging the Senate Finance Committee to confirm Katherine Tai as the new U.S. Trade Representative in light of her strong qualifications and familiarity with the core areas of USTR’s work that are so critical to U.S. food and agricultural exports. The Senate Finance Committee, which must approve her nomination, had not yet scheduled a date for that hearing as the month concluded.

Before Tai’s hearing but after her nomination, NMPF’s CEO Jim Mulhern had the opportunity to raise U.S. dairy farmers’ interests with Tai at a meeting she held with U.S. agriculture trade association CEOs. A summary of that meeting was issued by the Biden team. Mulhern underscored the importance of exports to America’s dairy sector and the need for both strong enforcement of existing details as well as new agreements to best support sales worldwide of the wide variety of products made with U.S. milk.

NMPF staff in January met with the USTR team tackling Canada’s administration of dairy Tariff-Rate Quotas (TRQs) while continuing Congressional outreach to ensure that the new administration and Congress continue the critical task of holding Canada accountable to its commitments under the U.S.-Mexico-Canada Agreement.

After sustained engagement from NMPF and USDEC, the USTR announced Dec. 9 it would initiate official consultations with Canada on its failure to fully implement provisions of USMCA dairy tariff rate quotas. The consultations are the first official step to try to resolve unwarranted restrictions Canada is using to administer its dairy TRQs established by the new Agreement. As USTR noted in its announcement, Canada’s dairy TRQ allocation measures appear to violate several provisions of the USMCA, including its mechanism to set aside and reserve a portion of the quota to processors. USTR also stated that Canada is not providing “fair” and “equitable” procedures and methods for administering its TRQs.

Unless a mutually agreeable solution can be found with Canada through the consultation process, the next step in addressing Canada’s disregard for its USMCA commitments would be for the U.S. to initiate USMCA’s formal dispute settlement procedures.  A dispute settlement case could take a year or more to run its course, making it all the more important to proceed swiftly at this early stage.

The USTR decision came after months of groundwork by NMPF, working closely together with the U.S. Dairy Export Council, with both the administration and Congress. NMPF will continue its work, as further enforcement may be necessary to effectively address Canada’s unfair dairy policies.

NMPF and the U.S. Dairy Export Council kicked off a new initiative in January to equip a select group of dairy producers and cooperative/manufacturing staff with the tools necessary to enhance grassroots communication on dairy trade issues to policymakers and the media.

The Dairy Trade Envoys Class of 2021, the first of its kind, includes 28 dairy farmers and industry staff who will help educate federal and state government officials and the media on the importance of U.S. dairy exports and dairy’s stance on various trade policy issues. Undertaking in-depth seminars on the facts of dairy trade, key policy issues, barriers facing U.S. dairy exports, and communicating with the government and the media, the Envoys will expand dairy’s voice and inform sound government trade policies and programs that support U.S. dairy exports.

Jim Mulhern, president and CEO of NMPF, welcomed the Class of 2021 on Jan. 19, telling the the group it’s engaged in a “critical effort to create a chorus of voices across the country speaking in unison to provide a very strong message at every level” regarding the value of dairy exports and dairy’s needs in the trade policy sphere.

NMPF joined with USDEC to submit comments on Jan. 28 to the U.S. Trade Representative’s Office urging a more robust approach to preserving U.S. cheesemakers’ ability to export their products that rely on common cheese names such as parmesan, feta, asiago and others. The submission also voiced strong support for more detailed comments filed by the Consortium for Common Food Names. Both were filed in response to USTR’s call for input to inform its annual Special 301 Report on Intellectual Property issues that documents key IP challenges facing U.S. companies and what USTR is doing to address them.

NMPF noted in the comments that EU use of FTAs to erect barriers to competition “creates a deeply uneven playing field that makes it much more difficult to successfully export the products that American workers have created using milk from U.S. farms.” To address this, NMPF urged the Administration to “secure firm and explicit commitments assuring the future use of specific generic food and beverage terms targeted by or at risk of EU monopolization efforts” and noted that last year more than 160 Senators and Republicans had urged the pursuit of that policy.

USDA released on Jan. 12 the U.S. Agriculture Innovation Strategy Directional Vision for Research summary and dashboard that will help to guide future research decisions within USDA. The strategy synthesizes information USDA collected as part of the public engagement in 2020 on research priorities under the Agriculture Innovation Agenda.

NMPF, Newtrient LLC, and the Innovation Center for U.S. Dairy submitted a series of comments to USDA on their request for comments on the Ag Innovation Agenda. These wide-ranging comments helped USDA put forth a clear and comprehensive research strategy specific for the U.S. dairy industry under four aspirational goals:

• Production Aspirational Goal: Increase agricultural production by optimizing yield and/or quality with higher input use efficiency;
• Production Capability Aspirational Goal: Increase agricultural production capabilities of soil, water, and air by developing and implementing sustainable farming tools and practices;
• Market Expansion and Diversity Aspirational Goal: Increase market diversity and product utility of the farming system to expand value, reach, and resiliency; and
• Data Aspirational Goal: Standardize, align, and integrate agricultural research and operational data to enable and energize a broad informatics ecosystem to drive tomorrow’s agricultural operations and state and federal programs.

As part of its digital growth and engagement, the National Dairy FARM Program has developed a webpage tailored to the needs of dairy farmers. The page includes resources, FAQs, and farmer-specific details about each program area, and was designed as an evolving collection of everything a farmer may need regarding FARM.

Also, after a successful relaunch of the digital Farmer Focus series in 2020, FARM and NMPF will continue to profile farmers on a monthly basis through the coming year. In January, Josh Sauter from Cannon Falls, MN shared his secret to resilience and talked about how he and his family have managed challenges in the past, unpredictability in the present, and opportunities in the future.

FARM also saw increased attendance at virtual events and online engagements. More than 100 attendees participated in the most-attended Evaluator H Engagement Hour and during the bi-monthly Quick Convos, views peaked at 300.

Dr. Jamie Jonker, NMPF Vice President for Sustainability & Scientific Affairs, was appointed as an ex officio member to the USDA APHIS Veterinary Services’ National Animal Disease Preparedness and Response Program (NADPRP) Consultation Board in January.

NADPRP was established as part of the 2018 Farm Bill to provide funds to eligible entities to conduct high-value projects that will help prevent the introduction and spread of foreign and emerging animal diseases that threaten U.S. agriculture.

Its board includes 12 voting members and 4 ex officio non-voting members. The United States Animal Health Association (USAHA) coordinates the nomination of ten members, including three State Animal Health Official representatives, four industry representatives (one each from cattle, swine, poultry, and small ruminants), and three academic representatives. USDA’s Agricultural Research Service (ARS) will nominate one member, and APHIS’ tribal liaison will nominate one member to represent interests from tribal organizations. The 4 ex officio members are also nominated by USAHA to represent additional animal agricultural industries with interest in participating in NADPRP.

The NADPRP Board is charged with representing the interests of all eligible entities and supporting the program by:

• Developing and consulting with Veterinary Services on annual funding priorities;
• Nominating experts to review and rank proposals;
• Providing input on and approving the program’s annual spending plan; and
• Providing feedback to improve the program’s processes.

More information online at  NADPRP Website.

NMPF is now accepting applications for its National Dairy Leadership Scholarship Program for the 2021-2022 academic year.

Each year, NMPF awards scholarships to outstanding graduate students (enrolled in Master’s or Ph.D. programs) who are actively pursuing dairy-related fields of research that are of immediate interest to NMPF member cooperatives and the US dairy industry at large.

Graduate students pursuing research of direct benefit to milk marketing cooperatives and dairy producers are encouraged to apply (applicants do not need to be members of NMPF to qualify).  The top applicant will be awarded the Hintz Memorial Scholarship, created in 2005 in honor of the late Cass-Clay Creamery Board Chairman Murray Hintz who was instrumental in establishing NMPF’s scholarship program.

Recommended fields of study include but are not limited to Agriculture Communications and Journalism, Animal Health, Animal and/or Human Nutrition, Bovine Genetics, Dairy Products Processing, Dairy Science, Economics, Environmental Science, Food Science, Food Safety, Herd Management, and Marketing and Price Analysis.

Applications must be received no later than Friday, April 16, 2021.  For an application or more information, please visit the NMPF website or email scholarship@nmpf.org.

CWT assisted member cooperatives in securing 79 contracts resulting in sales of 3 million pounds of American-type cheeses, 3.3 million pounds of butter, 985,466 pounds of anhydrous milkfat (AMF), 3 million pounds of whole milk powder, and 2.4 pounds of cream cheese. The product is going to 56 customers in 15 countries in Asia, Central America, the Middle East, North Africa, Oceania and South America. The product will be shipped during the months of January through June 2021.

These transactions will move the equivalent of 170.2 million pounds of milk on a milkfat basis overseas.

Assisting CWT member cooperatives to gain and maintain world market share through the Export Assistance program, in the long-term expands the demand for U.S. dairy products and the U.S. farm milk that produces them. This, in turn, positively impacts all U.S. dairy farmers by strengthening and maintaining the value of dairy products that directly impact their milk price.

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.

All cooperatives and dairy farmers are encouraged to add their support to this important program. Membership forms are available at http://www.cwt.coop/membership.

The margin in January for the Dairy Margin Coverage program, the main federal dairy safety-net initiative, was $7.14 per cwt, down from $8.78 per cwt in December. That generated a payment of $2.36 per cwt for $9.50 per cwt coverage for January – which, by itself, was already more than enough to repay the full cost of signing up for the program at the maximum coverage level for the entire year.

The January all-milk price dropped another dollar from December to $17.50 per cwt. Meanwhile, the remaining $0.64 per cwt monthly drop in the margin was generated almost entirely by increases in corn and soybean meal costs. The one-month increase in the margin’s feed cost was the highest for the DMC as well as for its predecessor, the Margin Protection Program, which was initiated in 2014.

With current futures prices indicating that the all-milk price won’t rise above January’s level for several months and that corn will keep rising and soybean meal will not get much cheaper over the same period, the program is expected to generate substantial payments in 2021.

NMPF filed comments Feb. 22 urging FDA to withdraw a proposed traceability rule that identifies what foods are high-risk and would warrant additional recordkeeping requirements to improve their traceability.

FDA proposed that all cheeses other than hard cheese should be considered high-risk foods.  FDA’s risk-ranking model, under the proposal, would place “pasteurized cheese, other than hard” as the riskiest of all foods in the marketplace — even above cheese made from raw milk, a finding NMPF thought was absurd.

This questionable ranking was partly caused by FDA adding a new criterion to its risk ranking model beyond what Congress had instructed it to do in the Food Safety Modernization Act, landmark food-safety legislation that became law in 2011. FDA added consumption data to the model, which had the effect of increasing a food’s risk rating due to its popularity. NMPF stated in its comments that popularity and risk do not go hand-in-hand — nor can FDA override what Congress has directed.

The comments also took issue with the agency’s interpretation that cheese made with pasteurized milk is not a food that has been subjected to a kill step, and therefore that full recordkeeping provisions should apply. Food subjected to a kill step has significantly fewer recordkeeping requirements, according to the proposed rule.

This rule, if put into effect, would increase consumer confusion, as FDA has long told consumers to choose pasteurized cheeses over raw-milk cheeses based on food safety concerns.

NMPF reviewed comments filed by the International Dairy Foods Association and supported their filing in its comments.

NMPF staff, working together with the U.S. Dairy Export Council (USDEC), joined several agriculture organizations last month to press the Federal Maritime Commission to help address severe shipping-related challenges plaguing dairy and other U.S. agricultural sectors.

A shift in U.S. consumer preferences for stay-at-home goods has led to a surge in imports from Asia, driving up container demand around the Pacific Rim. Meanwhile, several agricultural exporters, including U.S. dairy, are struggling with cancelled shipments, exorbitant detention and demurrage charges, and broken contracts as shipping companies are moving containers and vessels quickly back to Asia. Freight costs are netting 20 to 30 times more from Asia to the U.S. than vice versa and carriers are restricting availability of containers to rural points of origin in the interior U.S., preferring coastal drop-off and pickup.

In multiple meetings with maritime commissioners in February, NMPF and other organizations representing agricultural exporters stressed the urgent need to step-up regulatory compliance on detention and demurrage guidelines issued last year and to explore ways to address the container shortage issues. Alongside these organizations, NMPF is pursuing congressional outreach to encourage tougher FMC enforcement while working with other sectors to evaluate the need for changes to legislation to better equip the FMC to deal with such issues.

The US International Trade Commission (ITC) unanimously voted Feb. 11 to reject import restrictions on blueberries from Mexico, Canada, Argentina, Chile and Peru, ending the threat of retaliatory tariffs against U.S. dairy exports.

In testimony before USTR in August, NMPF Senior Vice President Jaime Castaneda urged the commission to avoid putting U.S. dairy producers again in the crosshairs of a trade dispute with Mexico. Per U.S. census data, over $1.4 billion of U.S. dairy products were sold to Mexico in 2020 – a market that would be at risk if tariffs on blueberry imports from Mexico are imposed.

NMPF in December joined 34 other agriculture and food groups to write the US Trade Representative (USTR) opposing limitations on blueberry imports. This broader coalition effort also secured a bipartisan, bicameral Congressional letter from Senator Kyrsten Sinema (D-AZ) and Senator Jerry Moran (R-KS) arguing against action that would invite subsequent retaliation against U.S. agricultural exports.

NMPF, working in concert with USDEC, provided early warning to U.S. trade officials in February regarding brewing safeguard tariff and regulatory threats in two key U.S. Free Trade Agreement partners’ markets: Panama and Colombia. In discussions with USTR and USDA officials in February, NMPF and USDEC underscored the importance of preserving commitments made by each country through the free trade agreements in place with the U.S. for nearly a decade.

Sparked by growing protectionist sentiment among domestic dairy interests, the Colombian and Panamanian governments are faced with calls to apply tariff safeguards on imported cheese and milk powder from the U.S. In the case of Panama, government official have used safeguard tariffs on certain cheese and yogurt products since imports have reached levels that automatically trigger the permissible safeguards under the FTA. In the case of Colombia, local dairy producers are campaigning for safeguard tariffs to be levied on U.S. milk powder imports, a move that would upend U.S. access to its 10^th-largest export market. Additionally, each government is considering labeling and other regulatory changes aimed at making U.S. dairy imports more difficult.

As both countries consider protectionist measures, NMPF will continue to work with USDEC and the U.S. government to preserve access to these markets.

Sage Saffran joined the FARM team on Feb. 1 as its Sustainability Initiatives Coordinator, supporting FARM’s Environmental Stewardship and Workforce Development program areas.

Immediately prior to joining the FARM team she was the Public Policy Intern at the National Association of State Departments of Agriculture (NASDA) where she worked with leaders of agriculture across all 50 states and four U.S. territories on policy solutions. Saffran grew up in a small Connecticut town, with a dairy farm in her backyard. She is a recent graduate of the University of Connecticut with a B.S. in Animal Science and Applied Resource Economics.

Sage is an avid polo player and proud alumni of the UConn Polo Team. She enjoys rock climbing, hiking, and spending time outdoors.

Two training opportunities will be available to FARM WFD Program Participant evaluators in March and April.

FARM staff and ACER Consulting, FARM’s training provider, piloted the training with a group of FARM evaluators and subject matter experts in January. Feedback from the pilot was instrumental in refining the content and curriculum.   The trainings equip evaluators  to conduct WFD evaluations for Version 1.0 of the program. The first of these trainings will be held virtually  on March 10th and 11th. A second training session will be held April 14 and 15. The separate trainings are limited to 20 individuals per training. Interested FARM evaluators can register for the March training here and the April training here.

The launching of Version 1.0 of FARM WFD was one of many FARM achievements captured in the annual FARM Year in Review, released in February. The overview details the resources developed across all program areas anddetails how aspects of FARM were brought into a fully virtual environment. Events like the annual Evaluator Conference, monthly Evaluator Engagement Hours and the program’s Quick Convos series gave FARM staff the ability to connect with all stakeholders and provided relevant and sought-after information as 2020 presented unrivaled challenges in providing on-farm social responsibility assurances.

2020 also saw FARM Animal Care Version 4 go into effect supporting closer farmer-veterinarian relationships, requiring continuing education for all employees and adding a new standard for pain management when disbudding animals. FARM also launched Version 2 of the Environmental Stewardship program which includes updated crop emissions factors, a breakdown of greenhouse gas emissions by gas type, a metric on the use of nutrient management plans, and the ability to capture the benefits of solid-liquid separation, and solar and wind energy.

NMPF released Feb. 9 a dairy farmer’s guide to the COVID-19 vaccine rollout and expanded its natural disaster resource page to include information for preparing for and dealing with winter weather emergencies on a dairy farm, part of its commitment to providing timely and relevant information to its members.

Vaccinating essential workers, including the dairy workforce, is important because of their role in maintaining critical infrastructure operations and their increased risk of getting and spreading COVID-19. NMPF’s guide to the COVID-19 vaccine rollout compiles state-by-state vaccine information, tools for communicating with employees, and answers to frequently-asked-questions about the vaccine.

Later that month, widespread freezing temperatures and power outages from Winter Storm Uri prompted NMPF to update its natural disaster page with winter weather emergency resources for dairy farmers. The page includes information from trusted sources on preparing for emergencies and power outages, workforce safety and animal care during extreme winter weather.

Because emergencies and disasters can occur at any time and without warning regardless of where a farm is located, NMPF urges all dairy producers to consider developing or updating comprehensive Emergency Action Plans on their farms.

CWT assisted member cooperatives in securing 64 contracts with sales of 5.2 million pounds of American-type cheeses, 3.9 million pounds of butter, 3.5 million pounds of whole milk powder, 1 million pounds of anhydrous milkfat (AMF) and 1.2 pounds of cream cheese. The product is going to customers in Asia, Central and South America, Europe, the Middle East, North Africa and Oceania. The product will be shipped during the months of February through August 2021.

These transactions bring the 2021 total of the CWT-assisted product sales contracts to 8.117 million pounds of cheese, 7.277 million pounds of butter, 6.495 million pounds of whole milk powder, 2.013 million pounds of AMF, and 3.530 million pounds of cream cheese. These contracts will move the equivalent of 368.4 million pounds of milk on a milkfat basis overseas in 2021.

Assisting CWT member cooperatives to gain and maintain world market share through the Export Assistance program, in the long-term expands the demand for U.S. dairy products and the U.S. farm milk that produces them. This, in turn, positively impacts all U.S. dairy farmers by strengthening and maintaining the value of dairy products that directly impact their milk price.

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.

All cooperatives and dairy farmers are encouraged to add their support to this important program. Membership forms are available at www.cwt.coop/membership.