News for Dairy Co-Ops

NMPF’s Board of Directors voted April 23 to request an emergency USDA hearing on a Federal Milk Marketing Order proposal to restore fairness for farmers in the Class I fluid milk price mover. The endorsement of the board, which represents dairy farmers and cooperatives nationwide, followed approval April 16 from the organization’s Executive Committee.

The NMPF plan would ensure that farmers recover lost revenue and establish more equitable distribution of risk among dairy farmers and processors. The current mover, adopted in the 2018 farm bill, was intended to be revenue neutral while facilitating increased price risk management by fluid milk bottlers. But the new Class I mover contributed to disorderly marketing conditions last year during the height of the COVID-19 pandemic and cost dairy farmers over $725 million in lost income.

NMPF’s proposal would help recoup the lost revenue and ensure that neither farmers nor processors are disproportionately impacted by future significant price disruptions.

“As the COVID-19 experience has shown, market stresses can shift the mover in ways that affect dairy farmers much more than processors. This was not the intent of the Class I mover formula negotiated within the industry,” said Randy Mooney, the dairy farmer chairman of NMPF’s Board of Directors. “The current mover was explicitly developed to be a revenue-neutral solution to the concerns of fluid milk processors about hedging their price risk, with equity among market participants a stated goal.

“Dairy farmers were pleased with the previous method of determining Class I prices and had no need to change it, but we tried to accommodate the concerns of fluid processors for better risk management. Unfortunately, the severe imbalances we’ve seen in the past year plainly show that a modified approach is necessary. We will urge USDA to adopt our plan to restore equity and create more orderly marketing conditions,” Mooney said.

While the current Class I mover was designed to improve the ability of fluid milk handlers to hedge milk prices using the futures market, it was also expected to be revenue-neutral compared to the formula it replaced. But that has not been the case. The significant gaps between Class III and IV prices that developed during the pandemic exposed dairy farmers to losses that were not experienced by processors, showing the need for a formula that better accounts for disorderly market conditions.

NMPF’s proposal would modify the current Class I mover, which adds $0.74/cwt to the monthly average of Classes III and IV, by adjusting this amount every two years based on conditions over the prior 24 months, with the current mover remaining the floor. NMPF’s request will be to limit the hearing specifically to proposed changes to the mover, after which USDA would have 30 days to issue an action plan that would determine whether USDA would act on an emergency basis​. NMPF plans to formally submit its proposal to USDA this month.

NMPF lauded USDA’s April 13 announcement that it will soon implement the $400 million Dairy Donation Program (DDP) that NMPF secured in a COVID-19 relief package Congress passed last December. The department issued an advance notice of the minimum provisions to be included in the program, including the initial reimbursement rate for dairy product donations, which will cover at a minimum the full cost of the raw milk and therefore be significantly higher than under the existing Milk Donation Reimbursement Program created in the 2018 Farm Bill.

The announcement is especially crucial because it comes at a time when the spring flush is building across the U.S. and is meant to “encourage the dairy industry to process and donate surplus milk supplies during the spring surplus milk production season,” according to USDA. This aligns with the intent of Congress to allow USDA to make retroactive reimbursements for donations made before final program regulations are announced later this year.

“NMPF worked closely with Congress to enact the Dairy Donation Program in the Consolidated Appropriations Act of 2021. This important program will help dairy farmers and the cooperatives they own to continue to do what they do best – feed people,” said Jim Mulhern, NMPF president and CEO, in a statement commending the USDA announcement. “Dairy stakeholders are eager to expand their partnership efforts with food banks and other distributors to provide a variety of nutritious dairy products to food-insecure households who have faced uniquely difficult challenges throughout the COVID-19 pandemic, as hunger has risen significantly during the last year.

“We commend USDA for prioritizing implementation of the DDP and look forward to continue working with the Department, the food bank community and all involved to make the program a success,” Mulhern said.

NMPF will continue to work closely with USDA and other interested stakeholders as the department works to finalize the program’s complete parameters. In particular, recognizing that processing and other expenses can significantly raise the cost of donating dairy products, NMPF is urging USDA to reimburse for these additional costs in order to make the DDP as effective as possible.

Beyond the DDP, NMPF looks forward to working with USDA on buying more of a wider variety of dairy products. Along with the department’s expected announcement that the Farmers to Families Food Box Program will end this month, Agriculture Secretary Tom Vilsack has indicated that USDA will continue to purchase dairy and other products through a variety of channels, such as Section 32 and The Emergency Food Assistance Program. NMPF is urging continued robust purchases of dairy products, with an emphasis on securing a better product balance between cheese and butter, to avoid the extreme market volatility that dairy farmers endured last year.

The March margin under the federal Dairy Margin Coverage Program rose $0.24/cwt above February’s to $6.46/cwt, with forecast for future margin’s indicating that February may have been the year’s low.

The March U.S. average all-milk price was $17.40/cwt, $0.30/cwt higher than in February, while the DMC March calculated feed cost was just $0.06/cwt higher than February’s. On a per hundredweight of milk basis, a higher corn price in March was almost entirely offset by a lower cost of soybean meal. The March payment for $9.50/cwt DMC program coverage is $3.04/cwt. On an annualized basis, the DMC program will have already paid the equivalent of $2.17/cwt for coverage at $9.50/cwt during the first quarter of 2021 alone.

Current futures prices indicate that the DMC program margins going forward may remain below $9.50/cwt until late summer, as rising milk prices compete with higher costs for corn and hay. USDA reported that 164.7 billion pounds of production history, or 79.4 percent of the total, was enrolled in the 2021 DMC program, with an estimated $223 million in payments for disbursement as of April 19.

USDA on April 28 announced an update of its livestock insurance policies intended to improve options for producers and create additional opportunities for producers to participate. NMPF, which in the last Farm Bill played a critical role in allowing Risk Management Agency programs to allocate unlimited funds for dairy farmers to protect themselves against market volatility, urges dairy producers to consider the new provisions when making risk-management plans.

The USDA Risk Management Agency (RMA) updates to the Dairy Revenue Protection (DRP) and Livestock Gross Margin (LGM) policies will be effective for the 2022 and succeeding crop years.

DRP, which covers about 30% of U.S. milk production, paid roughly $478 million to dairy producers in 2020 as the COVID-19 pandemic brought heightened volatility to markets. Changes for the 2022 crop year include:

• Ensuring the Class Pricing Option remains available for purchase even when either the Class III or Class IV milk price is not published.
• Relaxing records requirements by allowing monthly total pounds of milk and milk components (butterfat and protein) to be acceptable records instead of daily.
• Modifying weekend sales period to end on Sunday at 9 a.m. Central Time.

The LGM program, available for dairy, cattle, and swine producers, provides protection against loss of gross margin (market value of livestock minus feed costs). Changes for the 2022 crop year include allowing producers to purchase coverage weekly instead of monthly.

For more detailed information on changes to these and other USDA Risk Management Agency crop insurance programs, visit rma.usda.gov.

NMPF became a founding member of the COVID-19 Community Corps April 1, joining a nationwide effort to increase vaccine confidence while reinforcing basic prevention measures.

While the COVID-19 vaccine supply and availability has increased, hesitancy persists, creating challenges to achieving the herd immunity required to relax COVID-19 restrictions and restart the economy. Dairy farmers and their cooperatives are well-positioned to build on trusted relationships with employees, customers, and community members, and encourage vaccination in rural communities nationwide.

To support the dairy community’s continued leadership in workforce safety, NMPF distributed a COVID-19 Vaccination and the Dairy Workforce resource April 16. The toolbox was developed to help dairy farmers and cooperatives communicate with employees about the safety and benefits of COVID-19 vaccines and includes steps employers can take to help their workforce get vaccinated. NMPF also continues to update its Guide to the COVID-19 Vaccine Rollout to ensure dairy farmers can easily reference up-to-date information on accessing vaccines and scheduling appointments.

Member co-ops have also stepped up as leaders in protecting the public and reviving the economy.

• Farmers and cooperatives across the country are putting together vaccination events for farmers, staff and farmworkers in the fields where they live and work. Natural Prairie Dairy, a member of Select Milk Producers Inc. organized a vaccination event for 300 of its employees at its organic dairy farm in Dalhart, Texas. And Michigan Milk Producers Association has been driving employees to vaccination sites when necessary, reporting that up to 90 percent of employees are now vaccinated.
• At Dairy Farmers of America, co-op employees are offered two hours of pay for each vaccine they receive; at Maryland & Virginia Milk Producers Association, employees receive a $50 Amazon gift card upon receiving a single dose of a COVID-19 vaccine; and at Lone Star Milk Producers, employees can take paid time off to get their shots;
• Northwest Dairy Association/Darigold, Associated Milk Producers Inc. and Prairie Farms, among others, have organized vaccinations at their processing plants;

Vaccinating essential workers, including the dairy workforce, is important because of their role in maintaining critical infrastructure operations and their increased risk of getting and spreading COVID-19. Vaccination is one of many important tools to help stop the pandemic.

NMPF applauded bipartisan work being done on legislation that would bolster the many conservation and environmental efforts dairy producers are leading as they continue their everyday stewardship of air, land, and water resources.

Senator Mike Braun (R-IN) and Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) reintroduced on April 20 their bipartisan Growing Climate Solutions Act, which creates a USDA certification program permitting the department to informally endorse technical service providers that can help farmers implement environmental stewardship practices that may generate carbon credits.

The legislation, if passed, would greatly help dairy farmers seeking to achieve the sector’s goal to achieve carbon neutrality or better by 2050 through dairy’s Net Zero Initiative.

“We commend Chairwoman Stabenow and Senator Braun for continuing their bipartisan leadership on the Growing Climate Solutions Act, which would encourage greater farmer participation in environmental markets,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “This legislation will enhance the proactive, sustainable initiatives dairy farmers are expanding as our sector strives to achieve carbon neutrality.”

The Senate Agriculture, Nutrition, and Forestry Committee passed the bill on April 22 with broad bipartisan support. On the same day, Reps. Abigail Spanberger (D-VA) and Don Bacon (R-NE) reintroduced the companion House measure. NMPF submitted written testimony supporting the measure on behalf of Mulhern and Environmental Issues Committee Chair Mike McCloskey for a hearing held on the bill last June.

NMPF additionally commended House Agriculture Committee Ranking Member Glenn ‘GT’ Thompson (R-PA), who last month put forward several measures to adapt farm bill conservation programs that help address climate change: allowing private sector funding to meet conservation program demand; emphasizing soil health and increasing funding for Conservation Innovation Trials; and incentivizing the adoption of precision agriculture systems.

“We thank Ranking Member Thompson for furthering the conversation on climate and sustainability by putting forward several proposals for discussion,” said Mulhern. “We agree that farm bill conservation programs can be vital to helping producers reduce their environmental footprint, and we look forward to more closely examining this suite of legislation and other proposals that may be introduced in the coming weeks.”

Representatives Peter Welch (D-VT) and Mike Simpson (R-ID) and Senators Tammy Baldwin (D-WI) and James Risch (R-ID) on April 22 reintroduced the bipartisan DAIRY PRIDE Act. The bill would bring clear, accurate labeling information for consumers and end harmful mislabeling of dairy foods by peddlers of plant-based products by requiring the U.S. Food and Drug Administration (FDA) to enforce its own existing standards of identity on imitation dairy products after decades of inaction.

NMPF President and CEO Jim Mulhern thanked Welch and Simpson and Baldwin and Risch for reintroducing the measure and their ongoing leadership working to ensure FDA does its job. NMPF has been working for decades for FDA to enforce dairy standards of identity, as plant-based imitators have a long history of flouting these labeling laws to piggyback on dairy’s good name and reputation and benefiting from the “halo of health” associated with nutritious, healthy dairy products.

“FDA is responsible for the integrity and safety of our nation’s food, medicine, and medical devices, and it’s crucial that it enforce its own standards and requirements,” Mulhern said. “Without enforcement, we are left open to the potential for questionable products, deceptive practices, and, in cases such as mislabeled plant-based products that masquerade as having nutritional benefits similar to dairy’s, negative effects to our health.”

Medical groups including the American Academy of Pediatrics are voicing concerns over the harm lack of enforcement is having on public health as misinformed consumers unintentionally choose less nutritious products for themselves and their families.

Congress has also shown a growing concern for FDA’s failure to enforce. The House held a hearing in January 2020 on the agency’s lack of enforcement, during which NMPF Executive Vice President Tom Balmer testified on the need to enforce dairy standards of identity. In December 2020 Congress included in the report accompanying the FDA funding bill for FY 2021 a statement of concern and directive to FDA regarding enforcing standards of identity for dairy products.

NMPF will continue working on FDA enforcement, building on this progress made in 2020, with Mulhern seeing the reintroduction of the DAIRY PRIDE Act as “helping NMPF and consumers continue to move forward toward solving this critical public health and fairness issue.”

The European Commission announced proposed new certification requirements in July 2020 for a wide range of food products, including dairy, adding confusing and vague requirements that threaten to upend U.S.-EU dairy trade if left unremedied.

Since then, NMPF has been working closely with the U.S. Dairy Export Council on extensive efforts to partner with the U.S. government in seeking a successful resolution that rejects unreasonable EU documentation requests and preserves access to the EU market. On April 16, NMPF and USDEC sent a letter to USDA Secretary Vilsack and USTR Tai asking for enhanced engagement to secure a workable solution, underscoring the critical importance of preserving access to the EU market for U.S. dairy products and processed products that contain dairy.

Two sets of new requirements have posed concerns: revised import certificates for dairy products, and new certification requirements and importer attestation mandates for “composite products,” which are processed food products that contain ingredients both of animal and plant origin.

One earlier result of these efforts was the European Commission’s decision to delay the implementation date for use of both dairy and composite product certificates from April 21 to Aug. 20. This extension provided more time for U.S. government negotiations with the EU to address the remaining issues. The EU on April 19 also issued an important clarification for the new importer attestations for composite products to now allow for the use of pasteurized dairy ingredients from the United States in the production of those products. NMPF believes this should allow U.S. exports of these products to continue. Work continues on the remaining product areas.

NMPF and USDEC continue to hold regular discussions with federal officials about these issues to ensure that dairy certificates remain a priority for resolution in the U.S.  government’s engagement with the EU.

NMPF, working together with the U.S. Dairy Export Council, is continuing to actively raise the visibility of extensive port-related problems affecting exports of U.S. dairy products with federal officials while engaging on trying to find solutions. These challenges have included backlogs, delays, lack of storage for delayed shipments, and increased costs that have bedeviled shippers and impeded exports since last Fall.

NMPF staff met with key staff of the Senate Committee on Commerce, Science and Transportation on April 13 to discuss the challenges and ways in which Congress could help. Staff also participated in a meeting on April 19 convened with senior officials at the USDA and the U.S. Department of Transportation, which provided NMPF and groups representing other U.S. agricultural sectors the opportunity to outline problems facing U.S. exporters and press for faster resolutions.

On April 27, NMPF and several of its members joined together in sending a letter signed by almost 300 companies and organizations to the Department of Transportation urging further steps on this issue to help provide relief to U.S. agricultural exporters. NMPF has also been actively working to urge Congressional support for language in the Transportation Appropriations bill that would provide greater direction to the Federal Maritime Commission regarding its analysis of what measures could be taken to help alleviate the export crisis.

NMPF asks for help from the membership to share any information that quantifies the impact of the port problems. Questions and information can be directed to Tony Rice (trice@nmpf.org).

NMPF submitted two sets of comments to USDA in April on its Natural Resource Conservation Service (NRCS) Conservation Practice Standards.

USDA-NRCS requested comments to revise the conservation practice standards in the National Handbook of Conservation Practices (NHCP). The first comments, submitted April 8 jointly with Newtrient LLC, were grounded in updating the conservation practice standards to make them more useful for dairy farmers as they work toward the 2050 US Dairy sustainability goals of being carbon neutral or better and improving water quality. The comments focused on fourteen different conservation practice standards ranging from air filtration & scrubbing (Code 371) to wastewater treatment – milk house (Code 627) with suggested improvements making them more useful for dairy farmers.

NMPF joined a coalition of seventeen organizations in a second set of comments April 15. This large coalition submitting comments to specifically address the USDA NRCS on Conservation Practice Standard on Cover Crops (Code 340).  While the coalition generally supported the revised Cover Crops standard, the coalition expressed serious concerns with the proposed change to disallow mechanical harvesting of cover crops for forage. At the core of the coalition concerns was the belief that this language will be a very serious disincentive to grower adoption of cover crops and as such will unnecessarily result in a net loss of working lands’ conservation benefits.

NMPF joined with the International Dairy Foods Association (IDFA) to advise Montana and New Hampshire’s state legislatures that we oppose the passage of raw milk bills that would expand the sale of raw milk and raw milk products within their states.

In  letters submitted to the states on April 8, our two organizations emphasized the public health risks associated with expanding the sale and consumption of raw milk and raw milk products. The letters state, “while choice is an important value, it should not pre-empt consumers’ well-being. To expand the sale of raw milk and raw milk products is an unnecessary risk to consumer safety and public health.”

Montana SB 199, titled Provide for the Montana Local Food Choice Act, looks to allow for the sale of unpasteurized milk and cream from small dairies. New Hampshire HB 95 expands the sale of unpasteurized milk products from farmer direct to consumer to include ice cream and yogurt sold in no larger than 6 fluid ounce containers.  Montana SB 199 has been transmitted to the Governor to be signed or vetoed. New Hampshire HB 99 has been re-referred to committee by the Senate. We will continue to monitor the situation.

The FARM Program partnered with Cargill to launch the Actionable Safety Review on April 1.

The safety review is a new online tool that enables dairy farmers to identify and review opportunities to improve safety on the farm. Farmers filling it out are prompted to consider their own operations and make note of their approach to specific safety topics. The tool offers recommendations and resources for farmers to follow-up on those topics. Dairy farmers who complete the safety review will receive a copy of their responses to serve as a list of farm-specific action items designed to keep employees, farmers, and families safe on the dairy.

May’s focus will be on the Calf Care & Quality Assurance (CCQA) program. CCQA is the first, collaborative educational tool that provides guidelines for calf raisers. The CCQA program is jointly led by the FARM program and NCBA’s Beef Quality Assurance (BQA) program, funded by the beef checkoff. Support was also provided by the Dairy Calf and Heifer Association, and the beef checkoff-funded Veal Quality Assurance (VQA) program.

A reference manual sets the foundation for the CCQA program, which has been developed with the understanding of the diversity of calf-raising enterprises and is science- and outcomes-based while maintaining facility type and size neutrality. While the practices identified in the manual are not the only practices that can meet the desired outcomes, the program provides a framework that will serve as great resource for anyone working in the calf-raising industry.

In addition to the manual, the CCQA program will roll out producer-focused training modules that will certify producers in the principles of excellent calf care highlighted throughout the manual later in 2021.

The FARM Program and NMPF collaborated across the dairy community to recognize Earth Day on April 22, using it as an opportunity to highlight their efforts and goals across the sector in conversations about climate, the environment and sustainability throughout the month. In a  joint communications toolkit for members, messaging and social media was provided to amplify the spotlight on:

• The FARM Environmental Stewardship program area
• How farmers are prioritizing on-farm sustainability
• Recent House and Senate Agriculture Committee testimony about the industry’s proactive sustainability work and how congress can support these efforts
• NMPF’s role in the Food and Agriculture Climate Alliance

Nicole Ayache, senior director of sustainability initiatives for NMPF, discussed how the FARM Program has led achievements for the entire sector as dairy strives to achieve ambitious sustainability and emissions goals on the April 12 Dairy Defined podcast and in an article for Hoard’s Dairyman, published on April 19.  The Earth Day theme was continued in a FARM Quick Convos on Net Zero, a Farmer Focus, and another Dairy Defined podcast featuring Krista Hardin, president and CEO of USDEC.

The FARM Program and NMPF jointly promoted U.S. dairy as part of a sustainable, equitable and secure food system to UN Food Systems Summit audiences.

In April, CWT members secured 46 contracts to sell 2.7 million pounds of American-type cheese, 1.1 million pounds of butter, 3.4 million pounds of anhydrous milkfat (AMF), 2.3 million pounds of whole milk powder (WMP), and 1.1 million pounds of cream cheese. These products are going to customers in Asia, Central and South America, the Middle East, North Africa, and Oceania. They will be shipped April through September 2021.

These sales bring the total 2021 CWT-assisted dairy product exports to 14.5 million pounds of cheese, 9.9 million pounds of butter, 7.1 million pounds of anhydrous milkfat, 15.7 million pounds of whole milk powder, and 5.5 million pounds of cream cheese. Member cooperatives have captured sales contracts that will move overseas the equivalent of 706.8 million pounds of milk in 2021.

As dairy farmers work to recover from a challenging 2020, doing what is necessary to strengthen and maintain milk prices is a must. The key for both dairy farmers and dairy cooperatives in 2021 is dairy exports. CWT provides a means to move domestic dairy products to overseas markets by helping to overcome certain disadvantages such as the domestic/global price gap and shipping costs.

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 www.cwt.coop/membership.