News for Dairy Co-Ops

Top policy-makers from Capitol Hill and USDA highlighted the March meeting of the NMPF Board of Directors as the organization’s leaders learned more about implementation of the new Dairy Margin Coverage program and discussed new initiatives in the Farmers Assuring Responsible Management (FARM) program and NMPF’s ongoing efforts to address labeling of fake dairy products.

Richard Fordyce, administrator of the U.S. Department of Agriculture’s Farm Service Agency, updated the Board on   farm-bill implementation on March 4, the first day of the two-day conference Fordyce said he was pleased that dairy programs were on a fast track to implementation while warning about some of the technical barriers to putting initiatives in place, including problems with past MPP record-keeping and the need to quickly create a high-quality decision tool to help farmers make the best decisions for their operations.

“FSA has done a good job of delivering customer service, and we’re going to get better at it,” he said. “Get in, understand the program, get farmers to understand it, not have a lot of glitches, that’s our priority and our goal,” he said, reiterating Agriculture Secretary Sonny Perdue’s promise the previous week to have DMC signup starting June 17, with the first payments to farmers under the new program starting by July 8.

House Agriculture Committee Chairman Collin Peterson (at left, speaking with AMPI chairman Steve Schlangen) spoke to the board at its Monday evening dinner. Praising the program, Peterson said “dairy needed the most help in this farm bill, and I’m pleased we were able to deliver.”

“I wanted to make sure that we had a program that worked, and this program should work for everyone,” including larger and smaller producers, he said. “We’re hoping that we have a good sign-up.”

Wide-ranging efforts

The board meeting featured presentations from NMPF staff on a wide range of issues in which the voice for dairy in Washington serves its members:

• Emily Yeiser-Stepp, senior director of the FARM program, outlined proposed updates to the FARM Animal Care, now in a public comment period, explaining how FARM will remain the leader in dairy-care standards. Nicole Ayache, sustainability director, updated the group on expansion of the FARM environmental stewardship program and FARM’s development of materials to assist members on workforce development issues;
• NMPF regulatory chief Clay Detlefsen detailed potential impacts for dairy farmers under a new proposed Waters of the U.S. rule, which NMPF has been reviewing to find opportunities to advance improvements. He also updated board members on the latest phase of the fight against various foods misappropriating dairy terms – the NMPF’s citizen petition outlining a course of action for the FDA to take in resolving the issue;
• Chief economist Peter Vitaliano gave an update on the dairy economy, forecasting a modest price recovery in the second half of the year;
• Jaime Castaneda, head of policy strategy, and government relations head Paul Bleiberg, , discussed NMPF’s work with USDA on farm-bill implementation and current Capitol Hill challenges, including immigration reform and infrastructure legislation;
• Shawna Morris, vice president for trade, gave an update on trade talks and turmoil, along with an analysis of the prospects for the U.S.-Mexico-Canada Agreement before Congress; and
• Jamie Jonker, vice president for sustainability and scientific affairs, discussed antibiotic and animal health issues.

“It’s a great honor to lead this staff,” NMPF President and CEO Jim Mulhern said in his introductory remarks. “As you will hear in these reports, on issue after issue, their depth of knowledge and the dedication they bring is unparalleled here in Washington.”

USDA Secretary Sonny Perdue’s Feb. 26 announcement of a June 17 signup start for the new Dairy Margin Coverage program has galvanized NMPF efforts to aid members in understanding the new plan as farmers begin to decide how to best incorporate much-needed – and much-improved — assistance into business planning.

In hearings before the House and Senate agriculture committees, Secretary Perdue set the following key dates for dairy-program implementation:

• March 18 – Producers locked out of the Margin Protection Program last year because they were already enrolled in Livestock Gross Margin-Dairy policies may begin to retroactively enroll in Margin Protection Program coverage for 2018, pursuant to the program as modified last year by the Bipartisan Budget Act.
• April 15 – Producers will have access to an updated online decision tool to help evaluate their options under the new Dairy Margin Coverage Program, the successor to the Margin Protection Program.
• April 30 – Producers will be able to receive to partial refunds of Margin Protection Program premiums pursuant to a farm-bill provision allowing the payback.  Secretary Perdue noted that this provision is happening later than hoped; for the first two years of MPP, producer premium and payment information was recorded by hand rather than electronically, thus creating a need to first re-enter that information electronically.
• June 17 – DMC signup scheduled to begin.
• July 8 –DMC payments scheduled to begin, retroactive to Jan. 1.

Perdue and top USDA officials, at NMPF’s urging, have prioritized DMC implementation as part of the farm bill – and indeed, dairy signups rules will be in place before those of crop programs such as the ARC and PLC programs.

NMPF is also engaging key government leaders who have oversight over the process. When the government shutdown ended in late January, NMPF sent a letter to Secretary Perdue urging USDA to quickly open DMC sign-up while allowing producers adequate time for decisions. NMPF also asked the department to conduct aggressive outreach to producers across the country, using multiple mediums to target not only those who had signed up for the previous program, but also those who had not.

NMPF Outlines Dairy-Program Priorities

Those efforts complement NMPF’s own efforts, which include a farm bill resources page on its website and presentations on the importance of the program before producer groups and farm organizations.

NMPF is urging USDA to implement the DMC in a responsive, farmer-friendly manner. This includes:

• Providing producers with their net premium refunds under the old Margin Protection Program in advance of the DMC sign-up, which will be important in many cases to producers’ sign-up decisions for the future.
• Showing significant flexibility to producers who have made changes to their production history due to changes in the structure of their operations, especially due to intergenerational farm transfers or cases where farmers have exited the business and later reconstituted as new entities.
• Allowing producers to pay their premiums in installments, whether they select annual enrollment or the five-year enrollment option.
• Allocating funding to updating the decision tool and other related producer education efforts.
• Incorporating high-quality alfalfa hay costs now required of the National Agricultural Statistics Service into the DMC feed cost formula to ensure that the formula more accurately reflects producer costs.
• Urging USDA to ensure that the Farm Service Agency, which runs DMC, and the Risk Management Agency, which runs the Livestock Gross Margin and Dairy-Revenue Protection programs, are fully coordinated and informed on this point so that producers do not face any hurdles in signing up for both programs – an option now available under the new farm bill — should they choose to.

NMPF looks forward to continuing close engagement with USDA and Congress to ensure prompt, effective implementation of the much-improved dairy safety net and risk-management options.

The National Milk Producers Federation opened the next phase of the battle against fake milk on Feb. 21, submitting a citizen petition to the U.S. Food and Drug Administration outlining a road map for the agency as it considers more than 14,000 comments on what to do about milk imposters that are attempting to flood the marketplace.

The petition argues that the use of standardized dairy terms such as “milk,” “yogurt,” “cheese,” “ice cream” and “butter” in the statements of identity for non-dairy plant-based substitutes “falsely implies that the non-dairy substitutes are equivalent to and interchangeable with standardized dairy foods.” They also fail “to disclose the material facts concerning how these non-dairy substitutes differ from standardized dairy foods or adequately distinguish non-dairy substitutes derived from different plant sources,” according to the petition.

“The FDA comment docket gave us the chance to explain why there is a compelling need to resolve this labeling issue to address consumer confusion over nutritional content,” said National Milk Producers Federation Executive Vice President Tom Balmer. “This petition lays out a constructive solution to the false and misleading labeling practices existing in the marketplace today, and provides clear, truthful and understandable labeling options for marketers of plant-based imitation dairy products.”

The NMPF petition notes that any manufacturer not wishing to use modifiers such as “imitation,” “substitute” or “alternative” may simply eschew the use of dairy terms altogether – an approach that’s already common in the rest of the world and practiced by some companies in the U.S. including Chobani, Trader Joe’s and Quaker.

NMPF also addresses First Amendment arguments that have been raised by opponents, via a thorough discussion of relevant case law on commercial speech rights. Beginning with the landmark Central Hudson Gas & Electric Corp. v. Public Service Commission and running through more recent decisions such as Zauderer and American Meat Institute vs. USDA, the petition explains how NMPF’s proposed solutions focus on disclosure requirements narrowly tailored to improving labeling transparency and promoting informed consumer choice – and are emphatically not a “ban” on the use of dairy terms by plant-based products.

“Our approach does not advocate for any so-called “bans,” Balmer said. “It simply relies on proper disclosures that allow for appropriate, truthful, non-misleading messaging. In the end, products that are ‘milk-like’ or ‘yogurt-like’ are not actual milk or yogurt – and the nutritional distinctions are critical to informed consumer decision-making. That’s what our petition is all about.”

FDA opens new docket

The NMPF petition was filed in the wake of the agency’s request for public comment on related issues that closed on January 28, 2019.  While many of those comments were strongly anti-dairy, they delivered very little substance, in contrast with pro-dairy comments from organizations including the American Academy of Pediatrics, which noted that:

Pediatricians report that using the term “milk” in the labeling of dairy-free alternatives has caused parental confusion, leading to the purchase of products that they assume contain traditional dairy ingredients and, thereby, unintentionally causing harmful nutritional deficiencies in their children.

The comments filed by the dairy industry and others on the other hand were substantive and clearly showed that consumers are confused about the nutritional inferiority of plant-based substitutes and that there is ongoing public health harm as a result.

In response to the NMPF petition, FDA will has opened a docket, FDA-2019-P-0777, to accept feedback from the regulated community and interested stakeholders. The docket can be found at: https://www.regulations.gov/docket?D=FDA-2019-P-0777. NMPF urges stakeholders to comment on the docket, ensuring that the agency continues to pay attention to this crucial consumer issue.

The National Dairy Farmers Assuring Responsible Management (FARM) Program, the dairy industry’s on-farm quality assurance program, released Feb. 25 proposed Animal Care Version 4.0 standards for input from stakeholders, with comments accepted through the end of March. Comments are encouraged to engage the industry in what’s become the definitive guidelines for best practices in herd management.

“The FARM Animal Care comment period is an important opportunity for stakeholders to advance our goal of encouraging the highest standards of animal care and herd management,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “We are excited to work with industry partners in this next step.”

Open to all U.S. dairy farmers, co-ops and processors, the National Dairy FARM (Farmers Assuring Responsible Management) Program over the past decade has worked with dairy farmers, the producer community and industry partners to show customers and consumers that the dairy industry is taking the very best care of cows and the environment, producing safe, wholesome milk and adhering to the highest standards of workforce development.

Currently, 98 percent of the U.S. milk supply participates in FARM, an initiative developed as part of dairy’s commitment to producing the highest quality milk with integrity. Its Animal Care Program standards are revised every three years to reflect current science and best management practices.

Standards, rationale, and accountability measures behind the proposal have been reviewed and revised by the FARM Animal Care Technical Writing Group made up of dairy producers, veterinarians, animal scientists and industry personnel. Before being released for comment, the National Milk Producers Federation Animal Health and Well-Being Committee reviewed and provided feedback into the proposed changes.

After the comment period closes on Sunday, March 31^st, FARM staff, Technical Writing Group and the NMPF Animal Health and Well-Being Committee will review and consider revisions based upon the comments, then present final proposed standards for approval by the NMPF Board of Directors in June. The FARM Program encourages all those involved in the dairy supply chain to participate. To review proposed standards and provide feedback, please visit https://nationaldairyfarm.com/animal-care-open-comments/.

These draft standards have been proposed for FARM Animal Care Version 4.0. FARM Version 3.0 will remain in effect until December 31, 2019. To learn more, please visit www.nationaldairyfarm.com.

Farmers who elect to receive payments under the new Dairy Margin Coverage program at the new $9.50 per cwt. premium level would receive a payment of $1.51 per hundredweight for their January production after they sign up for the program starting June 17, according to price reporting from USDA’s National Agricultural Statistics Service.

That compares with a payment of $0.01 – a penny per hundredweight — under coverage at the maximum level of the old Margin Protection Program, the flawed dairy support NMPF pushed hard to replace in the farm bill.

USDA’s National Agricultural Statistics Service in February caught up on agricultural price reporting that was delayed due to the earlier partial government shutdown that ended in January, reporting prices needed to determine the final, December 2018, margin under the old Margin Protection Program (MPP) and the first, January 2019, one under the renamed Dairy Margin Coverage (DMC) as revised by the 2018 Farm Bill.  While the Farm Bill increased the dairy margin coverage ceiling from $8.00 to $9.50 per cwt., it did not change the margin calculation formula.

The December 2018 margin, the last governed by the MPP, was $7.85 per cwt., generating a final $0.15 per cwt. payment for producers with coverage for 2018 at the previous maximum level of $8.00. Total payments for those with such coverage averaged $0.45 per cwt., net of premiums and sequestration, for up to 5 million pounds of production history during the 2018 calendar year. The January 2019 margin was $7.99 per cwt. – a figure of negligible importance under the old program but one that would generate a substantial payment under the new one for farmers who elect to cover themselves at the maximum level for “Tier 1” production.

Coverage retroactive

Agriculture Secretary Sonny Perdue indicated on Feb. 26 that signup for the 2019 program would begin by June 17 this year, with coverage retroactive to January. The closing date for signup has not been announced.

The new farm bill also removes the previous restriction that prohibited producers from enrolling milk in both the MPP program and the Livestock Gross Margin for Dairy (LGM-Dairy) program during the same month. It further allows farmers previously prevented from enrolling in MPP during 2018 due to this restriction to enroll retroactively in MPP and collect payments for 2018 for the months during which they were prevented from doing so. NMPF actively supported both provisions during farm-bill negotiations and is urging the USDA to effectively communicate information that will help farmers make the best decisions for their operations.

USDA’s MPP margin forecasts can be accessed online. NMPF’s Future for Dairy website offers a variety of educational resources to help farmers make better use of the program.

Using every tool at its disposal to combat the threat of retaliatory tariffs that damage U.S. dairy’s domestic health and ability to expand sales abroad, NMPF wasted little time endorsing bipartisan legislation introduced in each chamber of Congress to reform the Section 232 process, which governs tariffs imposed in the name of national security.

Section 232 tariffs imposed on aluminum and steel imports under the guise of national security concerns have led to a wide range of U.S. exports, including dairy products, being hit with tariffs, causing more than $1 billion in income losses to dairy farmers in 2018, according to NMPF and other studies. Legislation introduced by Representatives Ron Kind (D-WI) and Jackie Walorski (R-IN) in the House of Representatives and Senators Rob Portman (R-OH) and Doug Jones (D-AL) in the Senate attempts to ensure that Section 232 is used as intended by Congress, for true national emergencies and in service of the national interest.

NMPF quickly endorsed the Trade Security Reform Act on Feb. 6, after its introduction.

“Dairy prices have steadily fallen since Mexico imposed its retaliatory tariffs, harming farmers,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “Exports to our most important market are being threatened, hurting dairy businesses and the thousands of Americans they employ.”

The Trade Security Reform Act tightens Section 232 rules to ensure it is only used to respond to genuine national security threats while taking into consideration a broad range of economic and security concerns. This legislation also expands the oversight role Congress plays in the process by allowing for a congressional resolution of disapproval of Section 232 action.

Removing the retaliatory tariffs on dairy and addressing how Section 232 power may be wielded is an urgent priority for NMPF, which is why we have asked policymakers to take immediate action. NMPF considers the legislation a good step toward preserving Section 232 powers while ensuring this tool is used effectively to combat national security threats.

NMPF staff also communicated the urgency to resolve Sec. 232 tariffs and Mexico’s retaliatory response to officials from Mexico’s new government earlier last month in meetings with the new Mexican government. Staff met with government officials from Mexico’s ministries of Agriculture, Foreign Affairs, and Economy to stress the importance of restoring the U.S.-Mexico trade relationship to normal conditions.

NMPF will continue to work to encourage both sides to move swiftly to resume normal trading conditions and to improve the rules underpinning this process moving forward.

The Consortium for Common Food Names (CCFN), of which NMPF is a member, submitted detailed comments Feb. 7 on the European Union’s abuse of geographical indications and related restrictions on the use of common food names to the U.S. Trade Representative’s office as part of the office’s annual “Special 301 Report” review.

USTR’s Special 301 Report identifies countries that are not providing adequate protection of intellectual property rights or are denying fair and equitable market access to Americans who rely on intellectual property protection. As a part of this review, the USTR solicits comments from the public identifying concerning policies or trade barriers.

NMPF, in partnership with the U.S. Dairy Export Council, submitted comments supporting CCFN’s outlined concerns regarding the abuse of GIs at the intentional expense of American companies, their employees and supplying farmers, specifically singling out egregious EU attempts to impede competition by adopting overly broad GI policies and pressuring countries to restrict common cheese names, such as parmesan and feta, in exchange for market access into the EU.

These policies are “anti-trade, anti-competitive, anti-free market, and anti-intellectual property,” NMPF wrote. “America and developing nations alike are harmed greatly by EU efforts to erect onerous trade barriers for common food name products, resulting in lost sales, jobs and economic development and undermining our existing free trade agreements.”

NMPF’s Jaime Castaneda, acting in his capacity as CCFN’s Executive Director, drove this point home further at a USTR-led hearing Feb. 27 designed to gather more information to inform USTR’s Special 301 Report. Castaneda urged the Administration to strongly oppose the EU’s increasingly aggressive efforts, saying that U.S. negotiators must stand firm and not “give into the EU’s sweeping demands on GI protections that over-step the bounds of fair trade.”

Through its active participation in CCFN, NMPF is continuously working dismantle trade barriers that prevent the U.S. dairy industry from selling common-name cheeses abroad.

The Cooperatives Working Together program assisted member cooperatives in securing 58 contracts with sales of 8.5 million pounds of American-type cheeses, 476,199 pounds of butter and 8.8 million pounds of whole milk powder. The product is going to customers in Asia, Central America, the Middle East, and South America and will be shipped during the months of February through August 2019.

CWT’s self-help mechanism will be extended to three additional product categories in March: Processed cheese and cream cheese will now be eligible for CWT Export Assistance, and anhydrous milkfat will be re-introduced. NMPF Executive Vice President Tom Balmer introduced the change at NMPF’s monthly board meeting, noting the additional channels will help boost dairy sales overseas, the fundamental mission of CWT.

“Stay on the lookout for that,” he said.

These transactions bring the 2019 total of the CWT-assisted product sales contracts to 20.278 million pounds of cheese, 1.184 million pounds of butter and 11.098 million pounds of whole milk powder. These contracts will move the equivalent of 294.8 million pounds of milk on a milkfat basis overseas in 2019.

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 milk that produces them. This, in turn, positively impacts all U.S. dairy farmers by strengthening and maintaining the value of dairy products that affect 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.

NMPF is now accepting applications for its National Dairy Leadership Scholarship Program for academic year 2019-2020. The deadline to apply is Friday, April 5.

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 of direct interest to NMPF member cooperatives and the greater U.S. dairy industry.

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 scholarship applicant will be awarded the Hintz Memorial Scholarship, which was 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.

For an application or more information, please visit the NMPF website or call the NMPF office at 703-243-6111.