News for Dairy Co-Ops

Reps. Peter Welch (D-VT), Mike Simpson (R-ID), Anthony Brindisi (D-NY), and John Joyce (R-PA) spearheaded a Feb. 18 letter urging new FDA Commissioner Stephen Hahn to quickly finish the job begun by his predecessor, Scott Gottlieb, in 2018 and finally begin to enforce standards of identity defining what may be labeled a dairy product. The letter garnered 58 bipartisan co-signers.

“The deception caused by mislabeling of imitation products is both unfair to our hardworking dairy farmers and problematic for consumers, making it harder for Americans to make educated decisions about what they feed themselves and their families,” wrote the lawmakers in the bipartisan letter.

Citing public health concerns expressed by medical groups including the American Academy of Pediatrics, the American Heart Association, the Academy of Nutrition and Dietetics, and the American Academy of Pediatric Dentistry, the members of Congress said they appreciated that Hahn saw the topic of fake dairy labeling as “a public health and nutrition matter” while calling action on it “long overdue.”

Many of the letter-signers are also co-sponsoring the DAIRY PRIDE Act, introduced by Representatives Welch and Simpson in the House and Senators Tammy Baldwin (D-WI) and Jim Risch (R-ID) in the Senate, and many also serve on the House Energy and Commerce Committee, which retains jurisdiction over this issue.

The DAIRY PRIDE Act would designate foods that make an inaccurate claim about milk contents as “misbranded” and require FDA to issue guidance for nationwide enforcement of mislabeled imitation dairy products within 90 days of its enactment.

During his confirmation process, Hahn voiced his support for “clear, transparent, and understandable labeling for the American people.” Given the agency’s inability to follow up on earlier pledges to act, NMPF supports DAIRY PRIDE’s passage. The strong bipartisan showing on the new letter will add momentum to this effort.

A combination of rising supplies and fears of lower demand due to the coronavirus worsened the economic outlook for U.S. dairy producers, with margins under the Dairy Margin Coverage program falling.

The January 2020 Dairy Margin Coverage margin was $10.72 per cwt., a drop of $1.23 per cwt. from the December margin, according to USDA data. This drop was the combined outcome of a $1.10 per cwt. lower all-milk price and a $0.13 per cwt. higher calculated DMC feed cost for January, compared with a month earlier. The January margin was $0.27 lower due to the incorporation of dairy-quality alfalfa in the DMC feed cost formula, which began in 2019.

At the end of February, USDA’s DMC Decision Tool, which can be accessed online, projected the DMC margin would drop sharply for the first several months of 2020 and fall below the $9.50 per cwt. coverage level for April through August. Based on that forecast, coverage at that level would pay an average of $0.18 per cwt. for all of 2020, which was above both the one-year and the 5-year discounted costs of that coverage.

As of Feb. 18, USDA reported that 13,024 dairy operations, or 47.71 percent of operations with production histories, had enrolled in the 2020 DMC program. Many of these enrollees are operations that signed up for 5-year coverage last year. Enrolling in the DMC program at the generous coverage and affordable premiums available will always be a highly recommended risk-management option for dairy farmers, and this year is a case in point. Just a month ago, the USDA DMC Tool indicated that the DMC margin would not drop below $10.00 per cwt. anytime during 2020 and thus would generate no payments during 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 also posted a new video explaining how farmers can benefit from the DMC.

NMPF, the U.S. Dairy Export Council (USDEC) and dairy allies in China are working both to solidify gains represented in the “Phase One” China trade deal that went into effect Feb. 14 and to advance beyond them by fostering the removal of all retaliatory tariffs on dairy.

The agreement, which includes pledges from China to step up its buys of U.S. agricultural goods, holds the potential for U.S. dairy exports to expand. However, still-in-place tariffs may curb those purchases relative to other farm products.

The tariff front saw a positive development March 2 when China’s Tariff Committee of the State Council opened a process for companies registered to conduct business in China to apply for exemptions from retaliatory tariffs still in effect. The process, intended to help fulfill China’s purchasing agreements under Phase One, may boost sales of skim milk powder, whey products and lactose, all among the products for which China specifically invited tariff exemption. Applications for additional products are permissible as well, according to China’s announcement of the program.

In addition to their efforts to lift retaliatory tariffs, NMPF, USDEC and the Consortium for Common Food Names (CCFN), sent a letter Jan. 27 to Ambassador Lighthizer and Secretary Perdue expressing support for the gains made in the China Phase One deal while noting the need to hold China accountable for its commitments made on facilities audits and listings, product registrations, and common food names.

The U.S. Trade Representative has established a Bilateral Evaluation and Dispute Resolution Office to oversee China’s compliance with the agreement. NMPF and USDEC are also actively monitoring China’s adherence to its Phase One commitments as coordinated enforcement efforts between the dairy industry and government partners will be key to ensuring that China upholds its trade obligations.

As the U.S. government now turns its attention towards implementing and ratifying the U.S.-Mexico-Canada Agreement, NMPF is encouraging the U.S. Trade Representative (USTR), working in concert with other parts of the USMCA implementation team including at the U.S. Department of Agriculture (USDA), to clearly outline U.S. expectations for how USMCA dairy provisions are implemented.

The forward-leaning posture, necessary to prevent bad-faith actors from undermining the full intent of USCMA’s dairy provisions, was signaled Feb. 27 NMPF joined with the U.S. Dairy Export Council (USDEC) in a letter to USTR and USDA outlining specific provisions that should command the administration’s dedicated attention. The provisions included: reforms to Canada’s dairy pricing policies; administration of Canada’s TRQs; and safeguards that protect U.S. companies’ rights to use common food names in Mexico.

These messages also were emphasized during recent in-person meetings NMPF held with USTR staff, Mexican industry and government officials and Canadian officials to discuss the importance of collaboration and good-faith implementation of USMCA to avoid trade disruptions. NMPF is continuing its work alongside government officials and industry stakeholders to ensure USMCA’s provisions are implemented and enforced in good faith.

With the European Union (EU) continuing its aggressive campaign to confiscate common food names at the expense of American dairy farmers and consumers, NMPF is backing U.S. government efforts to defend U.S. exports.

The federal government over the past year defended American-made exports via approval of USMCA and through incorporating new safeguards for common names in its Phase One negotiations with China. During recent meetings with European agriculture and trade officials, Agriculture Secretary Sonny Perdue made it clear that the EU must drop its GI agenda in order to successfully negotiate a trade deal with the U.S.

However, NMPF is urging the U.S. government to more proactively posture confront this issue to preserve market access, protect American jobs and defend the legitimate rights of food manufacturers, farmers and exporters. NMPF joined  with USDEC and CCFN to issue a joint statement Jan. 30 applauding Secretary Perdue’s commitment to protecting common names. “As Secretary Perdue rightly noted, Europe’s unfair trade barriers have less to do with preserving the rights of legitimate GIs than with restricting competition from exceptional U.S. products,” the statement said. “Dismantling EU trade barriers that drive the dairy deficit and cause undue harm to our industry must remain a top priority in negotiations with the EU.”

NMPF and the U.S. Dairy Export Council (USDEC) also raised the issues of GIs in a joint statement submitted to the USTR touting support for a detailed accounting of global GI barriers submitted by the Consortium for Common Food Names (CCFN) in response to USTR’s call for input to inform its annual Special 301 report on intellectual property issues.

NMPF is an active member of CCFN, which works to dismantle trade barriers that prevent the U.S. dairy industry from selling common-name cheeses abroad. CCFN’s comments lay out concerns regarding the misuse of GIs on a country-by-country basis, focusing on the EU’s push to use GIs to block U.S. exports.

FARM Environmental Stewardship officially transitioned to ‘Version 2’ at the end of February, updating its greenhouse gas and including new data points.

Accompanying the new version of FARM ES will be an updated User Guide and an online training to be released before the end of Q1.

The three main categories of major changes coming in FARM ES Version 2 include new data options and questions, new crop emissions factors that update baseline information, and more detailed results, such as the ability to see greenhouse gas results broken down by type of gas.

If previous data under the first version of FARM ES represents a coop/processor ‘baseline’ of GHG emissions, FARM recommends and is able to re-run the old data using Version 2 of the model. Typically, GHG reporting guidance recommends re-running the ‘base year’ of data if methodology updates will significantly impact results. In such cases, the crop emissions factors updates do change the ‘feed production’ portion of the GHG emissions. Participants who choose not to re-run baseline data should note in any external GHG reporting that subsequent years were calculated using different methods than the baseline year.

After months of work, the National Council on Interstate Milk Shipments posted two documents regarding the Dairy Inspection Pilot Program on Feb. 24. The pilot program began last month and will run until December in nine participating states. The pilot program offers two options for the inspections:

• Establish a federal-state partnership in which individual states co-regulate all non-Grade “A” products processed in Interstate Milk Shipment-listed facilities located in the state. During the check rating, the Milk Specialist will verify the state has adequately covered the non-Grade “A” PC requirements which will then count toward the federally mandated limited scope PC inspection or;
• All IMS- listed facilities receive and Appendix T audit by an FDA Milk Specialist on the check rating interval.

The pilot offers a chance to explore options to achieve inspectional efficiencies between the Pasteurized Milk Ordinance (PMO) and Food Safety Modernization Act (FSMA).

In 2018, FDA tried back-to-back inspections, first a PMO inspection, followed by an FSMA inspection. Plant personnel described that as an overwhelming experience and NMPF urged the FDA not to conduct inspections that way in the future. Once the pilot is completed, FDA and the NCIMS Liaison Committee will assess the pilot outcomes and present the findings at the 2021 NCIMS conference. NMPF is pleased with the outcome of the partnership between the NCIMS Liaison Committee and FDA in getting the pilot program up and running.

At its annual outlook conference in February, the USDA announced a new Agriculture Innovation Agenda intended to improve the productivity and reduce the environmental footprint of farming in the coming decades.  Agriculture Secretary Perdue said that the Innovation Agenda is a department-wide initiative to align resources, programs, and research to increase farm output by 40%, while reducing by half the environmental footprint of U.S. agriculture by 2050. This effort will focus on cutting nutrient runoff and carbon emissions, reducing food loss and waste, and increasing renewable energy production and use.

The USDA’s outline for achieving those sustainability targets are aligned with U.S. dairy sustainability goals. This will help leverage what the dairy producer community is already focused on through our collective efforts in the Innovation Center for US Dairy’s Environmental Stewardship goals, Newtrient, the Net Zero Initiative, and the FARM Program’s Environmental Stewardship module. These efforts are all designed to continue the global leadership of the U.S. dairy industry in environmental stewardship through voluntary efforts by dairy farmers through market-based incentives.

In a related development, NMPF joined with a coalition of farm organizations this week to announce the formation of Farmers for a Sustainable Future. Part of the mission of this group, which also includes the American Farm Bureau, the National Farmers Union and the National Council of Farmer Cooperatives,  is to help set the record straight about the impact of farming and food production on the environment.  It’s no secret that cattle farming in particular receives a disproportionate amount of blame for its greenhouse gas emissions, when our own dairy lifecycle assessment indicates that milk production is less than 2% of the national total.  Fortunately, the dairy sector is well-positioned as a leader in American agriculture in addressing sustainability issues and harnessing resources to further mitigate our environmental footprint.

CWT assisted member cooperatives in securing 75 contracts with sales of 3.6 million pounds of American-type cheeses, 862,008 pounds of butter, 4.6 million pounds of whole milk powder and 745,163 pounds of cream cheese. The product is going to customers in Asia, Central and South America, the Middle East, North Africa and Oceania. The product will be shipped during the months of February through July 2020.

These transactions bring the 2020 total of the CWT-assisted product sales contracts to 4.896 million pounds of cheese, 1.190 million pounds of butter, 5.291 million pounds of whole milk powder and 1.390 million pounds of cream cheese. These contracts will move the equivalent of 121.5 million pounds of milk on a milkfat basis overseas in 2020.

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.