News for Dairy Co-Ops

U.S. dairy farmers are concerned about possible bad-faith actions from Canada even as the United States-Mexico-Canada Agreement (USMCA) agreement entered into force July 1, with Canada’s announced Tariff-Rate Quota (TRQ) allocations undermining the trade deal by thwarting the ability of the U.S. dairy industry to make full use of the trade agreement’s market-access opportunities and violating some of the treaty’s provisions on TRQs.

USMCA implementation caps years of hard-fought negotiations to break down trade barriers and institute fairer rules to improve the flow of U.S. dairy products throughout North America, and U.S. dairy farmers and cooperatives stand ready to increase deliveries of high-quality U.S. dairy products to Canada. The TRQ action undercuts the agreement by effectively limiting agreed-upon U.S. access.

“U.S. farmers will bear much of the brunt of this bad-faith approach by Canada to implementing USMCA’s dairy provisions.” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “Canada needs to change its course and abide by its commitments.”

NMPF has repeatedly warned that the full benefits of this carefully negotiated trade agreement will not materialize without careful monitoring and stringent enforcement of Canada’s commitments under USMCA. While not unexpected, Canada’s latest efforts to manipulate its agreed upon trade obligations to protect its tightly controlled dairy market are unacceptable.

NMPF has been in close contact with USTR and USDA to urge swift action towards a resolution that ensures Canada is held strictly responsible for abiding both by the letter and intent of USMCA.

The organization also has been in contact with lawmakers, most recently working with Congressional offices to spotlight Canada USMCA compliance concerns during Congressional oversight hearings and lending support to a letter sent by Senator Charles Schumer (D-NY), urging USTR to ensure that Canada live up to the commitments it made to the U.S. on dairy access, including on the negotiated TRQ allocations as well as the elimination of Classes 6 and 7, which created conditions for dumped Canadian exports.

The National Milk Producers Federation, the largest organization representing U.S. dairy farmers, applauded bipartisan momentum on legislation that will enhance the many conservation and environmental efforts dairy farmers are taking as they care for air, land, and water resources.

The Growing Climate Solutions Act, introduced in the Senate on June 4 and the House on June 26, highlighted increasing congressional attention to climate-change solutions in which dairy farmers would play a prominent role.

Jason Weller, vice-president of Truterra, LLC, the sustainability arm of Land O’Lakes, testified in a Senate Agriculture Committee hearing on June 24 in support of the bill. NMPF also submitted written testimony on behalf of Environmental Issues Committee Chair Mike McCloskey and President & CEO Jim Mulhern.

“To continue and enhance our efforts to combat climate change, the dairy industry is launching the Net Zero Initiative to reduce the industry’s climate impact to ‘net zero’ by as early as 2050,” McCloskey and Mulhern wrote in their testimony. “Carbon markets will play an important role in helping us to achieve our goal, making the Growing Climate Solutions Act a valuable addition to the legislative landscape in this regard.”

The Growing Climate Solutions Act’s Senate sponsors are Sens. Mike Braun (R-IN) and Debbie Stabenow (D-MI), while the House version was introduced by Reps. Abigail Spanberger (D-VA) and Don Bacon (R-NE). NMPF is pleased with the bill’s bipartisan support in both chambers, a crucial step toward reducing agricultural carbon emissions that aligns well with dairy’s goal to achieve carbon neutrality or better by 2050 through the industry’s Net Zero Initiative.

“We are grateful that so many members of Congress in both parties have recognized the important contributions dairy farmers make to conservation and sustainability,” said Mulhern. “We look forward to working to advance this and other proposals as Congress takes up environmental legislation.”

The Dairy Margin Coverage (DMC) program margin for May was $5.37 per cwt., the lowest since July 2013 and $0.65 per cwt. lower than the margin for April. Still, projections show that June’s margin may see the highest jump since 2000, with a strong recovery in prices that should buoy margins through the rest of the year.

The April to May drop in the DMC margin was due to an $0.80 per cwt. lower all-milk price, offset by a $0.15 per cwt. lower calculated feed cost. The May margin will generate a payment of $4.13 per cwt. that month for producers enrolled in the program this year at the $9.50 per cwt. margin coverage level and smaller payments for producers enrolled all the way down to $5.50 per cwt.

The current USDA forecast for the June margin is $10.86 per cwt., $5.49 per cwt. higher than the May margin and by far the largest one-month increase in the MPP/DMC margin since at least January 2000, the earliest margin data available.”

The USDA/FSA Decision Tool’s current forecast for the remainder of the year, shown below, indicates the margin will peak in July at almost $13 per cwt., then drop back toward $9.50 per cwt. during the remainder of the year.

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

NMPF continued its advocacy as the next edition of the Dietary Guidelines for Americans advances toward adoption, urging the Dietary Guidelines Advisory Committee (DGAC) in June to consider the full range of scientific studies on the role of different types of dairy fats in a healthy diet.

The guidelines, which shape USDA nutrition programs, are set every five years; draft guidance for this year’s update largely preserve recommendations that are positive for dairy.

NMPF President and CEO Jim Mulhern, along with Michael Dykes, president and CEO of the International Dairy Foods Association, sent the letter on June 15 to Dr. Barbara Schneeman, DGAC Chairperson, and the secretaries of the Departments of Agriculture and of Health and Human Services “to reiterate our strong view, as explained more fully in previous comments to the DGAC, that a body of science in recent years has found that dairy foods, regardless of fat level, appear to have either neutral or beneficial effects on chronic disease risks.”

The DGAC is approaching the reporting phase of its recommendations for the 2020-2025 Dietary Guidelines for Americans. Currently it does not appear to have explored the full breadth of peer-reviewed literature investigating dairy’s relationship to beneficial or neutral outcomes for cardiovascular disease, type 2 diabetes, and other conditions.

The NMPF-IDFA joint message calls on the committee “to complete its review by including all relevant scientific studies that bear on these questions and, if the findings so indicate, recommend Americans incorporate dairy foods in all forms as an integral part of all dietary patterns,” noting failure to examine the validity of existing dietary advice “will represent a lost opportunity to share newer science with consumers, health professionals and policy makers and contribute to ongoing confusion about the healthfulness of dairy.”

The committee is finalizing its draft conclusions, with a final report of recommendations to be released on or around July 15. The final 2020-2025 Dietary Guidelines are expected by the end of the year.

Final Meeting Positive for Dairy

At the committee’s last public meeting, held via webinar June 17, it discussed updated draft conclusions and the final report, going through each chapter of the Diet and Health Evidence section of the final report which will be organized by life stage.  The committee stated that a consistent dietary pattern associated with beneficial outcomes includes higher intake of vegetables, fruit, legumes, whole grains, low- or non-fat dairy, lean meat, seafood, nuts and unsaturated vegetable oil; low consumption of red and processed meats, sugar sweetened foods and drinks and  refined grains. Key takeaways for dairy include:

• Dairy is still recommended in all three healthy eating patterns;
• Low-fat and fat-free dairy are still recommended;
• The saturated fat recommendation remains at less than 10% of total energy per day; and
• Yogurt and cheese were recognized as complementary feeding options for infants 6-12 months, and dairy foods were included in the healthy eating patterns for toddlers 12-24 months

This is the first time that the committee has looked at the science and made recommendations for children birth to 24 months of age. The nutrients of public health concern for ages 2 and above are added sugars, calcium, dietary fiber, potassium, saturated fat, sodium, and vitamin D. Dairy, specifically milk, continues to be a key source of three of those nutrients. The committee also noted that a majority of Americans don’t follow the dietary guidelines and would benefit from shifting from current choices to healthy, nutrient-dense choices across food groups.  For example, the proportion of children consuming milk steadily declines with age. To crack down on added sugars, the committee also recommended changing the daily allowance from 10 percent to 6 percent of calories.

NMPF made significant strides in June in making the Paycheck Protection Program (PPP) work better for dairy, specifically in improving access for sole proprietor, independent contractor, and self-employed producers.

Created by the CARES Act in March, PPP is a loan program administered by the Small Business Administration designed to help small businesses continue to pay their employees as the nation navigates through the COVID-19 pandemic. Individuals who file a Schedule F tax form – sole proprietor, independent contractor, and self-employed farmers and ranchers – currently must use their farm net income as the amount representing owner compensation when applying for a PPP loan. This creates problems for producers who report a zero or negative net farm income on their taxes because PPP loan amounts are based on payroll expenses. NMPF recognized this as a potential problem when the guidance to use the net farm income figure was issued in April.

Progress on this issue included the June 9 introduction of the bipartisan Paycheck Protection for Producers Act, sponsored by Sens. John Thune (R-SD) and Tammy Baldwin (D-WI), and a companion House measure sponsored by Reps. Ron Kind (D-WI), Glenn ‘GT’ Thompson (R-PA), Anthony Brindisi (D-NY) and John Joyce (R-PA) introduced on June 11^th. The legislation would allow sole proprietor, independent contractor, or self-employed farmers and ranchers to use their 2019 gross farm income (capped at $100,000) to determine PPP loan amounts as opposed to the net farm income figure, which by definition is a smaller amount.

NMPF will continue to work with the bill’s sponsors to advance the measure in both chambers. This bill could potentially advance when Congress takes up broader COVID-19 relief legislation, which will likely include additional support for agriculture to build on the Coronavirus Food Assistance Program.

A new economic analysis released June 18 has found that the European Union’s government-financed intervention purchases of skim milk powder (SMP) in 2016-2019 caused serious damage to the U.S. dairy industry – an important concern given the EU’s capacity to revive usage of this program while dairy markets are still recovering from the coronavirus crisis.

The earlier intervention, which the analysis found suppressed an economic recovery in milk prices and allowed the EU to seize market share, cost U.S. dairy farmers $2.2 billion between 2018 and 2019, according to the analysis conducted by Kenneth Bailey, Ph.D. and Megan Mao, B.S., from Darigold, a wholly owned subsidiary of the Northwest Dairy Association based in Seattle.

“This report puts into hard numbers the bitter truth that U.S. dairy farmers already know: the EU’s dump of intervention stocks onto the world market depressed farm-gate milk prices in the U.S. in 2018 and 2019,” NMPF President and CEO Jim Mulhern said.

The report comes as the EU Intervention Program is reopening for purchases in response to sluggish demand. NMPF is working to ensure that the EU does not again use it to undermine the global dairy market.

“Now, as farmers and cooperatives are working tirelessly amid a global pandemic to keep an essential food ingredient moving to those markets that need it most, it’s time to do the advance work necessary to ensure we don’t see a repeat of those harmful impacts from EU Intervention policy in the future,” Mulhern said. “The EU SMP Intervention Program needs serious reforms and the Administration should examine the best tools at its disposal to help drive that needed change.”

NMPF recently worked with USDEC in leading a global coalition of dairy groups in a joint statement warning against the EU’s market-distorting practices.

The leading U.S. dairy groups, including NMPF, also sent a letter to the office of the United States Trade Representative (USTR) to call immediate attention to the need to investigate the EU’s SMP Intervention Program and prevent the dumping of EU-purchased SMP through any means available to the U.S. government.

In conjunction with National Dairy Month, NMPF in June launched a new “Sharing Our Story” page on its website highlighting its member dairy-farm families and offering a place where the latest and most compelling arguments on behalf of the dairy community can be found.

Leading the page is a revamped “Farmer Focus” feature, spotlighting the work of NMPF cooperative farmers from across the country. NMPF’s “Dairy Defined” thought-leadership series is also featured, dispelling myths about the industry and offering fact-based views on its current challenges through timely essays and a regular podcast. “CEO’s Corner,” a monthly column on the dairy policy environment from NMPF President and CEO Jim Mulhern, rounds out the page.

“Dairy has a compelling, and crucial, story to tell readers and listeners from farms and grocery aisles to Capitol Hill. It’s only fitting that we launch an effort to get the word out during National Dairy Month,” Mulhern said. “We hope visitors to Sharing Our Story will better understand all that dairy has to offer and be motivated to become an ally to the important work dairy farmers do every day.”

The new page is NMPF’s second significant web addition this year, following the establishment of its special page devoted to dairy’s response to coronavirus in March.

The management and development of the FARM Program database and evaluation app was transferred to NewInsights on June 1, one of several changes in the past month that will enhance FARM’s ability to serve the dairy community.

NewInsights is a customer-focused technology company with extensive dairy industry and IT experience that has the capacity to drive continuous improvement of the FARM technology suite. Having worked with organizations such as Land O’Lakes and John Deere for IT solutions, NewInsights was hired to improve the user experience and develop new features tailored to the unique needs of program participants and producers.

In addition to the NewInsights contract, FARM has hired ACER Consulting to jointly develop programming for 2020 virtual and slated in-person FARM-hosted evaluator training sessions. ACER Consulting brings a background in animal health and animal care quality assurance programs across the globe; it also has extensive experience developing animal science-based educational and training resources.

FARM continues to adapt evaluator training opportunities and expectations to remain precautious amid the current COVID-19 outbreak. Evaluators and program participants with questions regarding evaluator trainings should contact dairyfarm@nmpf.org.

New Guides, Stakeholder Summit

The FARM Program continues to produce relevant and timely resources and materials related to all its program areas for producers.

The 2020 Milk and Dairy Beef Drug Residue Prevention Reference Manual and accompanying pocket guide is now available in Spanish and English. Interested stakeholders can view and download the manual of the FARM website or purchase the manual or pocket guide in the FARM Store. Updated each year, the manual and accompanying pocket guide are convenient resources detailing which antibiotics and other drugs are approved for treatment of dairy animals.

The FARM Program and the Beef Quality Assurance Program  has also revised the previously named Top 10 Considerations when Culling Dairy Animals poster. The refined poster clarifies and adds additional context to what observations to conduct before loading and transporting dairy cattle. Available in Spanish and English, this resource can be downloaded or purchased on the FARM website.

FARM is also participating in two key virtual events being held in July. FARM staff will provide updates on the FARM Animal Care, Environmental Stewardship and Workforce Development program areas and examine other developments in related policy areas as part of NMPF’s upcoming Dairy Stakeholder Summit, July 8-9.

Additionally, the annual FARM evaluator conference will also be held virtually and at no cost to attendees. This event will take place on July 21-22. Session topics include media training, training development and intake discoveries at the beef processing plant. Evaluators, program managers can register here.

The new Waters of the United States rule, now known as the Navigable Waters Protection Rule, on June 22 took effect in 49 states. But even before the rule had taken effect, there were already several organizations and states bringing court cases against it.

One lawsuit was brought by 17 states in the Northern District of California requesting an injunction to block the rule from taking effect. In a win for the rule and for dairy farmers, this request was denied June 19. However, just hours later, a district court judge issued a preliminary injunction for only the state of Colorado, which the Department of Justice will now appeal. NMPF was pleased with the ruling in California; still, more lawsuits are expected, making it likely that a patchwork of different rules may develop, as has long been the case with navigable-waters rules.

NMPF has long battled to prevent and Water of the U.S. rule from overreaching and is pleased with the new Navigable Waters rule. The new rule establishes the scope of federal regulatory authority under the Clean Water Act, narrowing Federal jurisdiction. The Navigable Waters Protection Rule includes four simple categories of jurisdictional waters and provides specific exclusions for many water features that traditionally have not been regulated.

CWT assisted member cooperatives in securing 17 contracts to sell 1.014 million pounds of American-type cheeses, 1.543 million pounds of whole milk powder, and 672,410 pounds of cream cheese. The products will go to customers in Asia, and South America. The product will be shipped during the months of June through November 2020

These contracts bring the 2020 total of the CWT-assisted product sales contracts to 21.859 million pounds of cheese, 6.246 million pounds of butter, 18.450 million pounds of whole milk powder, 3.606 million pounds of cream cheese and 1.960 million pounds of anhydrous milkfat. These transactions will move the equivalent of 558.444 million pounds of milk on a milkfat basis overseas.

Exporting dairy products is critical during these challenging times 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, pasteurized process cheese, or whole milk powder, the 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.

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.