News for Dairy Co-Ops

In response to a request from NMPF to help America’s dairy farmers, the Department of Agriculture announced in late August that it would purchase $20 million worth of cheese as the dairy industry weathers a prolonged period of low milk prices.

On August 12, National Milk sent a letter to USDA Secretary Tom Vilsack, asking the department to purchase $100 million of cheese for donation to food assistance programs. NMPF asked USDA to utilize its Section 32 program, as well as additional authorities through the Farm Service Agency, the Food and Nutrition Service, and the Commodity Credit Corporation, to purchase the cheese.

The USDA responded 12 days later by announcing a cheese purchasing program of $20 million, which will remove approximately 11 million pounds of cheese from commercial storage.

NMPF President and CEO Jim Mulhern said the organization was appreciative of USDA’s prompt action. “This cheese purchase will provide some assistance to America’s dairy farmers through increased demand for their milk, while also serving the needs of Americans who patronize food banks that will distribute the USDA purchases.”

Global dairy demand has sagged in the past two years, due primarily to a reduction in purchases by China and Russia. Meanwhile, a world-wide rise in milk production – particularly in Europe, where production quotas were removed last year – has led to an imbalance between supply and demand, pushing prices down for farmers across the globe. U.S. dairy exports have slumped, leading to a large domestic buildup of American-type cheese (between 2014 and 2016, U.S. cheese exports dropped by almost 20 percent).

Mulhern said NMPF will continue to assess the impact of the cheese purchase as markets respond during the remainder of 2016.  The USDA also announced that it is extending until December 16 the deadline for farmers to enroll in or change their coverage for next year in the dairy Margin Protection Program.  NMPF’s www.futurefordairy.com website offers informational resources and a calculator to help farmers assess their coverage for calendar year 2017.

The U.S. Department of Agriculture announced in late August that it would purchase $20 million worth of cheese as the dairy industry weathers a prolonged period of low milk prices.

The announcement by Agriculture Secretary Tom Vilsack came in response to requests for assistance from more than 60 members of Congress, as well as from NMPF, the American Farm Bureau Federation, National Farmers Union and the National Grange. In its letter, NMPF asked USDA to utilize its Section 32 program, as well as additional authorities through the Farm Service Agency, the Food and Nutrition Service, and the Commodity Credit Corporation, to purchase the cheese.

NMPF President and CEO Jim Mulhern said the organization was appreciative of USDA’s prompt action. “This cheese purchase will provide some assistance to America’s dairy farmers through increased demand for their milk, while also serving the needs of Americans who patronize food banks that will distribute the USDA purchases.”

Global dairy demand has sagged in the past two years, due primarily to a reduction in purchases by China and Russia. Meanwhile, a world-wide rise in milk production – particularly in Europe, where production quotas were removed last year – has led to an imbalance between supply and demand, pushing prices down for farmers across the globe. U.S. dairy exports have slumped, leading to a large domestic buildup of American-type cheese (between 2014 and 2016, U.S. cheese exports dropped by almost 20 percent).

Mulhern said NMPF will continue to assess the impact of the cheese purchase as markets respond during the remainder of 2016.  The USDA also announced that it is extending until December 16 the deadline for farmers to enroll in or change their coverage for next year in the dairy Margin Protection Program.  NMPF’s www.futurefordairy.com website offers informational resources and a calculator to help farmers assess their coverage for calendar year 2017.

Early September futures for feed and milk prices indicate that MPP margins should continue rebounding from the $5.76 per hundredweight rate announced for the May-June period. The monthly MPP margin for July was $7.59 per hundredweight, and USDA’s MPP decision tool still projects just a 33% probability that the combined July-August margin will be less than $8 per hundredweight, with margins above $9 projected for this fall and into next year.  USDA’s MPP margin forecasts are updated daily here.

NMPF joined the U.S. Dairy Export Council last week in commending two U.S. Senators for urging the U.S. government to investigate new Canadian dairy pricing policies. These policies have impacted current trade and stand to negatively affect U.S. dairy farmers and manufacturers, jeopardizing the country’s trade commitment to the United States, they said.

In a letter to U.S. Trade Representative Michael Froman and Agriculture Secretary Tom Vilsack, Sens. Chuck Schumer (D-NY) and Tammy Baldwin (D-WI) expressed concern about Canada's recently announced National Ingredients Strategy, and its already active Ontario Class VI pricing program. According to the senators, these programs incentivize Canadian processors to use Canadian milk and dairy inputs, penalizing them for the use of imported dairy products.

The letter highlights the impact of the Canadian approach on exports of ultrafiltered milk from New York and Wisconsin.

“Companies from our states inform us that they have already lost considerable export sales as a result of the Ontario dairy policy introduced this past spring,” the letter said. Not only would these types of programs discourage the use of U.S. dairy exports, the senators continued, they could raise further compliance issues with Canada’s NAFTA and WTO obligations by “impeding dairy trade” between the two countries.

NMPF President and CEO Jim Mulhern noted that the letter is coming at a critical time for dairy trade. “We appreciate the Senators’ attention to the importance of holding one of our largest trading partners to its international commitments and the key role that the U.S. government must play in doing so,” Mulhern said.

NMPF President and CEO Jim Mulhern was one of several top agriculture leaders who discussed the outlook for the Trans-Pacific Partnership during a recent segment on RFD-TV.  Mulhern told the audience watching a special segment last Thursday of RURAL AMERICA LIVE that the TPP will benefit America’s dairy farmers if it is properly implemented.  Mulhern was invited to participate in the RFD-TV segment to explain why the 12-nation pact matters to dairy farmers, and what it could mean for the future of American agriculture.

Industry leaders from both the U.S. and Mexican dairy sectors held a two-day summit last month to foster a renewal of the strong relationship between farmers in both countries. Representatives from both nations, including NMPF President and CEO Jim Mulhern and U.S. Dairy Export Council President Tom Suber, pledged to work together to boost trade between the two countries, address mutual challenges and increase dairy consumption while also promoting milk production on both sides of the border.

At the summit, the dairy leaders signed a memorandum creating the US-Mexico Dairy Alliance, which will meet annually to exchange information, review industry trends and identify and seek solutions for problems affecting the dairy sector in each country. Additionally, the industries committed to seeking ways to further reduce trade barriers between the two countries and defend against efforts to capture generic cheese names like parmesan, asiago and feta for the exclusive use of some European producers.

Signing the memorandum for the United States were Mulhern, and Suber. Signing for Mexico were Salvador Álvarez Morán, president of the Mexico Livestock Association (CNOG) and Juan Carlos Pardo, president of the National Chamber of Industrial Milk (CANILEC).

The summit re-energized a relationship forged under the North American Free Trade Agreement (NAFTA), which was created in 1994. NMPF has consistently pointed to NAFTA as an example of a trade agreement that substantially benefits the countries involved.

“Since NAFTA, our markets have converged seeing both U.S. and Mexican dairy farmers growing. U.S. dairy exports to Mexico have increased significantly, while Mexico’s internal milk production has also seen expansion,” said Mulhern.

A continual challenge for U.S. dairy exporters in recent years has been shifting sets of import requirements on dairy certificates that accompany U.S. products shipped around the world. Numerous countries require government assurances and documentation of the safety of the dairy foods they are importing. As these requirements have proliferated in recent years, though, some countries’ requirements have ground trade to a halt or needlessly put export access at risk through overly burdensome requirements.

To address this persistent concern, NMPF & USDEC are spearheading an effort to build support in the Asia-Pacific Economic Cooperation (APEC) region for a model dairy certificate. The project is aimed at creating a viable go-to dairy documentation template for countries considering putting in place new certification requirements for dairy imports. NMPF believes that encouraging countries to agree on a model certificate could help to alleviate the risk of sudden shifts in import requirements in key U.S. export destinations.

Jaime Castaneda, NMPF SVP for Strategic Initiatives & Trade Policy (pictured at right), participated in recent APEC committee meetings last month to lay out the concept to APEC governments and begin to build support for it, as well as to help foster a wider discussion about the importance of trade-friendly measures. As part of that work, Castaneda moderated a panel on the importance stakeholder consultations in government rulemaking and participated as a speaker in a panel focused on finding trade-facilitating solutions to a variety of supply chain constraints.

Under the APEC procedures, the U.S. dairy industry will work closely with the United States and other governments to establish a technical group that would review the current Codex certificate guidance and other certificates, including the U.S. AMS certificate, to discuss options for establishing a more formal regional certificate. The project is anticipated to enter into a more technical stage of discussions early next year at meetings in Vietnam.

Cooperatives Working Together member cooperatives captured 36 contracts to sell 5.392 million pounds of American-type cheese, 440,925 pounds of butter, and 573,202 pounds of whole milk powder in August. These products will go to customers in Asia, Central and South America, the Middle East, North Africa, and Oceania. The product will be shipped from August 2016 through February 2017.

Through August of 2016, CWT assisted members in getting exports sales contracts totaling 34.778 million pounds of American-type cheese, 8.814 million pounds of butter (82% milkfat) and 21.301 million pounds of whole milk powder going to customers in 21 countries on 5 continents. The sales are the equivalent of 674.815 million pounds of milk on a milkfat basis.

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.

Assisting CWT member cooperatives 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.

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.

Since the U.S. Food and Drug Administration (FDA) issued its final rule on Mitigation Strategies to Protect Food Against Intentional Adulteration in May 2016, the agency has been updating its tools and educational materials to align with the law’s relevant provisions. Late in August, NMPF and its members were asked to help facilitate an inaugural beta testing session on one such tool, the Food Defense Plan Builder software.

The Food Defense Plan Builder is a software program designed to assist owners and operators of food facilities with developing personalized food defense plans for their operations. This user-friendly tool harnesses existing FDA tools, guidance and resources for food defense into one single application. The latest version includes features that will help companies comply with the final rule when it goes into effect in 2019. 

The software was well received with little major revision needed. FDA has said it would make the final version of the software available no later than one year in advance of the compliance date.  Version 1.0 of the software is currently available for download. Food defense plans developed with that version will function with the revised version when it is released.

During the beta testing session, FDA announced it would initiate a “quick-check” program in 2019 as part of a regular food safety inspection process to verify that the regulated community is complying with the rule’s requirements. NMPF is confident that those using the software will comply, and urges its members to avail themselves of the software. NMPF staff have significant experience with food defense issues and will take steps to facilitate members’ compliance with the rule.  For questions about the rule or the software, please contact Clay Detlefsen.

On August 24, the Food and Drug Administration (FDA) announced the availability of a draft guidance for industry titled “Hazard Analysis and Risk-Based Preventive Controls for Human Food: Guidance for Industry.” This document includes several chapters intended to explain FDA’s current thinking on how to comply with the requirements for hazard analysis and risk-based preventive controls rule.  NMPF will be reviewing the materials and advising its members on implications for dairy processing facilities.

The guidance chapters that FDA released thus far include:

• Chapter One—The Food Safety Plan
• Chapter Two—Conducting a Hazard Analysis
• Chapter Three—Potential Hazards Associated with the Manufacturing, Processing, Packing, and Holding of Human Food
• Chapter Four—Preventive Controls
• Chapter Five—Application of Preventive Controls and Preventive Control Management Components

By 2018, FDA will have released an additional nine chapters of guidance. NMPF will review the 500-plus pages of information that FDA releases and will inform its membership of any relevant information that will assist with regulatory compliance. In addition, NMPF plans to file comments on any pertinent issues by the comment deadline of February 21, 2017.  The draft guidance is available here. Questions about the guidance can be directed to Clay Detlefsen or Beth Briczinski.

The National Dairy FARM Program continues to roll out materials to help producers prepare for the implementation of Version 3.0 of the program on Jan. 1, 2017. The following resources are now available on the FARM Program website:

• FARM Version 3.0 Animal Care Manual: a comprehensive document, developed by the Technical Writing Group, that provides best management practices and guidelines for the highest level of animal care.
• Version 3.0 Self-Assessment: a guide for producers to follow to prepare for their Version 3.0 evaluation. It has general FAQs about the FARM Program and the evaluation and also provides a checklist of documents to have ready prior to the evaluation.
• Written Herd Health Plan: a guide for producers to create a Herd Health Plan for their dairy. It provides written protocols for all areas focused on within the Animal Care Manual.

Registration remains open until October 7 for the NMPF 2016 Annual Meeting, to be held October 31-November 2 in Nashville, Tennessee. NMPF will join the National Dairy Board and United Dairy Industry Association in gathering stakeholders to share in dairy’s accomplishments and challenges, as well as discuss the best paths to follow for the future. Registration information is online here.

Several prominent speakers will be featured at this year’s event, the 100th year of NMPF’s founding. Stuart Rothenberg, a leading political analyst, will share his humorous and captivating thoughts about the likely outcome of this year’s historic presidential election, and what’s at stake for the dairy industry.

Nina Teicholz will discuss how her research and book, “The Big Fat Surprise: Why Butter, Meat & Cheese Belong in a Healthy Diet,” has upended the conventional wisdom on dietary fat and challenged the very core of nutrition policy.

Leigh Anne Tuohy, the inspirational subject from the real-life story and movie, “The Blind Side,” will speak to luncheon attendees about recognizing the full potential of individuals in their communities. The banquet entertainers will be the Last Bandoleros, a high-energy country-rock group.

Rick Smith, CEO of Dairy Farmers of America, as well as NMPF’s Jim Mulhern and Randy Mooney will also speak at this year’s event. The Dairy Bar returns this year, featuring samples from familiar brands like Domino’s and Pizza Hut.

For more information on the schedule, hotel accommodations and more, click here.

Registration also remains open for the inaugural FARM Program Evaluator’s Conference, a two-day event from Nov. 2-3, 2016, in Nashville, following NMPF’s annual meeting Oct. 31-Nov. 2.

The event will provide professional development opportunities for the more than 370 trained FARM Program evaluators to network, hear from engaging speakers and interact with each other. Conference sessions will include discussions on the latest animal well-being research, crisis management and communications training, as well as round table discussions and interactive activities about FARM Program challenges and opportunities.

Attendees will also have the opportunity to participate in an optional stockmanship training hosted in partnership with the National Cattlemen’s Beef Association’s (NCBA) Beef Quality Assurance Program. This session teaches handling methods to improve gathering, sorting, chute work, parlor movement and transportation of dairy cattle. Attendees will learn how to reduce handling stress and discuss how producers can have a significant economic – as well as quality-of-life – advantage when applied on the farm.

Registration information and further details can be found on the FARM Program website.