News for Dairy Co-Ops

The National Milk Producers Federation (NMPF) today submitted to USDA its comprehensive proposal for modernizing the Federal Milk Marketing Order (FMMO) system, the product of two years of examination and more than 150 meetings held to build consensus behind updates to a program that last saw significant changes in 2000.

“Dairy farmers and their cooperatives need a modernized Federal Milk Marketing Order system that works better for producers,” said NMPF President and CEO Jim Mulhern. “By updating the pricing formulas to better reflect the value of the high-quality products made from farmers’ milk, by rebalancing pricing risks that have shifted unfairly onto farmers, and by creating a pathway to better reflect processing costs going forward, we are excited to submit this plan as a path toward a brighter future for dairy.”

Upon official acceptance, USDA will have 30 days to review the plan and decide whether and how to move forward with a federal order hearing to review the plan. Highlights include:

• Updating dairy product manufacturing allowances (the “make allowance”) contained in the USDA milk price formulas;
• Discontinuing the use of barrel cheese in the protein component price formula;
• Returning to the “higher of” Class I mover;
• Updating milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas; and
• Updating the Class I differential price system to reflect changes in the cost of delivering bulk milk to fluid processing plants.

NMPF will pursue two other components of its Federal Order proposal, approved unanimously by the organization’s Board of Directors in March, outside of the federal-order hearing process, as they don’t involve changing federal order regulations. The recommendations, which remain essential parts of NMPF’s modernization plan, are:

• Extending the current 30-day reporting limit to 45 days on forward priced sales on nonfat dry milk and dry whey to capture more exports sales in the USDA product price reporting, which can be implemented through federal rulemaking; and
• Developing legislative language for the farm bill to ensure the make allowance is regularly reviewed by directing USDA to conduct mandatory plant-cost studies every two years.

Mulhern urged USDA to grant a hearing on the entire NMPF proposal, noting how the effectiveness of some components are dependent on the inclusion of others. Mulhern also thanked other organizations that have helped NMPF forge necessary producer consensus by sharing views and insights throughout the process, saying that spirit of unity and good-faith discussion will help FMMO modernization move forward more quickly.

“From state and regional dairy associations to the American Farm Bureau Federation, dairy farmers have had many allies and friends throughout this process,” Mulhern said. “As Secretary Vilsack has stated, consensus is necessary to successful modernization. We have that producer consensus, and we look forward to working together toward adoption and implementation of our plan.”

Second-generation New York dairy farmer Blake Gendebien championed NMPF’s Federal Milk Marketing Order (FMMO) modernization petition and advocated for a strong dairy safety net at a Senate Agriculture subcommittee hearing held today to review commodity programs in the farm bill.

“We are heartened by the strong support among dairy farmers from coast to coast for this broad proposal,” Gendebien said of NMPF’s FMMO proposal, which the organization submitted to USDA yesterday. “We are hopeful that this comprehensive, thoughtful, measured approach to modernizing the program will be considered as the foundation for a national federal order hearing.”

Gendebien, vice chairman of Agri-Mark, an Andover, MA-based NMPF member cooperative, testified on NMPF’s behalf at the hearing of the Subcommittee on Commodities, Risk Management and Trade, held on Capitol Hill in Washington.

The hearing, titled “Producer Perspectives on the Farm Safety Net,” kicks off Senate consideration of this year’s farm bill reauthorization, due Sept. 30. The measure includes programs important to dairy farmers such as the Dairy Margin Coverage (DMC) safety net and supports risk management programs such as Dairy-Revenue Protection (Dairy-RP) and Livestock Gross Margin-Dairy (LGM-Dairy).

DMC, which Gendebien lauded in his testimony, offers effective margin protection for small and mid-sized farms and affordable catastrophic coverage for large farms. Risk management programs including Dairy-LP and LGM-Dairy give all farmers the ability to tailor risk management to their specific needs.

“DMC has provided important security to my family’s farm, given the volatility that persists in dairy markets,” Gendebien said in his testimony. “Since the program was implemented in 2019, we have consistently purchased the maximum available DMC coverage at a margin of $9.50 per hundredweight, knowing that it may not pay out every year, but is intended to serve as a safety net when needed.”

The upcoming farm bill still presents an opportunity for improvements, Gendebien said, highlighted NMPF’s work to vet and review potential improvements to the dairy safety net and risk management programs, including a further update to DMC’s production history calculation.

“Dairy farmers need the opportunity to update their production history to reflect more current on-farm production levels,” Gendebien said. “Other farm safety net programs do not use such an outdated production reference.”

On marketing orders, Gendebien supported NMPF’s plan in this year’s farm-program reauthorization to pursue reinstating the previous “higher of” Class I mover, given the asymmetric risk borne by farmers under the current mover.

“There’s a ceiling on how much better the new mover can perform than the old mover,” Gendebien said in response to a question from Sen. Kirsten Gillibrand, D-NY, who chairs the Senate Agriculture Committee’s Dairy Subcommittee. But because the new mover is capped at 74 cents per hundredweight but has no floor, “it really causes a problem,” he said. “In 2020 and in 2022, the divergence in III and IV cost farmers about $900 million. We’d like to go back to the original “higher of,” which would eliminate those massive losses.”

Gendebien at the hearing also supported increased resources for farmer mental health services. “We need to remove the stigma around mental health,” he said, responding to a question from Gillibrand.

Following three straight months when the Dairy Margin Coverage (DMC) margin dropped by well over $1.00/cwt, the margin dropped again in March, but by just 11 cents from February.

The milk price was down again, for the fifth month in a row, to $21.10/cwt, $0.50/cwt less than the month before, and feed costs were down by almost as much, $0.40/cwt, the first monthly drop on the DMC feed cost since last November. The lower feed costs were driven almost equally by drops in the prices of all three feed components of the formula, when expressed on a milk equivalent basis. The March DMC margin of $6.08/cwt will result in a payment of $3.42/cwt for Tier 1 coverage at the maximum $9.50/cwt level.

Available forecasts currently indicate that the monthly DMC margins are close to bottoming out for the year, at around $6.00/cwt in a month or two, followed by a slow rise that still looking may not exceed $9.50/cwt until the fourth quarter.

The National Conference on Interstate Milk Shipments (NCIMS) addressed 72 proposals submitted to revise the Pasteurized Milk Ordinance (PMO) and its related documents at a meeting in Indianapolis from April 3-7.

NMPF staff advocated positions of interest for dairy cooperatives and their producer members. Many NMPF members also attended and played key roles in the deliberations of the conference. The 2023 conference featured more than 400 attendees — a record — after taking a four-year hiatus due to the COVID-19 pandemic. NMPF was pleased with many of the outcomes of the proposals and made significant progress in achieving reasonable solutions on many key issues.

The conference once again highlighted the successful collaboration between the U.S. Public Health Service/Food and Drug Administration, state regulators and dairy industry representatives to continue to promote and protect a safe supply of Grade A milk and milk products.  A total of 40 proposals were passed by the delegates either as submitted or as amended. Below are the outcomes of the NMPF-submitted proposals.

• Proposal 207 was submitted to require a 48-hour notice prior to on-farm inspection. Reasons for this include the risks to human health following the COVID-19 pandemic, the farm’s biosecurity and overall personnel safety. The proposal was amended at the conference and passed through the delegates to be assigned to a standing or ad-hoc committee to review sections 8, 13, and 14 of the PMO. This is an important first step in recognizing the importance of biosecurity measures on dairy farms and will hopefully lead to further discussion of inspection notices.
• Proposal 301 provided a definition of equivalence for the USPHS/FDA responsibility to determine whether a foreign country’s regulatory program and government oversight of that program has an equivalent effect on the safety of the regulated milk or milk product. The term “equivalence” is important for international trade; unfortunately, the PMO has long lacked a definition. This proposal passed through the delegates as amended to include a plain language definition in line with that of the World Trade Organization. Defining equivalence provides clarity for industry, state and Federal stakeholders about foreign countries’ obligations to participate in the PMO. This proposal reinforces the importance of transparency when analyzing equivalence for foreign countries.
• Proposal 302 was voted no action as 301 was decided to be the proper pathway for equivalence.

Also to note, Antone Mickelson, NMPF’s NCIMS committee chair, was re-elected to fill the western states industry seat on the NCIMS Executive committee and NCIMS Vice Chair. The next conference will be held in 2025 in Minneapolis.

NMPF’s efforts to protect the rights of dairy producers to use common names such as parmesan or feta were supported by the U.S. Trade Representative’s (USTR) office in its April 26 report on international challenges to intellectual property rights.

In its annual Special 301 Intellectual Property Report, USTR highlighted several policy concerns that NMPF and USDEC raised in joint comments filed on Jan. 30, as well as in a separate filing by the Consortium for Common Names (CCFN), which NMPF’s trade policy team staffs.

The report describes in detail the European Union’s ongoing campaign to abuse and misuse geographical indication (GI) rules to confiscate generic food and beverage terms and prevent U.S. producers from selling certain common name foods in specific markets:

The EU GI system and strategy “adversely impact access for U.S. and other producers in the EU market and other markets by granting protection to terms that are considered in those markets to be the common name for products,” the report stated.  “The EU has granted GI protection to thousands of terms that now only certain EU producers can use in the EU market, and many of these producers then block the use of any term that even ‘evokes’ a GI.

“As part of its trade agreement negotiations, the EU pressures trading partners to prevent any producer, except from those in certain EU regions, from using certain product names, such as fontina, gorgonzola, parmesan, asiago, or feta. This is despite the fact that these terms are the common names for products produced in countries around the world.”

NMPF will continue to engage USTR and the rest of the administration to turn these concerns into concrete actions. The U.S. government has a full suite of tools at its disposal, including existing free trade agreements and upcoming trade negotiations, to establish firm and lasting market access protections with U.S. trading partners around the world.

NMPF’s Executive Vice President for Policy Development and Strategy Jaime Castaneda traveled to Argentina for a regional seminar April 19-20 on, “The road to sustainability in livestock production in the Americas,” Coordinated in partnership with USDEC, the Pan-American Dairy Federation (FEPALE) and the Federation of Rural Association of the Mercosur (FARM).

The seminar facilitated discussion of common opportunities and challenges for the dairy and livestock sectors in the Americas on sustainability and other food systems policy issues. Organizers also adopted a set of joint principles to formalize collaboration on climate, the role of trade, and the importance of sustainable productivity growth.

The new partnership will focus on engaging government officials and international organizations to promote climate policies that are attainable for the dairy and livestock industries, given their unique needs.

With the UN Food Systems Summit Stocktaking Moment and COP28 taking place next year, this collaboration will play a significant role in ensuring dairy and livestock producers have a seat at the table and shaping the discussion of the agricultural industry’s part in reaching climate goals.

As supply chains struggle to fully recover from the pandemic, NMPF continued to engage Congress and the administration on ways to improve ocean and freight shipping.

Representative John Garamendi, D-CA, introduced the Ocean Shipping Competition Enforcement Act on April 8. Supported by NMPF, the bill would allow the Federal Maritime Commission to block anti-competitive agreements among ocean common carriers and maritime terminal operators – an important step in leveling the playing field with dairy exporters.

Additionally, NMPF joined partner organizations in sending two letters from industry urging the U.S. government to address a pair of ocean shipping concerns.  NMPF joined leading agriculture and retail organizations March 24 in calling for the administration to help resolve the ongoing West Coast port labor negotiations. Ocean terminal operators and workers have made little progress on a new labor agreement since the last contract expired over ten months ago. U.S. dairy exporters need the two parties to reach an agreement so that West Coast ports can return to operating at full capacity, a message that NMPF continues to relay on Capitol Hill.

Separately, NMPF joined the Agriculture Transportation Coalition in sending a letter to Representatives Dusty Johnson and John Garamendi, asking the OSRA co-sponsors to direct the maritime commission to address fees being incurred at rail depots for factors outside of dairy exporters’ control. Although OSRA required a stop of unwarranted fees at ocean ports, railyards currently fall outside of the commission’s jurisdiction. NMPF and its allies are advocating for Reps. Johnson and Garamendi to formally clarify the authority of the maritime commission under the OSRA to regulate these charges and facilitate more efficient and fair ocean shipping.

NMPF underscored its longstanding commitment to animal traceability to combat disease outbreaks while opposing a change to the definition of “dairy cattle” in comments it submitted  April 19to the United States Department of Agriculture Animal and Plant Health Inspection Service (USDA-APHIS) on the Use of Electronic Identification Eartags as Official Identification in Cattle and Bison (Docket No. APHIS–2021–0020).

USDA-APHIS is proposing to amend its animal disease traceability regulations to require that eartags be both visually and electronically readable to be recognized for use as official eartags for interstate movement of cattle and bison covered under the regulations. The agency also proposed changes to the definition of “dairy cattle” to include cross-bred dairy beef animals.

The proposed changes are intended to enhance the ability of tribal, state and federal officials, private veterinarians, and livestock producers to quickly respond to high-impact diseases currently existing in the United States, as well as foreign animal diseases that threaten the viability of the U.S. cattle and bison industries.

NMPF comments focused on the USDA-APHIS alignment with the longstanding NMPF policy supporting mandatory animal identification with radio frequency identification device (RFID) tags for dairy cattle. The USDA-APHIS requirement for eartags to be electronically readable comports with NMPF’s animal identification policy which is nearly two decades old.

NMPF in its comments opposed the APHIS proposed change to the definition of “dairy cattle” to include cross-bred dairy beef animals. APHIS contended that cross-bred dairy-beef animals, which are raised solely for meat and not for milk, represent increased risks of disease transmission and thus the animal disease traceability requirements should be the same as for dairy cattle. However, APHIS did not present data to indicate an increased risk of disease transmission and simply asserted that being raised and managed on a dairy farm result in increased risk. Many dairy farms also raise other livestock commercially, such as swine and poultry, yet USDA-APHIS did not propose to have similar disease traceability requirements for those animals. NMPF suggested these crossbred dairy-beef animals should have the same requirements as other beef cattle.

CWT member cooperatives secured 38 contracts in April, adding 3 million pounds of American-type cheeses, 55,000 pounds of butter, 6.7 million pounds of whole milk powder, 2,000 pounds of anhydrous milkfat and 522,000 pounds of cream cheese to CWT-assisted sales in 2023. In milk equivalent, this is equal to 85.6 million pounds of milk on a milkfat basis. These products will go to customers in Oceania, South America, Asia, Central America and the Caribbean, and will be shipped from April through October 2023.

CWT-assisted 2023 dairy product sales contracts year-to-date total 15.6 million pounds of American-type cheese, 495,000 pounds of butter, 3.4 million pounds of cream cheese, 2,000 pounds of anhydrous milkfat and 24.5 million pounds of whole milk powder. This brings the total milk equivalent for the year to 361.4 million pounds on a milkfat basis.

Exporting dairy products is critical 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, or whole milk powder, 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.

NMPF’s newest staff member, David West, has joined the organization as its Vice President of Finance and Administration for the Federation and its related organizations.

In that role, West is responsible for overseeing all finance and accounting, human resources, information technology, contract management, and other administrative matters. He also serves as the advisor to the senior leadership team on financial planning, reporting, budgeting, and operations and ensures organizational legal and regulatory compliance. In carrying out these responsibilities, David supervises a team of in-house administrative personnel and outsourced accounting, human resources, and legal services professionals.

Prior to joining NMPF, David served as the Director of Finance and Administration at George Washington’s Mount Vernon, a non-profit with 650 employees that generates $70 million in revenue and $200 million in investments. During his tenure, he led the organization’s efforts, in budgeting, finance, compliance, payroll, and system administration. Before that, David worked in public accounting at Tate & Tryon, where he oversaw non-profit financial preparation for a variety of non-profit organizations.

A native of Northern Virginia, David resides in Springfield, VA and is a graduate of High Point University in North Carolina.