News for Dairy Co-Ops

The popular Dairy Margin Coverage program signed up more than 22,000 dairy farmers – more than participated in the last year of the Margin Protection Program that it replaced — and paid out more than $302 million in its first year. That’s $302 million more than what farmers would have received under the MPP, which would have actually cost farmers money in 2019, according to an analysis of USDA data done by NMPF.

Monthly milk price/feed cost margins so far in 2019 have been above the $8 per hundredweight coverage cutoff that existed under MPP, but below the new $9.50 per hundredweight coverage limit under DMC, the stronger dairy safety net in the farm bill enacted last year with support from NMPF and the dairy community. Under the old MPP rules, the total paid out under the entire program so far this year would have been $75,000 — about $3 per farmer and a net loss for them after premium costs. Instead, the new DMC threshold has triggered hundreds of millions of dollars in much-needed assistance for dairy producers, showing the program’s value and helping farmers stay afloat who otherwise may not have been able to continue.

“The Dairy Margin Coverage program has proven its worth, with more than $300 million in farmers’ pockets as a result of our work on the farm bill with Congress and USDA,” said Jim Mulhern, president and CEO of NMPF. “None of that assistance would have occurred under the MPP. We encourage farmers who haven’t already signed up for all five years of Dairy Margin Coverage to re-new their sign up for 2020, and for farmers who decided not to participate in the 2019 program to consider it in the future.”

According to the latest USDA data, 22,631 dairy producers signed up for DMC. Based on reported margins for the first eight months of the year, payouts so far for 2019 have been $302,906,824. More than half of all farmers who signed up chose to sign up for one year, with the rest signing up for the full five years at a 25 percent premium discount. Wisconsin signed up the largest number of farmers, while California enrolled the highest production volume of any state.

A key change to the program that boosted aid was the inclusion of dairy-quality alfalfa into the feed-cost calculation, which narrowed the difference between milk prices and feed costs and adjusted margins to better reflect dairy expenses, a change that NMPF pushed for throughout legislation and implementation.

“We thank USDA not only for prioritizing the DMC in farm-bill implementation but adjusting it in a way that provided additional benefit to producers,” Mulhern said. “The DMC’s success has truly been a partnership throughout, from a united dairy community that aided Congress as it crafted and approved the program, to USDA’s work with that community in making it reality.”

Wisconsin had the most farms sign up, while California enrolled the most production. More than half of all farmers who signed up chose to sign up for one year, with the rest signing up for the full five years at a 25 percent premium discount.

The 2020 DMC sign-up will start Oct. 7. NMPF has a resource page on its website with more information about the DMC.

The United States and Japan reached an interim trade agreement at the end of September that will deliver welcome improvements in market access for the U.S. dairy industry. Still, further work remains to secure a sufficiently competitive landscape in Japan for dairy.

“This interim trade agreement with Japan is welcome news for farmers across the U.S. who have seen their incomes damaged by trade disputes,” said Jim Mulhern, president and CEO of NMPF. “We thank America’s trade negotiators for their pursuit of a deal aimed at benefiting our dairy farmers and expanding international markets for their high-quality milk. To reap those full rewards and ensure the U.S. is best able compete in the Japanese market, the subsequent stage of negotiations must secure further inroads into Japan, building upon what our key competitors – the European Union and New Zealand – have secured there.”

This trade development followed a NMPF and USDEC-led letter to the United States Trade Representative and the U.S. Secretary of Agriculture in August that encouraged the U.S. government to negotiate a trade deal with that builds upon the best market access components of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Japan-EU agreements and includes safeguards for common cheese names. This letter was signed by 70 dairy companies, farmer-owned cooperatives, and associations.

NMPF staff have been closely engaged with U.S. negotiators throughout these latest trade discussions, advising the USTR and communicating with Congress regarding the expected outcomes for dairy, conveying the dairy industry’s priorities.

One of the chief goals of the industry remains that an agreement will address the inequalities in market access in Japan granted to U.S. competitors by the CPTPP and Japan-EU agreements and push for ways to build upon what Japan agreed to in those earlier agreements. Japan represents a rapidly growing market, and without a strong trade deal, U.S. competitors in Australia, New Zealand and Europe will continue to receive an advantage over American dairy products.

This trade agreement represents the first stage of trade talks, as the White House has announced that they plan to pursue further trade negotiations to “achieve a comprehensive trade agreement that results in more fair and reciprocal trade between the United States and Japan.”

NMPF will continue to work with U.S. officials to achieve our stated goals and ensure that the U.S. dairy industry continues to command a growing share of Japan’s market.

From lawmaker meetings to motorcades, NMPF continues to make the case for the U.S.-Mexico-Canada Agreement as Congress and the White House work to hash out concerns that have hindered passage of the deal, which in October turned one year old. U.S. Trade Representative Robert Lighthizer is in active discussions with a nine-member working group of Democratic lawmakers to come to a consensus on several issues, including enforcement of the agreement.

Many members of Congress have expressed an understanding of the benefits of USMCA for agriculture and dairy. While the working group negotiations with USTR continue and the Administration has not yet sent implementing legislation to Congress, Speaker Nancy Pelosi recently told a reporter that she hopes “we’re on a path to yes.” House Ways and Means Chairman Richard Neal, leader of the working group, said that both sides have agreed to “intensify the discussions,” indicating there may be a positive path for USMCA this fall.

NMPF continues to work diligently to ensure that Congress understands the significance of USMCA for America’s dairy farmers and the urgency of getting it in place. In addition to solidifying our terms of trade with Mexico, tackling trade-distorting Canadian dairy policies such as Class 7, and paving the way for the U.S. to move on to additional trade negotiations, NMPF estimates that over the first six years of implementation, USMCA will bolster dairy farm revenue by an additional $548 million due to greater U.S. dairy exports in North America.

To secure these trade gains, Congress and the White House will need to quickly resolve any issues standing in the way of USMCA’s passage. NMPF’s campaign for USMCA’s passage has included meetings with key congressional offices on Capitol Hill, working with dairy cooperatives on opinion pieces for publication in local newspapers, creating materials laying out dairy’s case for the agreement and participating in coalition efforts such as the drive to accumulate signatures on letters of support from individual farmers and food-company employees.

Last month NMPF also participated in the “Motorcade for Trade” as it made its final stop last month in front of the U.S. Capitol for a rally to tout the trade benefits of USMCA. NMPF joined host organization Farmers for Free Trade, other agricultural groups and members of Congress from both sides of the aisle at the rally to help push for swift passage of this vital trade agreement.

“Restoring certainty to our trade relationships and bolstering the prospects for dairy exports by passing USMCA will bring important benefits to the dairy farmers and rural economies that rely on these export markets,” said Jim Mulhern, president and CEO of NMPF, following the rally. “America’s farmers are counting on Congress and the Administration to work together to secure passage of USMCA, and soon.”

NMPF is requesting dairy farmers respond to this survey to better understand how dairy farmers interpret an antibiotic with a zero-day withdrawal period of zero-day milk discard time.

The U.S. Food and Drug Administration opened a docket Aug. 9 requesting information regarding transit times to slaughter, milking frequency, and how end users interpret zero-day withdrawal period or zero-day milk discard time statements found on new animal drug labeling. This request is driven by the recognition that the animal agriculture industry has drastically changed since original assumptions were determined in 1980, and FDA is requesting information to ensure their regulations are in line with what is practiced today. The full request can be found here.

Survey responses are completely anonymous and cannot be traced back to the respondent. No personally identifiable information is captured, and your responses will be combined with those of other farmers and summarized to further protect anonymity. The answers will be used to inform NMPF’s comments to the FDA to ensure they have the most accurate information from dairy farmers.

NMPF regulatory expert and staff counsel Clay Detlefsen spoke about the importance of maintaining the integrity of the standards of identity and the unintended consequences of horizontal standards at a meeting hosted Sept. 27 by the U.S. Food and Drug Administration (FDA) soliciting input on the creation of horizontal standards across all categories of standards of identity.

So-called “horizontal” standards would allow the FDA to make sweeping changes to food standards of identity across categories. Proponents argue such standards would allow manufacturers to innovate and produce more nutritious versions of standardized foods. Detlefsen urged caution, noting the unintended consequences of across-the-board changes.

Of more than 280 standards of identity, 95 are for dairy products, Detlefsen said. If a change to one is a change to all, unforeseen results could be seen in any number of the other 280 foods, he said. For example: FDA has proposed allowing vegetable oils to be used where animal fats are currently used because of their so-called “healthier” nature, opening the door, for example, to olive oil substituted for animal fat – with an end result being an inferior-quality ice cream that has no cream in it.

“When dealing with 280 very different standards, and the intention is to improve one, such changes may not be transparent when applied to different foods, and stakeholders could be deprived of a proper opportunity to weigh in,” Detlefsen said. “Further, in many cases the real motivation for change could be to make the product cheaper.”

NMPF suggested that if any changes possibly could be limited to foods that are similar, such as grouping all dairy together or all cheeses.

The meeting, which took place on September 27^th, was held as part of the agency’s comprehensive, multi-year nutrition innovation strategy. FDA wants to modernize the standards of identity to:

1) protect consumers against economic adulteration;

2) maintain the basic nature, essential characteristics and nutritional integrity of food;

3) promote industry innovation and provide flexibility to encourage manufacturers to produce healthier foods.

The meeting included a history of the standards of identity, and three breakout sessions on innovation, nutrition, and consumer expectations where participants were free to share their opinions on the topics.

A twenty-cent per hundredweight increase in the price of milk from July to August, together with a 38-cent drop in the Dairy Margin Coverage feed cost calculation over the same time boosted the DMC margin for August by 58 cents a hundredweight over July’s margin of $9.27 per cwt. to $9.85, and thus “out of the money” for generating payments under the program. The maximum margin coverage level under the program is $9.50 per cwt. for up to five million pounds of covered production history. A drop in the price of corn, assisted by lower soybean meal prices as the country heads into harvest season, generated the DMC cost reduction, the largest monthly drop since June 2018. The DMC margin will almost certainly remain above $9.50 per cwt. for the remainder of 2019.

As of Sept. 26, USDA’s DMC Decision Tool, which can be accessed online, projected the margins shown in the chart on the left.

The DMC information page on NMPF’s website offers educational resources to help farmers make better use of the program.

The Environmental Protection Agency officially repealed the Waters of the U.S. (WOTUS) regulation Sept. 12^th, paving the way for that agency and the Army Corps of Engineers to finalize a new rule later this year or early next year. Having filed several comments regarding the need to repeal the 2015 WOTUS rule, NMPF agrees with this long-anticipated development, which will reduce confusion and uncertainty over the Clean Water Act that has lingered for more than four years.

The WOTUS regulation that took effect in 2015 was deeply unpopular among farm groups. Citing the many ambiguities and uncertainties of EPA’s then-proposed rule, NMPF urged EPA to rethink it in 2014, before it was adopted. An NMPF analysis at the time found that the Obama Administration proposal did not meet the requirements of various Supreme Court rulings that were the catalyst for the 2015 regulation.

Repealing the 2015 rule now makes the 1986 WOTUS rule effective for the entire United States.

The first FARM Stakeholder Forum held Sept. 4-5 in Minneapolis provided updates for all four FARM program areas and invited industry stakeholders to join the conversation on the FARM Program. National Dairy FARM Program team Representatives from pharmaceutical, nutrition, technology, extension and other support companies discussed opportunities for future partnership and collaboration with FARM to advance the goal of continuous improvement within the dairy industry.

For this month, The Innovation Center for U.S. Dairy and the FARM Program are holding a customer webinar series this month targeted toward food-service and retail customers.

Each session will focus on hot topics and priorities in the dairy industry important to businesses.  The webinars in the three-part series will be led by the FARM team and other industry experts who will provide the latest information and address questions about the future of animal care, how worker experiences can be enhanced on the farm, and how the U.S. dairy industry works from the farm to the retail shelf.

For more information or to learn how to register to attend these webinars, please email dairyfarm@nmpf.org.

The FARM program has updated its Antimicrobial Resistance Challenge numbers, showing dairy’s commitment to preventing the development of superbugs in livestock.

The Antimicrobial Resistance (AMR) Challenge was launched by the Centers for Disease Control and Prevention at the United Nations General Assembly in 2018 to “accelerate the fight against antimicrobial resistance across the globe.” By participating, governments, non-governmental organizations and private companies committed to preventing the spread of antimicrobial resistance and slowing the development of new resistance.

The National Milk Producers Federation committed to the AMR Challenge last year, joining more than 200 participants worldwide. NMPF took up the challenge through encouraging increased veterinary oversight of antibiotic use via FARM’s Veterinarian-Client-Patient-Relationship initiative. Under VCPR, a dairy farmer consults with a veterinarian on development of treatment and recordkeeping protocols that address the proper use of antibiotics. Dairy farms then are evaluated on conformance to the standards by a certified independent expert.

Since 2017, 27,650 dairy farms have been evaluated by the FARM Animal Care Program. Seventy-eight percent of evaluated farms had a valid VCPR, and the remaining 22 percent obtained a valid VCPR with the next 5.5 months.  For more about the AMR Challenge, visit at https://www.cdc.gov/drugresistance/intl-activities/amr-challenge.html.

In a letter to Administrator Andrew Wheeler, NMPF asked the Environmental Protection Agency to reassess a 2012 study examining the sources of nitrates in Washington’s Yakima Valley.  This report unfairly accuses local dairy farmers of contributing the majority of nitrates in lower Yakima Valley groundwater. When this study was published, there were questions and concerns raised by some of the top scientists and agronomists in the country that were apparently ignored by the Region 10 EPA staff.  Yet EPA has used this flawed study as the basis for regulatory decisions.

The study had several flaws, including inadequate data to support the conclusions that were being made, limited site information, using data only pertaining to the soils in the Yakima valley, errors in estimating the seepage rates from manure lagoons and not accounting for all sources of nitrates. Other groups have written letters, as has Rep. Dan Newhouse, R-WA, in support of doing a new review of the study. NMPF is hoping the agency will soon conduct a more thorough review of the science.

The Innovation Center for U.S. Dairy is now accepting nominations for the 2020 U.S. Dairy Sustainability Awards, which showcases the efforts cooperatives are making across the country that demonstrate positive environmental, societal and economic impact.

Cooperatives or farmer-members may be nominated in any of the following categories:

• Outstanding Dairy Farm Sustainability
• Outstanding Community Impact
• Outstanding Supply Chain Collaboration
• Outstanding Dairy Processing and Manufacturing Sustainability

Entries are at no cost. To learn more about eligibility, application requirements and to nominate someone, visit USDairy.com/Awards. Nominations close Nov. 15.

More than 70 farms and business have already been recognized through the U.S. Dairy Sustainability Awards program. The 2020 winners will receive:

• An expense-paid trip to Chicago next April to the awards ceremony and annual dairy sustainability events
• National and local recognition of their passion for sustainability
• A featured case study on com to share insights and lessons learned with industry peers
• Opportunities to work with others in the dairy community to help advance sustainability

Cooperatives Working Together in September assisted member cooperatives in capturing 39 contracts to sell 2.4 million pounds of American-type cheeses, 299,829 pounds of butter, 7.8 million pounds of whole milk powder, and 668,001 pounds of cream cheese. The products will be going to customers in 12 countries in Asia, the Middle East, Central and South America and are being shipped during the period from September 2019 through next February.

These contracts bring the 2019 total CWT-assisted product sales contracts to 94.4 million pounds, which includes of 42.6 million pounds of cheese, 4.5 million pounds of butter, 42 million pounds of whole milk powder, 277,782 pounds of anhydrous milkfat, and 5 million pounds of cream cheese. These transactions will move the equivalent of 848 million pounds of milk on a milkfat basis overseas.

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, helps 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.

With the registration deadline for the 2019 NMPF annual meeting looming Oct. 10, dairy producers and cooperative executives need to reserve both a hotel room and register for the meeting by the end of this week.

This year’s meeting, Nov. 4-6 at the Hyatt Regency hotel in New Orleans, will highlight the ways DMI and NMPF are collaborating to tackle two major issues facing dairy farmers today:  the importance of animal care in promoting the image of the U.S. dairy sector; and the opportunities available to U.S. dairy farmers for international market growth.

Attendees will hear from industry leaders during panel discussions on these topics, including Mike Haddad of Schreiber Foods; Simon Vander Woude of California Dairies, Inc.; Mike Durkin of Leprino Foods; and Ritch Allison of Domino’s Pizza. These perspectives will be complimented by the unique perspectives of farmer leaders from across the country. Attendees will also hear from University of California-Davis professor Frank Mitloehner, who will address how the entire value chain can work together to make dairy a sustainability success story.

The meeting will feature a Town Hall presentation from National Milk staff to provide participants with an overview of the work that the organization has provided for its members in 2019.  The general sessions will be preceded by the NMPF Board and Delegates meetings, and the Young Cooperator session, on Monday, Nov. 4.

Learn more about the meeting from the 2019 Join Annual Meeting website.  Individuals may register for the 2019 Join Annual Meeting at this link. Make hotel reservations ASAP using this link (NOTE: reserving a hotel room is a separate process from meeting registration).