Tag: dairy cooperatives

NMPF Statement on EU’s Retaliatory Tariffs on Dairy

Posted on by Theresa Sweeney

In response to the European Union’s (EU) imposition of retaliatory tariffs on U.S. agriculture exports, which escalates the dispute over World Trade Organization (WTO)-incompliant aircraft subsidies, National Milk Producers Federation President and CEO Jim Mulhern issued the following statement:

“Europe has long wielded restrictive and unjustified trade tactics to limit fair competition from U.S. agriculture, including dairy exports. While Europe may be authorized to retaliate, the U.S. has already taken deliberate action to address the WTO decision. Meanwhile, Europe has failed to come into compliance with their WTO obligations.

“As the U.S. works to hold Europe accountable to its WTO obligations, U.S. retaliatory tariffs against EU dairy products continue to play a key role in bringing Europe to the negotiating table and compelling them to fulfill their trade commitments. The EU’s restrictive trade policies that have resulted in a one-way flow of agriculture trade, and in particular dairy trade, to Europe is something that both the current and future Administrations need to keep in mind. In fact, the trade deficit between the EU and U.S. continues to widen as the EU uses unjustified trade tactics to erode U.S. market access and limit fair competition.

“One of the most egregious of these tactics is the EU’s misuse of geographical indications (GIs) to ban the U.S. from selling cheeses with common names, such as asiago, feta or parmesan. We commend USTR’s continued maintenance of GI cheeses on the WTO-authorized list of tariff retaliation as these tariffs help to temporarily level the playing field for U.S. producers.

“It’s time for Europe to not only comply with its WTO obligations, but also make a fundamental change to retire its discriminatory agricultural trade policies once and for all.”

NMPF Congratulates President-Elect Biden and Incoming Congress

Posted on by Theresa Sweeney

The National Milk Producers Federation congratulated President-elect Joe Biden and members of the upcoming 117th Congress for their election victories, pledging to work for bipartisan solutions to the many challenges faced in agriculture and in the nation.

“Congratulations to President-elect Biden and the incoming members of the 117th Congress, who will have a lot of work to do in this country, from legislating to building common ground,” said NMPF President and CEO Jim Mulhern. “Dairy is ready to do its part and work with the administration and Congress to face difficult problems successfully, in the bipartisan spirit we have always practiced and believed in.”

NMPF has long been committed to working with both major political parties for sound, consensus-based public policy. More on NMPF’s approach to policy, why dairy farmers and the cooperatives they own possess a distinct voice within agriculture, and the crucial role they can play in the months ahead, can be found in this week’s Dairy Defined column.

Dairy Defined Podcast: How NMPF Pulled Off a Virtual Cheese Contest

Posted on by Theresa Sweeney

The coronavirus pandemic has disrupted lives and transformed everything from schooling and shopping habits to … cheese contests. It’s not something most people think about, but in a time of social distancing and curtailed travel, how exactly does one gather, sample, compare and celebrate world-class cheeses, virtually?

This was the question National Milk Producers Federation coordinators Jamie Jonker and Miquela Hanselman set out to answer – and their solutions were cheese-tastic, to say the least. Judging conducted from multiple locations, donated storage spaces and smaller cheese blocks played their role – as did continual ingenuity from a team determined not to let a pandemic upend a cherished dairy tradition.

NMPF announced the winners of its first-ever virtual cheese contest – one believed to be the first nationwide U.S. cheese contest of the virtual era – last week. This week’s Dairy Defined Podcast tells the tale of the Cheese Contest That Could, featuring Jonker, Hanselman, and Head Cheese Judge Allison Reynolds of the USDA, facilitated by NMPF Communications Manager Theresa-Sweeney Murphy.

“I think it’s important that while we are in strange and unique times because of the pandemic, that some things still continue to happen as normal course of order,” said Jonker, NMPF’s staff scientist and a 16-year veteran of the competition. “The most rewarding part is that, unless we told people about how we did it, most people wouldn’t understand that it was any different from other years. And I think that’s a testament to the great team that we’ve got at National Milk, our cheese judges, and our co-ops that enter the cheese every year for really making it seem like nothing was different, even though everything was different.”

To listen to the full discussion, click here. You can also find this and other NMPF podcasts on Apple Podcasts, Spotify,  SoundCloud and Google Play. Broadcast outlets may use the MP3 file. Please attribute information to NMPF.

 

Bipartisan Congressional Letter Calls for Stronger U.S. Approach to Preserving Common Food and Wine Terms

Posted on by Theresa Sweeney

A coalition of leading farm and agricultural groups are applauding a bipartisan letter sent today by 111 members of Congress urging stronger protections for American-made food and wine exports using common terms. This is an important message regarding the need for enhanced U.S. efforts to combat the European Union’s (EU) attempts to ban U.S. exports of cheese, meat and wine products that are labeled with common terms – such as parmesan, bologna or chateau.

“Congress has spoken loudly; it is time for stronger action by the U.S. government. For far too long, Europe has used unjustified trade barriers to block competition from high-quality American-made cheese, meat and wine exports. Europe is undermining global trade rules and weakening intellectual property system protections internationally. Today’s letter is an important reminder that we must raise the bar in our efforts in order to prevail in creating agricultural trade policy that works for the world, not just the European Union,” said Jaime Castaneda, Executive Director of Consortium for Common Food Names.

The letter asks the U.S. Trade Representative (USTR) and U.S. Department of Agriculture (USDA) to make safeguarding common food and wine terms a core policy objective in all current and future trade negotiations. The effort was led by Reps. Jim Costa (D-CA), Jodey Arrington (R-TX), Angie Craig (D-MN), Dusty Johnson (R-SD), Ron Kind (D-WI), Mike Gallagher (R-WI), Jimmy Panetta (D-CA) and Mike Kelly (R-PA).

“The EU’s ban on common cheese terms has already impeded U.S. dairy exports but even more severe consequences for our industry lie ahead if the EU is allowed to continue these unfair trade practices. Preserving export opportunities for American-made cheeses and other products labeled with common terms must take priority in all future trade negotiations. I applaud Congress and the leaders of this effort for setting this important precedent in defense of American-made exports,” said Tom Vilsack, president and CEO of U.S. Dairy Export Council.

“Creating false barriers to block exports denies families around the world the high-quality food America’s farmers and ranchers produce. It’s trade manipulation. We applaud the U.S. government for its efforts to remove unfair trade practices that keep our nation from competing in the global marketplace,” said American Farm Bureau Federation President Zippy Duvall.

“The European Union has for too long unjustifiably and erroneously attempted to restrict trade in common food name products, including meat exports from the U.S. The policy advocated in the bipartisan letter sent today to USDA and USTR will advance critical safeguards for common food name products in international trade and will enable America’s meat and poultry packers and processors, agricultural producers and food manufacturers to compete on a level playing field with their counterparts in the EU. We thank members of Congress for their leadership, and we stand ready to work with the Administration to defend against anti-competitive and protectionist policies pursued by trading partners that serve only to impede U.S. meat and poultry exports,” said Julie Anna Potts, CEO of the North American Meat Institute.

“NASDA Members work tirelessly with the federal government to open new doors for agricultural producers around the world. We encourage the U.S. Trade Representative (USTR) and U.S. Department of Agriculture (USDA) to amplify the importance of common food and wine terms as a core policy objective to successful free trade negotiations in the future. Doing so will ensure consumers are able to access the full bounties of our farmers and ranchers around the world,” said National Association of State Departments of Agriculture CEO Dr. Barb Glenn.

“America’s dairy farmers have been unduly harmed by the EU’s efforts to limit market opportunities for U.S. dairy products. For years, the EU has sought to ban high-quality American-made cheeses, putting U.S. dairy jobs at risk and limiting economic growth in the rural communities that rely on a healthy dairy industry.  I appreciate the important work being done by Congress to ensure that U.S. trade negotiators must have all necessary tools at their disposal to fight back against the EU’s destructive agenda,” said Jim Mulhern, president and CEO of National Milk Producers Federation.

“We have watched time and again as the EU has gone well beyond protecting legitimate GIs to erect trade barriers that benefit their own producers at our expense. The recent EU-China agreement on GIs is a perfect example of how the EU abuses GIs for their own gain. The U.S. must do more to ensure a level playing field for common food names, grape varietal names and traditional terms and we are grateful to these Representatives for supporting this effort,” said Bobby Koch, President and CEO of Wine Institute.

In July, 61 Senators sent a similar letter requesting that the U.S. government enhance protections for common food and wine terms.

 

Jim Mulhern Remarks at NMPF/NDB/UDIA Joint Annual Meeting

Posted on by Theresa Sweeney

Note: This is a lightly edited transcript of remarks made Oct. 27.

Good afternoon, and good morning to all of you joining us in the West. Let me add my thanks to you for being here for our first-ever — and I hope last ever — virtual annual meeting. I do wish we could be together in person and, like all of you, I’m looking forward to getting to the other side of this dreadful pandemic. But right now, we’re all trying hard to make the best of a bad situation.

So, I want to jump right into things here with a few brief remarks.  Then we’ve got another great presentation for you: Our annual NMPF Town Hall issues update with a panel featuring some of our key experts working on your behalf on a wide range of dairy policy issues, economics and the FARM Program.

Because of our more limited time format for this year’s meeting we’ve condensed our traditional Town Hall panel for this live presentation. But we still want you to provide you with more in-depth discussions on all the issue areas we are involved in. So, we’ve taped a series of presentations that you can find online on our website, nmpf.org. I encourage you to watch them at your convenience to learn more about the wide range of important work NMPF has done this year.

And, man, what a year. For those who were with us last year in New Orleans, I’m sure none of you remember what I talked about. But my message was the importance of resilience — how it is one of the key strengths that all of you as dairy farmers consistently exhibit and how it has helped us get through nearly a half-decade of difficult times.

Well, little did I know back then just how important resilience was going to be for all of us. This year has posed challenges beyond what any of us could have imagined just one year ago…. challenges on our farms, in our families, and to our futures.

And yet, the obstacles we’ve faced this year will only make us stronger as we deal with the hardships that, yes, still lie ahead.

Think back to March, when the COVID-19 crisis began to profoundly change all our lives. The challenges were immediate… and clear. The solutions, less so. At National Milk, as we looked at all of this, there were a few things we knew. We knew that the nation’s dairy farmers and our member cooperatives are essential for the nourishment of those we serve. We knew that the dairy community can be formidable when it pursues its goals with unity and commitment. And we knew that our organization has demonstrated a track record of effectiveness, even in the face of daunting tasks.

That all gave us confidence. And just like the thousands of dairy farmers we serve, we went to work to tackle the crisis, consulting closely with our leaders, seeking ways to stem the damage and improve lives.

We needed to be a resource to not only our dues-paying members, but to all dairy farmers who were dealing with immediate crises in their operations and supply chains. And even in those darkest times, there were bright spots. Aided greatly by the efforts of the U.S. Dairy Export Council, international trade saw strong demand. Here at home, retail milk flew off store shelves, as consumers showed their support for the nutritious beverages they relied on most.

But the root of dairy’s resilience was centered, as always, on the farm, and led by many of you…. our farmer-leaders. Faced with an unprecedented rupture in the balance of supply and demand, many farmers used every tool in their arsenal to throttle back production — from changing feed rations and milking schedules to putting the brakes on herd expansion. Those efforts helped stave off what would have been a complete price collapse and they set the stage for a rebound.

Farmers and our co-ops took important steps to address the issues they could control. Meanwhile, we advocated for our industry before Congress and  USDA, and the White House. As a highly perishable, 24/7/365 days a year commodity, dairy never stops, and that made the need for immediate, robust support for dairy simply essential. We engaged in marathon discussions, and strategized across the industry and throughout the government. Together, we succeeded in making sure dairy received important levels of government disaster assistance, both in the first round of the Coronavirus Food Assistance Program payments and in the more recent CFAP 2.

To be sure, these government programs are far from perfect – not all farms were treated equally, and we continue to work with Congress and USDA to remedy flaws in future disaster assistance. But this assistance did much to cushion the immediate blows to balance sheets from COVID-19. And it continues to help stabilize operations nationwide.

Beyond direct federal disaster assistance, we also knew that, while farm payments helped, they didn’t address the root of COVID-19’s impact on dairy – the devastating blow to dairy demand from lost foodservice sales, a huge part of our market.

We emphasized to policy makers how government dairy purchases can create a positive economic cycle, with programs like the popular Food Boxes providing  products to families hit hard by the pandemic. Those government purchases create demand that strengthens prices, keeps processors operating and enables dairy farmers to get support where they really want it — through improved milk checks.

We’ve experienced a roller-coaster ride in prices for sure – but the federal assistance kept the worst-case scenarios from occurring. And it shows yet again how effective advocacy can prompt a forceful and helpful government response.

Just as important as protecting our businesses, of course, is protecting our families, and our workers, and our communities, especially during a pandemic. Dairy has always been a leader in stewardship to our land, our animals and our community – and this year has been no exception. Through the National Dairy FARM program, we quickly made available industry best practices and guidance to help address the crisis, and through our outreach and our coronavirus toolbox on our website, we gave our members – and all dairy farmers – the information they needed to adjust to dairy farming in this new reality.

So, what will all this mean in the days ahead? Well, make no mistake: this crisis is far from over. Without a vaccine, with an uncertain political future, with an economy that still hasn’t found a “new normal,” there’s no happy ending I can share with you today, because we still have a long way to go. But I’d like to conclude with a few observations that offer hope and optimism for the journey ahead:

  •  First, it is the strength of Farmer-owned dairy cooperatives that have led the industry through this crisis, and they will carry it through to the end. From our economic leadership, to our commitment to customers and consumers, to making our voices heard in Washington, co-ops remain the heart and soul of this industry. And this industry benefits best when our cooperatives speak with unified voices, on everything from marketing orders to on-farm best practices.
  • Despite the few naysayers out there who love to sow discord in difficult times, it is our unity as an industry that enables us to achieve our goals and helps us prevail. We will continue to work together as this crisis evolves, and our track record of success this year helps set the stage for future success.
  • Finally, the lessons we’ve learned here are applicable elsewhere. We have learned that the Dairy Margin Coverage program, which we fought for in the 2018 farm bill, provides important risk management and affordable catastrophic coverage when farmers need it most.  And we’ve learned again that the positive stewardship story so crucial this year, focusing on farmers and their high level of  care for their animals and the land, this provides the backbone needed for other exciting and challenging endeavors, such as our industrywide Net Zero Initiative and our Stewardship Commitment goals.

So, know that our challenges and risks are far from over.

But we’ve already proven a lot – to ourselves, and to the nation. We will get through this, and we’re stronger now than before. Throughout the world, everyone is hoping tomorrow will be brighter. We KNOW it will be, because of the work we’ve done together that has brought us here today.

Thanks again for this opportunity to speak to you.

FDA Must Enforce Fake-Dairy Rules, NMPF Tells Agency Ombudsman in New Advocacy Phase

Posted on by Theresa Sweeney

With FDA giving little indication of promised action on proper labeling of imitation dairy products, the National Milk Producers Federation today asked the agency’s ombudsman to ensure that rules are properly enforced.

“Allowing unlawfully labeled ‘plant-based’ imitation dairy foods to proliferate poses an immediate and growing risk to public health; it is a clear dereliction of the FDA’s duty to enforce federal law and agency regulations,” wrote NMPF President and CEO Jim Mulhern in the letter, sent to Dr. Laurie Lenkel, ombudsman for the U.S. Food and Drug Administration. “The FDA’s Office of the Ombudsman must intervene to break the bureaucratic logjam that is adversely affecting consumers. Doing so would fit squarely within the Office’s own mission to ensure even-handed application of FDA policy and procedures.”

The FDA ombudsman, based in the agency commissioner’s office, “serves as a neutral and independent resource for members of FDA-regulated industries when they experience problems with the regulatory process,” according to the agency. NMPF is urging the ombudsman’s office to take appropriate action to remedy the FDA’s lax approach to enforcing its own rules on the use of dairy terms on products containing no dairy ingredients, which have proven impacts on public health – a new phase of advocacy brought about by the agency’s regrettable inaction. The American Academy of Pediatrics and other organizations have offered evidence of nutritional deficiencies caused by confusion over the contents of plant-based versus dairy beverages.

NMPF last year released its own road map offering solutions to how public health, product integrity and free speech could be protected through updated regulations. NMPF also supports the DAIRY PRIDE Act, a potential legislative prod for FDA action, and has asked FDA commissioner Dr. Stephen Hahn to follow up on the pledge he made nearly one year ago to make fake-dairy labeling a high-priority issue at FDA.

NMPF Chair Mooney Says Dairy is Meeting “Biggest Challenges of Our Lifetimes”

Posted on by Theresa Sweeney

The extreme disruptions and financial upheaval caused by the COVID-19 pandemic have created real struggles for dairy producers – and the industry has responded by rising to an unprecedented occasion, said Randy Mooney, chairman of the National Milk Producers Federation, to delegates Monday at NMPF’s first-ever virtual annual meeting.

“We haven’t landed safely yet, but there’s plenty of reason to believe that we as an organization and an industry have risen to the biggest challenges of our lifetimes, and that we’ll be able to look back with pride on our response to the pandemic,” Mooney said in his remarks, this week’s Dairy Defined podcast. The podcast can also be found on Apple Podcasts, Spotify,  SoundCloud and Google Play.

NMPF’s annual meeting continues today and is free of charge to registrants. More information about the meeting — the largest dairy-farmer policy gathering in the U.S. — is here, and registration information is here.

Broadcast outlets may use the MP3 file. Please attribute information to NMPF.

USDA’s Dairy Margin Coverage Program Now Open for 2021 Enrollment

Posted on by Theresa Sweeney

With the ongoing COVID-19 crisis teaching hard lessons on risk management throughout agriculture, and with dairy margins expected to be volatile over the next year, the National Milk Producers Federation (NMPF) urges farmers to sign up for maximum coverage in 2021 under the Dairy Margin Coverage (DMC) program.

DMC is designed to ensure that dairy farmers can protect themselves against financial catastrophe. Despite forecasts in late 2019 predicting that DMC was unlikely to generate payments in 2020, margins fell to their lowest levels in more than a decade in the first half of this year, triggering payments that kept many dairies afloat. The current USDA forecast indicates margins will drop below $9.50/cwt. in the first half of 2021. DMC coverage offers certainty in times of need, allowing for better financial planning and faster payment when necessary.

Enrollment for the 2021 DMC program year starts today and runs through Dec. 11. See below and visit USDA’s Farm Service Agency’s DMC page for more information.

 

ELIGIBILITY

All U.S. dairy operations are eligible for DMC. An operation can be run either by a single producer or multiple producers who commercially produce and market milk. Each producer on an operation must share the risk of producing milk and make contributions (including land, labor, management, equipment, or capital) to the dairy’s operation at least equal to the individual or entity’s share of the operation’s proceeds.

An eligible dairy operation must:

  • Have a production history determined by USDA’s Farm Service Agency (FSA).
  • Be registered to participate during a signup announced by FSA.
  • Pay a $100 administrative fee annually for each year of participation, except if the dairy operation qualifies for a waiver for limited resource, beginning, socially disadvantaged, or veteran farmers and ranchers.

A dairy operated by more than one producer still will be registered as a single operation. Producers who operate two or more dairies need to register each operation separately to cover that operation.

Eligible DMC participants are also eligible to participate in the Livestock Gross Margin for Dairy Producers Program and the Dairy Revenue Protection Program. Both are administered by the USDA Risk Management Agency.

 

COVERAGE LEVELS

Producers have multiple options for coverage each year. Basic catastrophic coverage of $4/cwt. is free, except for the $100 annual administrative fee. Farms can insure their first 5 million pounds of milk production history, designated as Tier I, in 50-cent increments from $4/cwt. up to $9.50/cwt.  Annual production above 5 million pounds falls into Tier II. Coverage options in Tier II range from $4/cwt. to $8/cwt. Producers must also select a coverage percentage of the dairy operation’s production history ranging from 5 percent to 95 percent, in 5-percent increments.

The following table provides the premium schedule.

 

HOW TO APPLY

FSA opens enrollment for DMC on Oct. 13 for calendar year 2021. The deadline to enroll for 2021 coverage is Dec. 11.

All dairy farmers who want 2021 coverage must visit their local USDA Service Center office to pay the annual administrative fee, which is $100 for all coverage levels. Producers must visit their local office even if they locked in coverage in 2019 for five years to take advantage of the 25% premium discount offered the first year of the program.

 

ADDITIONAL SUPPORT

USDA offers a variety of programs that have helped dairy farmers in addition to DMC, including insurance, disaster assistance, and conservation programs. Most recently, the first round of aid under the Coronavirus Food Assistance Program provided $1.75 billion in direct relief to dairy producers who faced price declines and additional marketing costs due to COVID-19 in early 2020. Signup is now underway for a second round of CFAP payments, offering further assistance for dairy producers and many other eligible producers. CFAP 2 applications are being accepted by FSA offices now through Dec. 11.

 

ADDITIONAL RESOURCES

For more information, visit the farmers.gov DMC webpage, or contact your local USDA Service Center. To locate your local FSA office, visit farmers.gov/service-center-locator.

Dairy Defined Podcast: Sustainability, in All Its Forms, Key to Dairy’s Future, Vold Says

Posted on by Theresa Sweeney

On National Farmer’s Day, dairy farmer Suzanne Vold is highlighting dairy’s commitments to the environment and a net-zero future, noting that her colleagues are already effective stewards and are committed to doing more.

“We need to work with our partners in government. We need to work with partners in academia, dairy science departments, and agronomy departments and our colleges and universities. And we need to work with our cooperatives, the companies that process our milk into products to sell,” said Vold in the latest Dairy Defined podcast, released today. “But we have to start the work somewhere, and we have to start the work now.”

Vold, with her husband, brother-in-law and two part-time employees, runs Dorrich Dairy, a 400-cow, fourth-generation dairy farm in western Minnesota. In the podcast, she also discusses specific practices on her farm that save money and create potential revenues as well as improve water and soil health – as well as the importance of other initiatives important to dairy and agriculture, from the Dairy Margin Coverage program to rural broadband.

The full podcast is here. You can also find the podcast on Apple Podcasts, Spotify,  SoundCloud and Google Play. Broadcast outlets may use the MP3 file. Please attribute information to NMPF.

Dairy Defined: An Open Letter to FDA Commissioner Dr. Stephen Hahn

Posted on by Theresa Sweeney

Dear Dr. Hahn –

Sorry to bother you at such a busy time, but we need to talk. We’re guessing that 2020 wasn’t what you expected, dealing with COVID vaccines and a host of other pressing concerns. It’s been crazy for us too. But faith and friends can help you through, no matter how big or small the troubles may be. We hope you’ve felt supported through these challenging times.

We’ve noticed that recently, FDA has been getting more active on topics beyond COVID-19, in some cases even revisiting issues that have lain dormant from previous decades in the spirit of completing unfinished business. That made us think it was time to remind you about something you promised you’d deal with back in November, before everything turned upside down. At your FDA confirmation hearing, Senator Tammy Baldwin asked you whether and when FDA under your leadership would soon start enforcing labeling standards that reserve dairy terms for real dairy products, not the plant-based imposters that are posing an increasing problem for public health. You said you supported “clear, transparent, and understandable labeling for the American people” and that you would “very much” look into it.

How is that going? Any way we could help? We understand that FDA has kicked fake dairy deception down the road for decades, but the problem is only growing, public-health experts are growing concerned, and it isn’t a heavy lift for the FDA to do what’s not only true to its mission but also what’s legally required. In fact, we have provided an entire road map proposal that offers a clear guide to resolution – one that is well-grounded in First Amendment law, would ensure that consumers know what products are and aren’t nutritionally, and even could allow plant-based “milks” to continue dairy terms in some instances, with proper qualifiers that have long been established in FDA regulations to clearly distinguish them from dairy.

We had been very hopeful, based on your pledge, that this would be the year this problem could finally be solved. Since it’s late in 2020 – and who knows what the next few months might be like? — we thought we should check in.

We’re cheering for you to take action. FDA commissioner is never an easy job, and 2020’s been a challenge for the ages. But since fake milk has long been crucially important to dairy farmers – in places like Wisconsin, in Michigan, in Pennsylvania, in Minnesota, and all across the United States – we thought this might be a good time to remind you of this promise.

We’re happy to chat further because this simple matter can be resolved soon, to the benefit of everyone. Well, maybe not marketers of dishonest products, but they’ve had their day. Say hi to everyone at FDA for us, there’s never enough bandwidth on Zoom to talk to everyone we’d like to. Good luck with the rest of the year!

With Regards,

The National Milk Producers Federation

A Crisis Should Bring Opportunity – Not Opportunism

Posted on by Theresa Sweeney

There’s an adage applied often in politics that “in the midst of every crisis lies great opportunity.” And while no one would ever wish for what’s happened in dairy markets over the past several months, this crisis does provide opportunities – to reaffirm the importance of cooperatives in marketing producers’ milk; to appreciate robust risk management protection initiatives like the Dairy Margin Coverage program, for which 2021 signup starts Oct. 12; and to remember the power that dairy has when it works together, both to stabilize markets and reassure consumers who turn to it in troubled times.

But it’s also important to distinguish between opportunities — which come from the lessons of a crisis — and opportunism, which exploits a crisis to push policies that may not lead to real improvements or prevent a similar crisis in the future. That contrast is important to remember when discussing what’s been a hot topic in dairy the past few months: the negative Producer Price Differentials that have resulted from the wild gyrations in markets, understandably frustrating farmers who don’t feel they’ve captured the full benefits of the market rebound we’ve seen.

Negative PPDs – which happen when milk-price swings among component classes fall out of sync — create an ugly accounting deduct line on a milk check. They’re frustrating, but they’re rare – in fact, negative PPDs have occurred during only 16 months out of the past 10 years. The ones we’ve seen recently have been based on extremely unusual circumstances, specifically the unprecedented price collapse that accompanied the COVID-19 pandemic and the impact of other factors, including the federal government’s response, which combined to whipsaw dairy markets.

When the pandemic hit this past spring, the nation’s foodservice industry ground to a halt, kneecapping a market that traditionally absorbs well over a third of total U.S. dairy sales and sending commodity markets into a tailspin. NMPF efforts weren’t limited to helping farmers with direct payments; NMPF and allied organizations also pursued federal government support to step in to purchase displaced dairy products and provide them for donation to those in need. Those efforts were hugely successful; they will result in hundreds of millions of dollars in federal government dairy-product purchases provided to food banks and other outlets, feeding families and buoying markets.

It’s important to keep in mind that while the federal government’s purchases of dairy products for donation contributed to bringing about the negative PPDs this summer, that outcome was vastly superior to the alternative of no government and industry action. The intervention sharply raised farm milk prices from catastrophic lows. Without this intervention, we were facing a sustained collapse of the U.S. dairy market, with ongoing massive losses within both the farm and processor communities.

While the government has purchased a variety of dairy products, the largest purchases have been for cheese. Those purchases, along with strong export sales, quickly and forcefully lifted commodity cheese markets from $1 a pound to nearly $3 a pound. That undoubtedly kept cheese plants open and saved family dairy farms – it also, in turn, dramatically boosted Class III milk prices. Meanwhile, the government to date has purchased limited amounts of butter and very little nonfat dry milk. That has resulted in much smaller increases in Class IV prices and created a large gap between Class III and IV.

That gap, along with the Federal Milk Marketing Order program’s standard advance pricing announcement of Class I fluid milk, led to high levels of Class III milk being de-pooled from federal orders rather than pay into the pool to share the revenue across the market. For co-op cheese plants that de-pooled, the revenue stayed within their farmer-owned operations and benefitted their members. Proprietary cheese plants may or may not have shared those monies with their farm suppliers.

The large amount of temporary de-pooling that occurred has certainly raised concerns in some markets. Those concerns could be addressed by looking at whether stronger pooling requirements are needed, something that is available and could be looked at on an order-by-order basis within the FMMO system.

Other, related issues could be examined as well — the FMMO system is always an area worthy of careful thought and consideration. But changes to a system that’s managed milk pricing for generations shouldn’t be the result of a knee-jerk reaction prompted by extremely rare, black swan events. Any suggestion otherwise isn’t one that’s seeking a genuine opportunity – it’s opportunism in a crisis, and it’s an approach of which dairy farmers should be wary.

We all know that making long-term policy changes in response to short-term disruptions and unprecedented conditions, even if challenging, rarely results in good policy. Instead, it can lead to longer-term unintended consequences that could permanently reduce farmer income without remedying any fundamental market shortcomings. Preventing negative PPDs can sound like a good idea – but how might a “fix” affect milk checks in more-normal times? Those are the questions that need to be explored. Concern with negative PPDs is understandable. But negative PPDs will largely go away once markets return to normal function, which ought to be our underlying goal.

At NMPF we are engaged in an ongoing review of the federal order system to identify areas for potential improvement, and for discussion with our members as we examine ways to create consensus among the nation’s dairy farmers and their cooperatives. We welcome input and ideas, and especially appreciate the thoughts expressed by our member cooperatives that so effectively represent their members’ collective judgment. This is what ensures that real opportunity is pursued.

This industry has been through a lot these past few months. Let’s use the time ahead wisely, gaining the most from the lessons we have learned as we seek together to benefit most from the opportunities that are certain to arise. These decisions should be made in a deliberate and organized manner, with dairy farmers and their cooperatives leading the effort.