Tag: dairy economics

Diving in on Dairy’s Legislative Agenda

Posted on by Alan Bjerga
By Paul Bleiberg, Executive Vice President, Government Relations, National Milk Producers Federation
President Donald Trump and Vice President J.D. Vance have now taken their oaths of office, and the 119th Congress has been seated. While the opening weeks of a new Congress and presidency focus on nominations and organization, these important housekeeping processes will soon give way to a busy legislative session.

We know dairy is ready for an action-packed 2025. National Milk Producers Federation’s (NMPF) major legislative goals begins with passage of a five-year farm bill, but what makes up that bill for dairy is just as important.

First, enabling schools to offer whole and reduced-fat milk is paramount. Milk provides 13 essential nutrients and is the top source of calcium, potassium, phosphorus, and vitamin D for children ages 2 to 18. However, just last month, the Dietary Guidelines Advisory Committee’s Scientific Report reaffirmed that 88% of all Americans are under consuming dairy. The bipartisan Whole Milk for Healthy Kids Act, recently reintroduced in Congress, provides the solution. This bill would allow, but not require, schools to serve all varieties of milk, including whole and reduced-fat milk. A growing body of evidence demonstrates that dairy foods at all fat levels have a neutral or positive effect on health outcomes. NMPF strongly supports swift passage of this measure to solve a critical child nutrition problem.

This problem is made clearer by data. Accurate, transparent data drives strong public policymaking. And that brings up another NMPF policy priority: remedying the persistent lack of accurate data when it comes to the costs of manufacturing raw milk into processed dairy products, which denies stakeholders an essential tool for assessing how milk pricing formulas ought to be structured.

A fix lies in the Fair Milk Pricing for Farmers Act, a bipartisan bill to require USDA to conduct mandatory dairy manufacturing cost surveys every two years. This will equip all voices in the dairy industry with better data to help drive future dairy pricing conversations.

Ongoing discussions on dairy pricing are vital for an industry that continues to innovate and advance. But milk pricing isn’t the only area where innovation is necessary. On the farm, U.S. dairy farmers benefit from safe and effective feed ingredients that can boost productivity in their herds and support environmental stewardship. However, the Food and Drug Administration’s (FDA) current outdated review process for these ingredients hinders their timely approval and puts U.S. dairy farmers at a disadvantage with their global competitors. NMPF supports the bipartisan Innovative FEED Act, first introduced in 2023, to create a safe but expeditious process for FDA to review these products to help farmers make important gains and stay competitive.

These are just a handful of the major legislative efforts NMPF seeks to advance. Each of these bipartisan bills made headway last year as the House and Senate began their respective farm bill processes. With the new Congress getting ready to produce results, dairy stands ready to get these important priorities signed into law.

r of choice.

This column originally appeared in Hoard’s Dairyman Intel on Feb. 6, 2025.

NMPF Thanks Members, USDA for FMMO Leadership

Posted on by Theresa Sweeney

NMPF thanked USDA and the dozens of farmers and cooperative leaders who successfully steered Federal Milk Marketing Order modernization to a successful conclusion.

“Dairy farmers and cooperatives have done what they do best – lead their industry for the benefit of all,” said Gregg Doud, president and CEO of NMPF. “This final plan will provide a firmer footing and fairer milk pricing, which will help the dairy industry thrive for years to come. We appreciate the monumental contributions across government and the dairy industry that made this happen. The industry, and all dairy consumers, owe all of you a debt of gratitude.”

The new FMMO comes after more than 200 NMPF-led meetings to formulate the proposal that contributed heavily to USDA’s final decision, as well as a record-length 49-day federal order hearing and approval from the farmers who are covered under all federal milk marketing orders.

The new federal milk-pricing system, which officially will be published in the Federal Register tomorrow, will mostly take effect June 1 – coincidentally, World Milk Day – and is closely aligned with the principles of NMPF’s member-led recommendations, a process that began nearly four years ago.

Highlights include:

  • Returning the base Class I skim milk price formula to the higher-of the advanced Class III or Class IV skim milk prices for the month. In addition, adoption of a Class I extended shelf life (ESL) adjustment for all ESL products equal to the average-of mover plus a 24-month rolling average adjuster with a 12-month lag.
  • Updating the Class III and IV manufacturing allowances for cheese, butter, nonfat dry milk and dry whey, and the butterfat recovery factor.
  • Updating the Class I differential values to reflect the increased cost of servicing the Class I market.
  • Updating skim milk composition factors, with implementation delayed six months until Dec. 1.
  • Removing 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey.

NMPF has more resources to understand FMMO modernization and the road taken to get there. Farmers and cooperatives will have opportunities to learn more about the new system through webinars and other materials offered in coming weeks. NMPF will also continue pushing for elements of its proposal that require congressional authorization, including mandatory dairy manufacturing cost reporting to provide accurate, transparent data to inform future milk pricing discussions.

Vitaliano’s Valedictory: Economist Shares Thoughts on Dairy’s Evolution

Posted on by Theresa Sweeney

After nearly four decades as an economist at NMPF, Dr. Peter Vitaliano is retiring at the end of the year. He predicts a bright future for the industry.

“The U.S. dairy industry produces a huge variety of great products, for which consumption is continuing to grow,” Vitaliano said in a Dairy Defined Podcast. “It has very progressive farms and farmers, and great leadership amongst our organizations, and great organizations. That has been the case when I came, it’s the case now, and it’s going to be the case for many years in the future.”

Vitaliano, NMPF’s longtime chief economist, reflects on the evolution of policy challenges for the dairy industry in the podcast, explaining how shifts in the industry have created greater unity – and a more effective NMPF. For more of the Dairy Defined podcast, you can find and subscribe to the podcast on Apple Podcasts and Spotify under the podcast name “Dairy Defined.”

Media outlets may use clips from the podcast on the condition of attribution to the National Milk Producers Federation.

Driven by Cheese, Dairy Consumption Rises Again

Posted on by Rachel Ravencraft

Propelled by record cheese use and gains in butter, cottage cheese and yogurt, U.S. per capita dairy consumption returned to 1950s levels last year, according to USDA data released just before Thanksgiving.

At 661 pounds per person, the amount of milk Americans consume is back to where it was in 2021, which in turn was on par with the year Buddy Holly died — at least in terms of dairy U.S. dairy consumption.

What’s driving the trend? Think cheese, which has doubled in per capita consumption over the past 50 years even as per capita fluid milk use has declined. Or look at butter, at its highest since the 1960s. And fermented dairy products are having a moment — cottage cheese consumption is at its highest in a decade, and yogurt is also rising.

The only disappointment? Rounding. If you drill more deeply into the numbers, 2023 didn’t quite match 2021, with consumption at 660.7 pounds, compared to 661.2 two years ago. But with positive signs in sales and the holidays ahead, there’s still a chance for Americans to push 2024 to new heights.

We can do this, America. Have your grocery carts at the ready, help a dairy farmer, and enjoy the perfect companion for your holiday cheer.

 

Beef dynamics may hinder dairy herd growth

Posted on by Alan Bjerga

By Allison Wilton, Coordinator, Economic Policy & Global Analysis, NMPF

High prices are supposedly the cure for high prices. That may not be the case with beef-on-dairy.

In recent years, the popularity of crossbred calves has grown exponentially as dairy farmers faced tight margins and beef cattle fetched record prices. Margins have improved on the dairy side, but the beef market has shown few signs of cooling down, suggesting a dairy herd boom is unlikely to materialize.

The beef herd is typically cyclical in nature, even as it has steadily shrunk since the 1990s. It’s now the smallest since 1951, leaving little supply cushion when weather or markets cause disruption. Droughts in 2022 and 2023 pushed many ranchers to liquidate herds; heifer and cow cull rates climbed in 2022 (up 4.8% and 10.9%, respectively), sparking the current cycle of high prices. Today, even with sky-high beef prices, calves on the ground at the beginning of 2024 were down 2.7% from the year earlier.

With drought in decline, ranchers may be looking to rebuild their herds. But a beef supply increase will take time. It will even result in higher prices in the short term as producers retain more heifers, which typically take at least two years to calve, and it will take another two years for those calves to be processed. Beef producers also operate under similar incentives as dairy farmers where today’s prices are pushing many to eschew a herd rebuild in favor of sending calves to market as soon as possible. These factors will all constrain the supply of beef animals for the next few years and support elevated prices for dairy-beef crosses.

Is change ahead?

Even as the beef herd is likely to remain constrained for the foreseeable future, two factors could still lower prices.

First, U.S. dairy farmers’ foray into beef crosses could shift supply dynamics in the beef market. U.S. farmers and ranchers purchased 9.4 million units of beef semen in 2023, according to the National Association of Animal Breeders, double as much as just five years ago. Notably, 85% of the beef semen purchased was by dairy farmers. Those calves have only recently made it to feedlots.

Second, several high-profile announcements of new feedlots specifically designed for dairy-beef crosses are likely to further entrench dairy’s investment in beef, permanently expanding the universe of potential beef production. Dairy could possibly cool off the beef market, but dairy’s own limitations to growing its herd naturally limit how many beef calves can come from dairy without seeing the dairy herd itself expand, which then would require switching away from beef — a highly unlikely outcome.

So, the beef herd is constrained for the foreseeable future and beef-on-dairy breeding has yet to provide enough supply to make today’s market more bearish. Demand for U.S. beef is unlikely to slow and remains relatively robust, even as consumers watch their spending. Meanwhile, global and domestic demand for protein, and specifically beef, has strengthened in recent years. U.S. beef exports grew 21% from 2015 to 2023. Tighter beef availability has limited exports so far this year (down 2% year-over-year), but growth remains the trend. Domestic demand has expanded as well, with domestic disappearance of beef 0.6% higher year-over-year in 2023, and per capita beef consumption has been rising as well.

With inflation cooling, consumers are likely to continue adding beef to their grocery carts. Until we see evidence that consumers are willing to switch from burgers to chicken or other proteins consistently, it appears beef prices are likely to remain strong and continue to limit the ability to grow the U.S. dairy herd in a meaningful way.

This column originally appeared in Hoard’s Dairyman Intel on Oct. 17, 2024.