News for Dairy Co-Ops

With the signup deadline for the Dairy Margin Coverage (DMC) program quickly approaching on September 20, NMPF urges all dairy farmers to enroll in the program. The DMC is guaranteed to pay all producers enrolled at the maximum $9.50/cwt. coverage level for at least every month of production this year through July, according to USDA data.

The latest enrollment numbers indicate that 68 percent of dairy operations with an established production history have enrolled so far for this year. This represents more than 18,000 producers nationwide.

“Dairy farmers want their income to come from the market. But given continued poor prices through the first half of this year DMC payments will provide welcome certainty for farmers,” said Jim Mulhern, NMPF President and CEO. “DMC offers better support for dairy farmers than its predecessor, the Margin Protection Program. It’s worthwhile for every farmer.”

Created in the 2018 Farm Bill, the DMC offers a much more robust safety net for dairy producers of all sizes. Improvements include:

• Affordable higher coverage levels that permit all dairy producers to insure margins up to $9.50/cwt. on their Tier 1 (first five million pounds) production history.
• A new option for producers to receive a 25 percent annual discount on their premiums if they agree to lock in their coverage for the five-year period of this Farm Bill. Producers are still able to pay premiums annually even if they elect the five-year discount.
• An improved feed-cost formula, which includes dairy quality hay values and better reflects the true cost of feeding dairy cows.
• Affordable $5.00 coverage that lowers premium costs by roughly 88 percent, creating a more meaningful catastrophic-type coverage at a reasonable cost for larger producers without distorting the market signals needed to balance supply with demand.

NMPF has a resource page on its website with more information about the program, including a  brochure, which summarizes key facts about the DMC. “Time for sign-up is running out,” Mulhern said. “Anyone who hasn’t enrolled yet should contact their local USDA Farm Service Agency office immediately to gain the benefits of the DMC program.”

At $9.27 per cwt., the July margin under the Dairy Margin Coverage program came in under the maximum $9.50 per cwt. program coverage level for the seventh, and likely final month in 2019, given current Chicago Mercantile Exchange forecasts.

Absent any additional payments for the final five months of the year, the net payment for the full year to producers signing up at that maximum coverage level for their first five million pounds of covered production history will be $0.36 per cwt., after sequestration reduction and payment of premium. Nine cents of this average payment comes from including dairy-quality alfalfa hay in the DMC feed-cost calculation, a change in policy NMPF pushed for throughout farm bill discussion and implementation.

Producers have until September 20 to enroll in the program for this year.

The changes in the July DMC margin and its components from the month before are shown in the chart on the left.  All numbers are per hundredweight of milk and are rounded to the nearest cent.

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 last week explaining how farmers can benefit from the DMC.

The U.S. dairy industry is working to ensure that passage of the USMCA should be at the top of the agenda when Congress returns to Capitol Hill on September 9.

In order to keep the momentum moving forward and help provide members with resources they can use to advocate for USMCA’s passage, NMPF has expanded the messaging toolkit available to advocates with the addition of written templates that can be customized according to the targeted audience.

Resources include downloadable sample letters to congressional representatives from either a dairy company or a supplying farmer. A template op-ed for a local newspaper from company leadership or a farmer who is passionate about securing trade opportunities is also available.

As Congress wrestles with addressing final outstanding USMCA issues with the White House in September, direct communication from industry stakeholders is critical to ensuring sufficient congressional support. NMPF will continue to work alongside industry allies to encourage Congress to quickly ratify USMCA and bring home immediate benefits for dairy farmers and the rural economy.

Members of Congress are returning to a significant slate of work in D.C. following their August recess.

Trade is one promising area of activity on Capitol Hill. House Democrats and U.S. Trade Representative Robert Lighthizer are working to address several issues relating to USMCA in advance of the deal coming before Congress for a vote. NMPF continues work to build support for USMCA because the negotiated agreement maintains the U.S. dairy industry’s current access to Mexico and increases access to the Canadian market while also addressing Canada’s egregious Class 7 pricing policy. NMPF encourages cooperatives and dairy farmers to use its grassroots tool to quickly and easily send letters to elected officials.

Members of Congress will also be weighing in on the results of the US-Japan negotiations once details are made public.

In addition to trade, Fiscal Year 2020 Appropriations work will be a priority now that Congress has enacted a two-year budget deal. NMPF will continue to focus on building bipartisan support for programs authorized in the 2018 Farm Bill, including the Farm and Ranch Stress Assistance Network (FRSAN) and Dairy Business Innovation (DBI) Initiatives.

Further, discussions regarding immigration reform will likely continue in the House, including on legislation that could address dairy’s unique workforce challenges. Beginning earlier this year, NMPF has been working closely with House Immigration Subcommittee Chair Zoe Lofgren (D-CA), Congressman Dan Newhouse (R-WA), and other members and agriculture leaders to develop bipartisan legislation aimed at addressing the labor crisis currently crippling American agriculture.

While work continues on this bipartisan bill, Congressmen Henry Cuellar (D-TX) and Dan Newhouse offered an approach to provide short-term relief to the dairy industry’s labor crisis by spearheading an amendment to the House’s Fiscal Year 2020 Department of Homeland Security Appropriations bill. Should it become law, the amendment will allow dairy farmers to access workers through the H-2A temporary worker visa program for the 2020 fiscal year.

Dairy producers currently cannot hire workers through the H-2A program because dairy employment is year-round, as opposed to the seasonal nature of jobs in other agriculture sectors. NMPF is working with the amendment’s sponsors to press for its inclusion in a final appropriations bill.

Additionally, Congress may continue work on other issues this fall including the reauthorization of child nutrition and surface transportation programs.

• On child nutrition, Senators Pat Roberts (R-KS) and Debbie Stabenow (D-MI) have made clear their plans to move a strong, bipartisan reauthorization bill through the Senate Agriculture Committee sometime this fall. NMPF is focused on ensuring that kids have access to a wide range of healthy dairy options and is working to expand the varieties of milk allowed in school meal programs.
• On transportation, NMPF is working to provide the dairy industry with flexibility on issues relating to both truck weight and hours of service.

A tentative agreement on trade between the U.S. and Japan that’s expected to benefit dairy is being watched closely by NMPF and the U.S. Dairy Export Council, who worked together in August to unite dairy cooperatives, companies and organizations from across the country to urge the U.S. government to move swiftly to finalize a strong trade deal that secures U.S. dairy access to this promising market.

NMPF and USDEC led a coalition of 70 dairy companies, farmer-owned cooperatives, and associations in an Aug. 19 letter to the United States Trade Representative and the U.S. Secretary of Agriculture encouraging the U.S. government to negotiate a trade deal that builds upon the best components of the CPTPP and Japan-EU agreements, both of which give preferential trade terms to major global competitors in Japan. Members joined the effort to send a unified message that increasing our market access in Japan is vital for U.S. dairy.

Japan is the fifth-largest overseas market for U.S. dairy, with $270 million in U.S. exports to Japan in 2018. It’s already the world’s second biggest net dairy importer, with per-capita consumption of dairy products increasing at a rate of four percent a year. At the same time, domestic production is decreasing and unable to meet market needs.

However, Japan’s preferential trade deals with America’s largest competitors are limiting this opportunity for U.S. dairy. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Japan-EU agreements have allowed the European Union, New Zealand and Australia to position themselves to take sales from the U.S. dairy industry. U.S. sales to Japan may fall by 50 percent over a decade, costing the U.S. dairy industry $1.3 billion, according to a USDEC study. These lost sales will cost farmers $1.7 billion in revenue, harming dairy farmers, processors and rural communities alike.

“NMPF partnered with USDEC to organize this unified dairy sector message to the U.S. government because a healthy dairy industry requires trade negotiators to decisively pursue foreign markets and secure robust opportunities for U.S. dairy exports,” said Jim Mulhern, president and CEO of NMPF. “Growing our foothold in the expanding Japanese dairy market will be critical to strengthening milk prices for American producers and fueling economic recovery in farm country.”

The letter also asked trade negotiators to safeguard the use of common cheese names, by ensuring that any agreement draws upon the precedents pioneered under the United States-Mexico-Canada Agreement (USMCA) to combat the EU’s efforts to monopolize the use of common name products through the misuse of geographical indications.

Japan and the U.S., who confirmed an agreement “in principle” late in August, are aiming to sign a final deal timed to the United Nations General Assembly meetings later this month.

NMPF has requested an extension of a U.S. Food and Drug Administration notice in the Federal Register published August 9 requesting public comment on transit times to slaughterhouses, milking frequency and interpretation of withdrawal periods. NMPF’s goal is to ensure that procedures for assigning withdrawal periods for animal drugs intended for use in food-producing animals adequately consider current industry practices.

Upon reviewing the notice, NMPF has identified key issues that require more detailed stakeholder input than the current 60-day notice provides. Issues include:

• Industry practices regarding how long it takes to transport certain food producing animals from production facilities to slaughter facilities;
• How frequently dairy animals are milked; and
• How end users interpret animal drug labeling that states a drug has a “zero-day withdrawal period” or “zero-day milk discard time.” Such phrases indicate that an animal’s meat or milk is allowed to enter the food chain regardless of how much time has passed since the animal was last given the drug.

The docket can be found here.

If granted, NMPF’s 90-day extension request would allow adequate time to reach out to experts including veterinarians, pharmaceutical companies and others involved in residue testing. More time would provide opportunities to conduct more thorough analysis, resulting in stronger, science-based comments.

NMPF is pleased that the FDA opened this docket and believes it will promote continued judicious and responsible use of antimicrobial drugs.

The USDA announced August 12 that it will be using resources from the 2018 Farm Bill for new animal health activities, including two new programs, the National Animal Vaccine and Veterinary Countermeasures Bank and the National Animal Disease Preparedness and Response program. These programs will help dairy producers in the event of an outbreak.

In 2019, the funding will also make up to $10 million available for the existing National Animal Health Laboratory Network and the disease preparedness and response program, both important initiatives that will help coordinate stakeholders in the event of an outbreak. “These three programs will work together to protect and improve the health of our nation’s livestock, helping farmers and ranchers provide high-quality agricultural products to consumers here and abroad,” the USDA said in its announcement.

NMPF is excited to see the USDA moving forward with these new programs, which were identified as key priorities by the NMPF Foot and Mouth Disease task force five years ago.  Formed in 2014, the task force participated in five webinars to learn and discuss foot and mouth disease preparedness before making recommendations to the Animal Health and Wellbeing committee and later, to the NMPF Board of Directors. These recommendations included a focus on vaccines, and laboratory and field diagnostics. The full list of recommendations can be found here.

Upon approval of these recommendations, NMPF joined a coalition of stakeholders to obtain new preparedness funding in the 2018 Farm Bill. The task force also developed on-farm biosecurity and FMD preparedness educational materials with partners including USDA Animal and Plant Health Inspection Service, American Association of Bovine Practitioners, National Cattlemen’s Beef Association and the Center for Food Security and Public Health at Iowa State University.

The National Dairy FARM Program is launching a pilot to get feedback on the new FARM Workforce Development (WFD) evaluation tool. The pilot is open to cooperatives and processors that participate in the FARM Program. FARM WFD equips dairy owners and managers with tools to enhance safe and thriving work environments.

The WFD evaluation tool is a best-practice assessment guide, rather than a set of standards. The goals of the evaluation tool are to help farms learn about HR and safety management best practices, identify which practices might be useful and track improvement over time.

By performing on-farm evaluations, the industry can also provide important assurances to supply chain customers. In response to dairy buyers and retailers concerned about on-farm labor practices, the FARM program has proactively created an on-farm evaluation tool that will serve as the industry’s voice to communicate that dairy is committed to providing safe and thriving work environments for employees and family members.

The goal of the pilot is to test out the FARM WFD evaluation tool with dairies across the country, with the most important part being producer feedback. Feedback from producers, cooperative and processor staff, and FARM evaluators will be key in refining the evaluation tool.

The FARM Program is grateful to the following organizations who have already committed to participating. Collectively, they aim to pilot the WFD evaluation with 45 to 50 dairy producers:

• Agri-Mark, Inc.
• Dairy Farmers of America
• Foremost Farms USA
• Maryland & Virginia Milk Producers Cooperative
• Michigan Milk Producers Association
• Select Milk Producers

FARM expects the pilot to wrap up by the end of the calendar year. Around this time, FARM will launch a public comment period to get additional feedback. FARM will refine the evaluation accordingly and make it part of the FARM program in early 2020. The WFD evaluation will be a voluntary part of the FARM program, similar to FARM Environmental Stewardship, that cooperatives and processors can choose to implement with their members/producers.

Organizations interested in in learning more about participating in the pilot are encouraged to contact Nicole Ayache at nayache@nmpf.org.

The National Dairy FARM Program is hosting its Stakeholders Forum in Minneapolis September 4-5, the first of several opportunities to learn from and inform the dairy community in coming weeks.

The Forum is intended to give industry stakeholders such as pharmaceutical, nutrition, extension and other support companies the opportunity to join in-depth discussions on the FARM program, which in turn should help identify further opportunities and potential partnerships within the industry to advance the goal of continuous improvement. Topics include the updated FARM Animal Care Version 4 standards, FARM Workforce Development, dairy customer involvement in the FARM program, and FARM program resources and partnership opportunities.

Later in the month, the FARM team will have a joint exhibit with Beef Quality Assurance (BQA) at the American Association of Bovine Practitioners Annual Conference, held in St. Louis September 12-14.

The joint FARM/BQA exhibit provides an important opportunity for further engagement with the veterinarian community, a cornerstone of the FARM Animal Care Program, and to foster new partnerships with the veterinarians and the companies that support our dairy producers.

Finally, all dairy producers, FARM program participants and industry stakeholders are invited to join the National Dairy FARM Team for lunch on Thursday, October 3 at the World Dairy Expo.

FARM will host lunch in Mendota Room 3 of the Exhibition Hall from 1 to 3 p.m. Attendees will learn about FARM program updates, including the updates to FARM Animal Care Version 4 standards. Learn more at https://worlddairyexpo.com/.

Consistent with the views and statements in the numerous comments NMPF has filed with the EPA, on August 22, the U.S. District Court for the Southern District of Georgia found that the promulgation of the 2015 Waters of the United States (WOTUS) rule was procedurally and substantively unlawful.  Procedurally, it violated the Administrative Procedures Act because it went beyond the parameters of the proposed rule. Substantively, the 2015 rule resulted in an “impermissible, significant intrusion on traditional state authority” because of its vast expansion of jurisdiction over what would otherwise be within a state’s jurisdiction. Further, the court held that certain provisions were “arbitrary and capricious.”

The court has chosen to remand the rule to EPA for further proceedings. EPA has already proposed to vacate the rule and proposed a new rule to replace both the 2015 and the 1986 rules. NMPF has filed several comments to the repeal and the replace rule. Those comments can be found here and here. EPA has stated that it hopes to complete the repeal rulemaking this fall and the replacement rulemaking late this year or in early 2020.  Until the rulemaking is complete, the U.S. will continue to have two WOTUS rules in effect (2015 and 1986). The 2015 rule is enjoined in 28 states and in effect in 22 states – where enjoined, the 1986 rule applies.

In August, Cooperatives Working Together assisted member cooperatives in securing 67 contracts to sell 4.5 million pounds of American-type cheeses, 88,185 pounds of anhydrous milkfat, 1.4 million pounds of whole milk powder, and 703,275 pounds of cream cheese. The product is going to customers in 11 countries in Asia, Central America, the Middle East, North Africa, and South America. The product will be shipped during the months of August 2019 through February 2020.

These contracts bring the 2019 total of the CWT-assisted product sales contracts to 44.212 million pounds of cheese, 4.213 million pounds of butter, 277,782 pounds of anhydrous milkfat, 4.348 million pounds of cream cheese and 37.807 million pounds of whole milk powder. These transactions bring the total milk equivalent CWT will assist member cooperatives moving overseas to 783.5 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, 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.