News for Dairy Co-Ops

The National Milk Producers Federation welcomed California Dairies Inc., the second-largest U.S. dairy cooperative by volume, into its membership by unanimous vote during its June board meeting. The addition boosts the strength of dairy producers in speaking with a unified voice on national and international issues of concern to farmers.

“We are very pleased to have CDI join our already strong and active membership,” said Jim Mulhern, president and CEO of NMPF, which is the largest U.S. dairy-farmer organization, at the meeting in Arlington, VA on June 4. “CDI bolsters the nationwide reach and diversity of our organization and strengthens our ability as farmer-owned cooperatives to tackle a wide array of challenges in marketing, farm labor and trade, food safety, nutrition and product labeling.”

Visalia-based CDI produces 40 percent of California’s milk and about 8 percent of all milk in the U.S. Co-owned by more than 370 dairy producers who ship 16 billion pounds of milk annually, CDI makes high-quality butter, fluid milk products and milk powders. It produces two leading brands of butter – Challenge and Danish Creamery — and its products are available in all 50 states and more than 50 foreign countries.

“California Dairies, Inc. is excited to begin our membership with the National Milk Producers Federation as we work toward a stronger U.S. dairy industry,” said Simon Vander Woude, Chairman of the CDI Board of Directors.  “Both CDI and NMPF are active and respected organizations in Washington, DC, advocating on behalf of our respective memberships. However, we believe by combining our efforts, we can be an even stronger and more effective coalition, advocating pro-dairy policies that fundamentally strengthen our farmers and our industry.”

The three days of NMPF meetings from June 3-5 began with a day of training and activities for the organization’s Young Cooperators, who spent the next day meeting with lawmakers on Capitol Hill. Board members also spent two days discussing a number of dairy policy issues and hearing presentations from NMPF staff as well as NMPF Chairman Randy Mooney.

Looking at the state of the dairy economy and the turbulence of U.S. trade, Mooney noted that while an immediate relief from low prices and increased consolidation may not be imminent, dairy’s crucial role in feeding the U.S. and world continues.

“Last year was troubling, as U.S. dairy farms disappeared at almost double the rate of consolidation than we’ve seen over the past decade,” Mooney said. “But milk remains a fundamentally attractive product for a growing global population.”

The addition of California Dairies Inc. to the National Milk Producers Federation at its June board meeting was accompanied by an enlargement of the NMPF board and the creation of a new executive committee which will include CDI, the nation’s second-largest dairy cooperative by volume.

CDI will have five seats on an expanded board of 53 members. In addition, NMPF also created a 14-member executive committee to serve as a core leadership body, supplementing the work of its officers and board. The members of the executive committee, also approved at the June board meeting, include:

• Jay Bryant, Maryland & Virginia Milk Producers Cooperative Operation (Reston, VA)
• Beth Ford, Land O’Lakes Inc. (Arden Hills, MN)
• Tony Graves, Prairie Farms Dairy, Inc. (Edwardsville, IL)
• Mike McCloskey, Select Milk Producers Inc. (Dallas, TX)
• Randy Mooney, Dairy Farmers of America (Kansas City, KS)
• Keith Murfield, United Dairymen of Arizona (Tempe, AZ)
• Ken Nobis, Michigan Milk Producers Association (Novi, MI)
• Doug Nuttelman, DFA
• Leroy Plagerman, Northwest Dairy Association/Darigold (Seattle, WA)
• Neal Rea, Agri-Mark, Inc. (Andover, MA)
• David Scheevel, Foremost Farms USA (Baraboo, WI)
• Steve Schlangen, Associated Milk Producers Inc. (New Ulm, MN)
• Simon Vander Woude, California Dairies Inc.
• John Wilson, DFA

“The addition of the new executive committee will be helpful in gaining additional member input on often fast-developing policy issues, and it reflects the strong interest of our membership in united dairy community action,” said Randy Mooney, NMPF’s chairman and a dairy farmer from Rogersville, MO.

Dairy producers got a dose of much-needed good news in May when North American trading partners reached agreement to end a testy tariff dispute. The trade deal announced May 17 put an end to the Section 232 metal duties that the United States levied against Mexico and Canada last year. In return, Mexico and Canada agreed to end retaliatory tariffs against several U.S. products, including cheese and yogurt. Economists with Informa Agribusiness Consulting had estimated that Mexico’s retaliatory tariffs, left unchecked, would have cost dairy farmers nearly $1.2 billion in lost revenue by the end of 2019.

“Dairy farmers have much to celebrate, with the resumption of normal business with our largest export partner,” Jim Mulhern, president and CEO of the National Milk Producers Federation, said. Congress’s next step should be “to vote on USMCA and quickly ratify it,” he said.

Dairy quickly capitalized on the USMCA momentum, with NMPF joining with the U.S. Dairy Export Council and the International Dairy Foods Association to inform Congress in a letter sent June 10 endorsing swift USMCA approval. The next day NMPF joined with almost a thousand other food and agricultural organizations and companies, including many NMPF members, to send a unified message to the Hill urging movement on the trade agreement.

USMCA modernizes the North American Free Trade Agreement, maintains U.S. dairy sales into Mexico, expands dairy market access in Canada, and reforms many nontariff barriers to trade. Dairy sales to Mexico and Canada should grow by a total of $277 million once USMCA is fully implemented, according to U.S. government estimates.

Dairy exports to Mexico totaled $1.4 billion last year, or 80 percent of Mexico’s total imports, and are poised for further growth under the open trade conditions that USMCA solidifies. Negotiations of the trade deal were completed in November but requires congressional approval. NMPF and its partners at the U.S. Dairy Export Council have pushed for USMCA ratification through a series of Capitol Hill meetings, briefings, special events, and letters to lawmakers.

The importance of committing to solidifying dependable trading conditions with our biggest export market – Mexico – was driven home in early June as President Donald Trump threatened to impose escalating tariffs against all Mexican products in an unrelated dispute over immigration. Numerous groups, including NMPF, swiftly spoke out against the proposal, and late on June 7^th the White House announced it would not proceed with the tariffs.

In a statement issued the day after the President threatened to impose tariffs, NMPF President and CEO Jim Mulhern warned that “New tariffs against Mexico are unlikely to secure the border, but judging from reaction on Capitol Hill, they may very well jeopardize the chances of passing the USMCA, a key White House priority and one that’s crucial for future agricultural prosperity. Re-escalating trade tensions only harms farmers further, just when they were seeing glimmers of hope.” Over the course of the intervening week when the prospect of tariffs loomed, NMPF took the threat of upheaval to this critical market seriously, arming Young Cooperators meeting with dozens of Congressional offices with talking points urging maintenance of open trade with Mexico and joining onto a joint statement with others in the agriculture and business communities.

NMPF estimates that producers have lost at least $2.3 billion in revenues through March due to higher tariffs by Mexico and China against U.S. dairy, which have lowered milk prices for all producers.

U.S. negotiations with China faced a serious setback in May, pushing off the prospect of a resolution in long-running U.S. efforts to reform a myriad of Chinese policies that harm U.S. interests.

The new tariffs that took effect June 1 included hikes by China of tariffs on lactose and infant formula. Still, greater damage to dairy is coming from prolonging the standoff that’s deeply damaged U.S. dairy exports to one of the world’s largest dairy markets, crimping U.S. sales while competitors take advantage of the impasse.

Tariffs erected in 2018 have proven to be a catastrophic blow for the U.S. dairy industry in its third-biggest overseas market. China’s dairy imports grew by 13 percent in the first quarter of 2019 compared to the same period last year; over the same period U.S. dairy exports fell by more than 40 percent, reversing the 10 percent annual growth the U.S. had seen in the Chinese over the past decade. Resulting losses in U.S. dairy farm revenues may reach $4.8 billion by 2020.

USDA’s National Agricultural Statistics Service (NASS) has reported milk and feed prices that peg the April 2019 margin under the Dairy Margin Coverage (DMC) program at $8.96 per cwt, which would generate a payment that month of $0.54 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. All four months announced so far this year will generate DMC payments at the maximum coverage level, with program signup set to begin June 17.

The DMC margin for April was just $0.11 per cwt higher than the March margin. The April milk price was $0.20 per cwt higher than a month earlier, and the DMC feed cost was up $0.09 per cwt from March. A sharp rise in the price of alfalfa hay from March to April more than offset slightly lower prices for corn and soybean meal.

As of June 5, USDA’s DMC Decision Tool, which can be accessed online, projected margins that would generate payments that average $0.45 per cwt., which is net payment to farmers after estimated 6.5 percent cut to payments because of government 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. This would return $0.30 per cwt. after payment of the $0.15 per cwt premium for coverage at this level.

USDA has announced that signups for the 2019 DMC will begin on June 17.

The new Dairy Margin Coverage Program page on the NMPF website offers a variety of educational resources to help farmers make better use of the program.

NMPF celebrated a successful milestone in a more than two-year effort on June 5, when the Environmental Protection Agency issued a final rule that codified its earlier interpretation that air emissions from manure are not reportable under the Emergency Planning and Community Right-To-Know Act.

The action successfully concludes a battle in which NMPF was involved at every step.

“We are pleased with the outcome of EPA’s painstaking efforts,” said Jim Mulhern, NMPF president and CEO. “This final rule codifies what’s been the right thing to do all along.”

The Emergency Planning and Community Right-to-Know Act (EPCRA) of 1986 was created to help communities plan for chemical emergencies and requires industry to report on the storage, use and release of hazardous substances to federal, state, and local governments. The extent to which agricultural operations needed to be included has been controversial, with the EPA moving toward fewer burdensome requirements for farmers.

NMPF had been engaged with the effort to codify the manure exemption since April 2017, filing comments as recently as last December supporting EPA’s efforts last fall to modify its regulations to eliminate the reporting of ammonia or hydrogen sulfide air emissions from manure.

EPA had concluded in Oct. 2017 that air emissions from manure did not need to be reported under EPCRA while signaling it would explain its thinking on the issue through rulemaking. EPA’s assessment largely was based on the conclusion that the air emissions were a result of “routine agricultural operations” exempt from EPCRA reporting.

EPA’s final actions with EPCRA is consistent with Congress’ recent action to exempt manure emissions reporting requirements under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).  NMPF supported that approach and noted that EPCRA’s legislative history showed that Congress did not intend for continuous air emissions reports to be filed under EPCRA if they were not required under CERCLA.

NMPF has noted in its support for EPA that the emergency response community has said it doesn’t need these reports and that they impede their emergency response function.

NMPF is strongly supporting the bipartisan School Milk Nutrition Act of 2019, which would codify into law current milk varieties that schools may offer and reaffirm the longstanding requirements that milk served in schools be fully consistent with the most recent version of the Dietary Guidelines for Americans.

The measure was introduced in the House by Representatives on June 5 by Reps. Joe Courtney (D-CT) and Glenn ‘GT’ Thompson (R-PA), both senior members of the House Education & Labor Committee, the panel that oversees school nutrition programs.  The bill has more than 25 bipartisan cosponsors, including committee members in both parties.

According to the U.S. Departments of Agriculture and Health and Human Services, American children and adolescents over four years old are not consuming enough dairy to meet the Dietary Guidelines for Americans recommendations. Milk also provides numerous additional health benefits, including stronger and healthier bones, lower blood pressure, and reduced risk of cardiovascular disease.

The bipartisan legislation does not expand the varieties of milk that may be offered in schools but codifies current options into law to provide certainty to schools and school districts and ensure that future generations of milk drinkers are introduced early on to healthy, nutritious dairy products that they will want to drink.

Milk is the leading food source of nine essential nutrients in children’s diets, including calcium, vitamin D, and potassium.  A survey of over 300 schools that offered low-fat flavored milk during the 2017-18 school year found that 58% of schools saw an increase in milk sold, and 82% of schools found it easy or very easy to include low-fat flavored milk within their overall calorie maximums.

NMPF looks forward to working with Reps. Courtney and Thompson to work to include this measure in the upcoming child nutrition reauthorization legislation, which Congress is expected to act upon this session.

The House Appropriations Committee’s Fiscal Year 2020 Agriculture-FDA Appropriations measure that passed out of committee in May included multiple items of importance to NMPF.

The bill’s accompanying report included bipartisan language urging the Food and Drug Administration (FDA) to continue with its review of dairy standards of identity so that dairy standards are ultimately enforced.  The language gives voice to ongoing concerns that plant-based imitators continue to misuse dairy’s good name on products that are not nutritionally equivalent to milk, cheese, yogurt, butter and other healthy dairy products.

Following related language in the Fiscal Year 2018 Appropriations measure urging FDA to act on this critical issue, the agency indeed began a regulatory process to receive public comments and determine how standards would be enforced.  NMPF applauds the House Appropriations Committee for making clear congressional intent that it’s time for FDA to follow the law and enforce dairy standards of identity.

The measure also provides $10 million in discretionary funding for the Farm and Ranch Stress Assistance Network, an NMPF-backed program authorized in the 2018 Farm Bill to provide grants to extension services and nonprofit organizations to assist producers who are facing greater stress due to the continued downturn in the farm economy.

Finally, the bill makes no cuts to critical conservation programs, which help dairy producers to access technical and financial assistance to carry out multiple conservation practices on their land and water.

The House and Senate are working to reach an overall budget agreement to allow the 2020 Appropriations process to reach a bipartisan conclusion.  NMPF will work with Congress to preserve these important provisions in any final measure.

NMPF sought to highlight the deep imbalance in U.S.-EU dairy trade by supporting the U.S. Trade Representative’s proposal to impose retaliatory tariffs on European dairy imports if Europe continues to flout its WTO subsidy commitments.

Europe has been found to have doled out unfair aircraft subsidies to Airbus by a World Trade Organization court, with damages to U.S. business of $11 billion, according to U.S. estimates. The WTO is assessing the size of the retaliatory tariffs it is willing to authorize the U.S. to levy against EU exports should the EU not comply with the WTO ruling. USTR anticipates a decision this summer.

European dairy products feature prominently on USTR’s intended retaliation list, a smart move according to National Milk Producers Federation President and CEO Jim Mulhern.

“We have a unique opportunity to make a big dent in the dairy market access gap we face with Europe,” Mulhern told USTR during testimony on May 15. “Including EU cheeses, yogurt, and butter on this list, as USTR has proposed, is entirely warranted, and we would encourage you to add additional EU dairy-related tariff lines,” he said. Doing so “would bring increased attention to the gross inequities that currently define our dairy trading relationship.”

The United States is currently running a $1.6 billion dairy trade deficit with Europe. A complex web of EU tariffs and nontariff obstacles, including Geographic Indication restrictions, are largely to blame.

“It is essential that America deliver a clear and powerful message across the pond,” Mulhern concluded. “Subsidies and barriers that handicap U.S. businesses in the global marketplace will not be tolerated. And the days of trade deficits induced by unfair trade practices are coming to an end.”

The 38 contracts Cooperatives Working Together member cooperatives secured in May added 1.9 million pounds of American-type cheeses, 654,773 pounds of butter, 632,727 pounds of cream cheese, and 6.8 million pounds of whole milk powder to CWT-assisted sales in 2018 bringing total milk equivalent for the year to 604 million pounds on a milkfat basis.

These products will go customers in Asia, Central and South America, the Middle East, and North Africa. The product will be shipped May through September.

CWT-assisted 2019 dairy product sales contracts total 26.1 million pounds of cheese, 4.6 million pounds of butter, 2.6 million pounds of cream cheese and 30.2 million pounds of whole milk powder. All this product is scheduled to ship in the first nine month of 2019.

A thriving dairy export sector is critical to the growth and 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 growth potential in world markets is greater that domestic sales. 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.

The 2019 National Dairy FARM Evaluator Conference will be held in Denver on July 23-24^th, with optional industry tours on July 25th.

The Evaluator Conference is an annual opportunity for evaluator networking across the country and professional development. This year’s conference attendees will hear from industry experts, leaders and dairy customers about on-farm social responsibility and quality assurance measures including the dairy workforce, environmental stewardship and animal care. New to the conference is a consumer panel focused on dairy buying habits and concerns.

The FARM Town Hall will give attendees the opportunity to discuss program updates, implementation questions and concerns with FARM Staff including the new Animal Care 4.0 standards and a discussion with FARM’s third-party verifier, FSNS. Additionally, attendees will have the opportunity to attend a Cargill beef plant tour or a Quail Ridge Dairy farm tour on July 25th.

To register or learn more info, visit: https://www.eventbrite.com/e/farm-evaluator-conference-tickets-60708982200