News for Dairy Co-Ops

Signup for the long-awaited Dairy Margin Coverage program began June 17, including a late change to DMC feed-cost calculations that will bring dairy farmers millions of dollars in additional aid and that NMPF had been quietly advocating with the White House and USDA for months. More than 5,000 dairy farmers signed up for the program in its first 10 days, according to USDA.

The 2018 Farm Bill created the DMC program, which replaces the Margin Protection Program for Dairy. The program protects dairy producers when the difference between the milk prices and feed costs (the margin) falls below a certain dollar level of coverage selected by the producer. The USDA’s decision to include the cost of high-quality alfalfa feed in the payment calculations, announced shortly before signup began, increases calculated feed costs and thus lowers margins, triggering higher payments to producers. The decision will be a boon for dairy farmers facing a fifth year of low prices.

“The DMC provides a stronger safety net for America’s dairy producers, one sorely needed as low prices, trade disturbances and chaotic weather patterns combine to create hardships,” said Jim Mulhern, president and CEO of the NMPF. “We have advocated for months that margin calculations must consider the higher feed costs dairy producers pay to properly nourish their livestock. USDA’s decision to include premium and supreme quality alfalfa feed is appropriate and is another win for dairy farmers that will provide additional, crucial aid.”

Producers may cover up to their first 5 million pounds of milk production history (equivalent to the production of a 215-cow dairy farm) at a margin of up to $9.50 per hundredweight. Payments under the program will be retroactive to January 1. Calculations already made for the first five months of the year show that producers signing up at the $9.50 level would receive payments for each month, with total payments far exceeding the already-set annual premium. All producers will be able to access this affordable coverage regardless of size, and larger producers will have access to significantly more affordable $5.00 catastrophic-type coverage.

As far back as the Farm Bill signing in December 2018, NMPF advocated for USDA to prioritize implementation of the dairy program given the prolonged distress producers have faced.  USDA heeded this call early on and members of Congress gave voice to it as well.  This spring, House Agriculture Committee Chairman Collin Peterson (D-MN) and Rep. Glenn ‘GT’ Thompson (R-PA) as well as Senate Agriculture Committee Ranking Member Debbie Stabenow (D-MI) and Senator Roy Blunt (R-MO) spearheaded bipartisan letters urging USDA to promptly finalize the DMC program in a farmer-friendly manner.

“We very much appreciate USDA Secretary Sonny Perdue sticking with the department’s pledge to make dairy a priority in Farm Bill implementation,” Mulhern said. “And we again want to express our appreciation to Congressional agriculture leaders who worked together on a bi-partisan basis to deliver these program improvements,” he said.

Dairy farmers have begun to receive letters in the mail from USDA’s Farm Service Agency to make them aware of their enrollment and coverage options under the DMC. NMPF looks forward to working closely with USDA to ensure that any remaining producer questions or concerns are addressed as the implementation process unfolds.

USDA’s announcement that it was modifying the feed-cost calculation for the DMC margins to reflect the cost of dairy-quality alfalfa hay has offered additional assistance for producers who sign up for the program.

Under USDA’s formula, the department will use the simple average of the U.S. average price received by farmers for all alfalfa hay and the average price received in the five largest milk-producing states for premium and supreme grade alfalfa hay. That’s a change from the previous Margin Protection Program, which used only the lower U.S. average price for all alfalfa hay. The change will increase the calculated DMC feed costs for the first five months of the year by an average of 21 cents per hundredweight of milk, which reduces the DMC margin by the corresponding amount. This will generate larger payments for program participants whose coverage level is high enough to trigger compensation.

The National Milk Producers Federation has long urged USDA to calculate the margins using the cost of higher quality alfalfa used in dairy feed rations and secured a provision in last year’s farm bill directing the department to collect and report the necessary data. In its announcement, USDA stated that the change would “provide a total feed cost that more closely aligns with hay rations used by many producers.”

The DMC margin for May is $9.00 per cwt, generating a payment for the month of 50 cents per cwt for producers who purchase coverage for 2019 at the DMC maximum level of $9.50 per cwt, for up to 5 million pounds of production history. May’s DMC margin was $0.18 per cwt higher than April’s, resulting from a $0.30 per cwt higher milk price and $0.12 per cwt higher feed cost.

USDA’s DMC Decision Tool, which assists producers in making their program enrollment decisions, has been updated to reflect the recent change to the feed cost calculation. As of June 28^th, the tool, which can be accessed online, was projecting margins that would generate payments that average $0.49 per cwt., net of estimated federal sequestration, for all of 2019 to producers who sign up for $9.50 per cwt coverage on up to 5 million pounds of production history. Coverage at this level costs $0.15 per cwt for the year.

The NMPF’s DMC information page on its website offers a variety of educational resources to help farmers make better use of the program.

The push to complete the U.S.–Mexico–Canada agreement (USMCA) received a boost in June when Mexico became the first country to ratify the trade agreement. Still, Washington has yet to take action, making collaboration key as NMPF works with other stakeholders to get the agreement over the finish line.

The U.S. Trade Representative’s Office is working with leading members of Congress to hash out a way forward, specifically focusing on concerns expressed by Democrats to guarantee sufficient Congressional support. Complementing that work, about 50 dairy farmers and dairy-cooperative staff took NMPF’s message in support of USMCA’s passage directly to Capitol Hill in June. Their on-the-ground advocacy was dovetailed with NMPF’s work to educate policymakers on the importance of this trade agreement to the dairy industry.

Also last month, NMPF joined forces with the U.S. Dairy Export Council and the International Dairy Foods Association to write to members of Congress from top dairy-producing states, asking them to “please pursue a USMCA vote without delay” on behalf of the dairy farms and businesses they represent.

“Solidifying and expanding trade opportunities abroad through USMCA will improve the prospects of dairy farms here at home,” said Jim Mulhern, president and CEO of NMPF. “In the midst of uncertainty surrounding our trade relationships and yet another year of meager milk prices, the United States lost an average of seven dairy farms a day in 2018. The passage of USMCA will instill a renewed sense of optimism in our dairy farmers.”

USMCA will help bolster the U.S. dairy industry by locking in existing access to our key export market in Mexico while increasing trade opportunities in Canada and establishing new trade rules to discipline Canada’s trade-distorting dairy policies, discourage unscientific barriers to trade and preserve the rights of common cheese name users. U.S. government estimates calculate that USMCA will increase U.S. dairy exports to Mexico and Canada by $277 million once it is fully implemented.

The National Milk Producers Federation commended Agriculture Secretary Sonny Perdue for taking action late in June to provide much-needed relief to farmers who have suffered from feed shortages this spring due to significant flooding and rain.

USDA’s Risk Management Agency announced that farmers who planted cover crops on prevented-plant acres will be able to hay, graze, and chop their fields as early as September 1 this year, as opposed to the usual November 1 date, to provide for enough forage for dairy and livestock operations later this year.  The Department is also allowing for silage to receive the same treatment this year as haying and grazing.

Feed availability is a critical issue for dairy farmers in many regions of the country, given volatile weather this spring that disrupted planting. NMPF has also endorsed the bipartisan Feed Emergency Enhancement During Disasters Act (H.R. 3183) introduced by Reps. Dusty Johnson (R-SD) and Angie Craig (D-MN), which takes similar steps to alleviate the feed challenges facing dairy farmers and others in agriculture. NMPF looks forward to additional work with Congress and USDA to address this challenge.

The House Appropriations Committee in June adopted a bipartisan amendment to its Fiscal Year 2020 Homeland Security Appropriations bill that takes a step in the right direction to address dairy’s unique workforce needs. The amendment, offered by Representatives Henry Cuellar (D-TX) and Dan Newhouse (R-WA), would permit dairy farmers and other farm employers to use the H-2A visa program to hire year-round workers, not just those who are doing temporary or seasonal work.

NMPF and its Immigration Task Force have worked carefully on this proposal, which Rep. Newhouse has offered in the past with support from Rep. Cuellar, so that dairy farmers can use the H-2A visa program to meet their labor needs for year-round workers.  Up to this point, the dairy industry has largely not been able to use the H-2A program because it is restricted to temporary and seasonal workers.

The full House is likely to consider the Homeland Security Appropriations measure later this summer, and the Senate will craft its own version of the bill.  NMPF looks forward to working to maintain the amendment in any final House-Senate negotiated measure to be sent to the president later this year.

NMPF also continues to work with members of Congress to build momentum for comprehensive ag labor legislation that meets dairy’s workforce needs by providing a pathway to legal status for current farm workers and creating a workable guest worker program on a permanent basis. The Cuellar-Newhouse amendment is an important foot in the door to meeting the needs of an industry that ‘harvests’ its product multiple times a day, every day.

NMPF fought back after the Organic Trade Association released a study done by Emory University on June 26 that supposedly found that 60 percent of 35 conventional milk samples that were tested had antibiotic residues – a study that came with head-scratching conclusions when compared to the wealth of research already available on the issue.

The antibiotics detected by the study, which was funded by The Organic Center, included sulfamethazine and sulfathiazole, which aren’t allowed for use in lactating dairy cattle. One sample also tested positive for amoxicillin levels higher than what is approved by the FDA. The conventional samples also tested positive for pesticides and growth hormones, while organic milk samples tested were found to have no pesticides, antibiotics or growth hormones.

Many questions were raised about the study immediately after its release, after lab experts began to analyze the methodology of the study including its size, the standards used for the testing, and the four-year lag period between sample collection and the published analysis. The research also conflicted with rich data found by the National Milk Drug Residue Monitoring Program conducted by the Food and Drug Administration (FDA). That report in 2018 found that out of the 60,000 milk samples tested for sulfonamide drugs, none of the samples tested positive. Over the past decade, sulfonamide antibiotics were present in only 99 samples of the 884,455 tested.

NMPF released a joint statement with the International Dairy Foods Association and the National Dairy Council restating the safety of milk and calling out the flaws in the study. The article, written for USA Today, was quickly amended to include a section on “reasons for skepticism” highlighting the potential flaws of this study. NMPF has requested a meeting with FDA to discuss next steps.

Karen Jordan, DVM Chair of the NMPF Animal Health and Wellbeing Committee and NMPF staff met with USDA APHIS Administrator Kevin Shae and other USDA animal health leadership June 13 to discuss important animal-health issues for U.S. dairy farmers.

Dr. Jordan spoke about the importance of industry-government collaboration on preparedness for foreign animal diseases such as Foot and Mouth Disease. She commented on the need for USDA to modernize the FMD Vaccine Bank. “While there is always the promise for better vaccines in the future, now is the time to build a best-in-class FMD Vaccine Bank with the new funding provided by the 2018 Farm Bill,” she said. Jordan also stressed the need to maintain and enhance the Secure Milk Supply and the FMD Bulk Tank Milk Test.

Stakeholders also discussed domestic cattle diseases during the meeting. USDA is revising and updating its Bovine Tuberculosis Eradication Program Standards to meet the reality of the disease today. Jordan complimented USDA for its monthly teleconferences with the dairy and beef sectors and identified improving TB diagnostics as a priority for advancing TB eradication. The caudal fold test has outlived its usefulness for Test and Remove Protocol for dairy herds affected by TB.

Finally, Jordan expressed the importance of trade to U.S. dairy farmers. “More than 15 percent of U.S. milk is exported around the world, and APHIS leadership is necessary to maintain and enhance market access for U.S. dairy farmers,” she said. The important work that USDA APHIS does with Codex Alimentarius, the World Organization for Animal Health, and animal health certification for export certificates is vital for this, she said.

The National Dairy Farmers Assuring Responsible Management Program has released two new manuals and other materials as part of its FARM Workforce Development program area.

The FARM Safety Reference Manual provides straightforward, relevant and useful information on workplace safety and health meant to help dairy owners and employees develop and implement a robust and practical safety program. The FARM Safety Reference Manual is a collaboration between the Idaho Dairymen’s Association, the Idaho Milk Processors Association, and National Milk Producers Federation.

The FARM Human Resources Reference Manual helps dairy farm owners, managers and other relevant staff develop an on-farm HR program. An effective HR program supports a positive and safe work environment that helps attract and retain a professional, high-quality, and engaged workforce. A downloaded, customizable set of HR templates and a sample Employee Handbook accompany the FARM HR Manual.  The manuals can be found here. Spanish-language versions of the manuals and templates will be available soon.

The National Dairy FARM Program launched its newest component last year, gathering expert and stakeholder input from the entire dairy value chain, including farmers, cooperative staff, academics, and other subject matter experts. This input ensures the Workforce Development materials are technically robust and relevant to today’s dairy industry.

With the manuals complete, the FARM Workforce Development Task Force met on April 8 to discuss future program priorities:

• Conduct a nationwide labor survey, implemented and analyzed by an academic institution. All data will be anonymous. The survey will provide robust, credible data to prove dairy’s labor story, especially in the face of misconceptions that exist outside of our industry.
• Develop additional resources to support dairy producers, such as training videos and a safety ‘road map’. A breakout session at the Dairy Sustainability Forum in early May provided additional ideas and direction for useful resources.
• Pilot an on-farm evaluation tool to help farms learn about HR and safety management best practices; identify which practices might be useful for their farm; and, track improvement over time. By performing on-farm evaluations, the industry can also provide important assurances to dairy customers, retailers, and brands.

FARM Workforce Development demonstrates that the U.S. dairy industry is proactive and passionate about providing safe and thriving work environments.

The Codex international food standards are meant to protect human health and establish fair trade practices by developing cohesive food safety standards for food and agricultural products. However, the mandate to base Codex international food standards on scientific fact may be up for debate in July.

The European Union and other countries are seeking to water down Codex’s scientific mandate and instead direct that nonscientific factors, such as consumer preference issues, be considered as Codex develops standards. This would have significant negative repercussions for the American dairy industry and its ability to challenge unscientific barriers to trade.

The Codex Executive Committee and Commission will meet at the beginning of this month to consider revising its procedures in light of EU pressure. NMPF is working with the U.S. Dairy Export Council to lead the charge against these changes and ensure that existing science-based Codex rules are enforced and followed to preserve a level playing field for U.S. exports. The outreach on this issue harnesses a united U.S. food and agricultural effort on this issue, including driving support for U.S positions at the meetings.

NMPF has joined with other leading U.S. agriculture groups to develop materials outlining this threat to share with policymakers and international stakeholders. Together with several of those groups and USDEC, NMPF staff met last month with USDA Undersecretary of Trade Ted McKinney and USTR Chief Agriculture Negotiator Gregg Doud to make the case as to why preserving the scientific structure of Codex is critical.

 CWT in June assisted member cooperatives in securing 51 contracts to sell 2.888 million pounds of American-type cheeses, 154,324 pounds of anhydrous milkfat, 257,941 pounds of butter, 5.407 million pounds of whole milk powder, and 566,588 pounds of cream cheese. The products will go to customers in Asia, Central America, the Middle East, Oceania and South America. The product will be shipped during the months of June through December 2019, to customers in 14 countries in five regions of the world.

These contracts bring the 2019 total of the CWT-assisted product sales contracts to 30.953 million pounds of cheese, 4.213 million pounds of butter, 35.640 million pounds of whole milk powder, 3.139 million pounds of cream cheese and 154,324 pounds of anhydrous milkfat. These transactions will move the equivalent of 669.376 million pounds of milk on a milkfat basis overseas.

Assisting CWT member cooperatives gain and maintain world market share through the Export Assistance program expands demand for U.S. dairy products and the U.S. farm milk that produces them. This helps all U.S. dairy farmers by strengthening and maintaining the value of dairy products that effect 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 Agricultural Technical Advisory Committees (ATAC) for trade are tasked with providing guidance and technical advice to the USTR and USDA on trade negotiations. NMPF is pleased to share the recent announcement that NMPF’s Jaime Castaneda has been reappointed to the ATAC for Animals and Animal Products, along with John Wilson of Dairy Farmers of America, an NMPF member cooperative.

Castaneda and Wilson will play a valuable role through their continued service on the ATAC and their expertise and first-hand knowledge of the dairy industry will help the USTR and USDA develop effective trade strategies and objectives.

The National Milk Producers Federation continues to bolster its staff, adding experts in regulation and trade.

Miquela Hanselman, who interned last winter with NMPF trade staff, has joined the organization full-time as a manager for regulatory affairs. In this role she assists NMPF in its dealings with the U.S. Food and Drug Administration, U.S. Department of Agriculture and the Environmental Protection Agency.  Specific topic areas include the National Council on Interstate Milk Shipments; food safety; raw milk legislation and regulation; labeling issues; nutrition policy, including the Dietary Guidelines for Americans, and environmental issues including air emissions. Hanselman grew up on a dairy farm in upstate New York and holds two degrees from Cornell University, a Master’s in Public Health earned this year and a Bachelor’s in Animal Sciences.

Tony Rice joins NMPF as our new Trade Policy Coordinator. In that role, he will work with NMPF’s Trade Policy team to advance the development, implementation and communication of NMPF’s work to support policies that promote U.S. dairy exports, to seek removal of policies that impede those exports and to address foreign barriers to U.S. dairy sales. NMPF does this work in concert with the U.S. Dairy Export Council. A native to Pennsylvania dairy, Rice is a former vice-president of the Pennsylvania FFA Association and this year earned a degree in Agricultural Business Management and Policy from Penn State University. He’s also interned at the White House and the Office of the U.S. Trade Representative.