Dairy Farmers to Seek Emergency USDA Hearing on Class I Mover Reform

The National Milk Producers Federation’s Board of Directors voted today to request an emergency USDA hearing on a Federal Milk Marketing Order proposal to restore fairness for farmers in the Class I fluid milk price mover. The endorsement of the board, which represents dairy farmers and cooperatives nationwide, follows approval from the organization’s Executive Committee last week.

The NMPF plan would ensure that farmers recover lost revenue and establish more equitable distribution of risk among dairy farmers and processors. The current mover was adopted in the 2018 farm bill and intended to be revenue neutral while facilitating increased price risk management by fluid milk bottlers. But the new Class I mover contributed to disorderly marketing conditions last year during the height of the pandemic and cost dairy farmers over $725 million in lost income. NMPF’s proposal would help recoup the lost revenue and ensure that neither farmers nor processors are disproportionately harmed by future significant price disruptions.

“As the COVID-19 experience has shown, market stresses can shift the mover in ways that affect dairy farmers much more than processors. This was not the intent of the Class I mover formula negotiated within the industry,” said Randy Mooney, the dairy farmer chairman of NMPF’s Board of Directors. “The current mover was explicitly developed to be a revenue-neutral solution to the concerns of fluid milk processors about hedging their price risk, with equity among market participants a stated goal.

“Dairy farmers were pleased with the previous method of determining Class I prices and had no need to change it, but we tried to accommodate the concerns of fluid processors for better risk management. Unfortunately, the severe imbalances we’ve seen in the past year plainly show that a modified approach is necessary. We will urge USDA to adopt our plan to restore equity and create more orderly marketing conditions,” Mooney said.

While the current Class I mover was designed to improve the ability of fluid milk handlers to hedge milk prices using the futures market, it was also expected to be revenue-neutral compared to the formula it replaced. But that has not been the case. The significant gaps between Class III and IV prices that developed during the pandemic exposed dairy farmers to losses that were not experienced by processors, showing the need for a formula that better accounts for disorderly market conditions.

NMPF’s proposal would modify the current Class I mover, which adds $0.74/cwt to the monthly average of Classes III and IV, by adjusting this amount every two years based on conditions over the prior 24 months, with the current mover remaining the floor. NMPF’s request will be to limit the hearing specifically to proposed changes to the mover, after which USDA would have 30 days to issue an action plan that would determine whether USDA would act on an emergency basis​.

NMPF’s Bjerga on Food Box, Vaccinations, and Butter’s Bright Future

NMPF Senior Vice President of Communications Alan Bjerga discusses the rise and fall of the Farmers to Families Food Box program and the potential for improved food-assistance programs, along with the need for stepped-up rural COVID vaccinations and how the pandemic could brighten the long-term outlook for butter. Discussion on WEKZ radio, Janesville, Wisconsin.

First Quarter 2021 CWT-Assisted Export Sales Top 42 Million Pounds of Product

In the first three months of 2021, CWT assisted member cooperatives in securing 218 contracts to sell 11.8 million pounds of American-type cheeses, 8.8 million pounds of butter, 3.6 million pounds of anhydrous milkfat (AMF), 13.5 million pounds of whole milk powder and 4.4 million pounds of cream cheese. The milk equivalent of these 2021 contracts is 540 million pounds on a milkfat basis. The product is going to over 100 customers in 26 countries around the world. All the product will be delivered in 2021.

The year-to-date totals include March contracts for 3.7 million pounds of cheese, 1.5 million pounds of butter, 1.6 million pounds of AMF, 7 million pounds of whole milk powder and 901,691 pounds of cream cheese.

Assisting CWT member cooperatives gain and maintain world market share through the Export Assistance program expands the demand for U.S. dairy products. 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.

NMPF’s Sweeney-Murphy Explains Vaccination Resources

NMPF’s Theresa Sweeney-Murphy says confusion can vary by state or even among counties for when for COVID vaccines will be available for essential food and ag workers. “There are 50 states, and they each have different plans for distributing vaccines,” she said in an interview with the Brownfield Ag News She says a new toolbox aims to answer COVID questions and help dairy farmers navigate the continually changing eligibility requirements.

CWT Assisted Sales in February Total 14.2 Million Pounds of Dairy Exports

CWT assisted member cooperatives in securing 64 contracts with sales of 5.2 million pounds of American-type cheeses, 3.9 million pounds of butter, 3.5 million pounds of whole milk powder, 1 million pounds of anhydrous milkfat (AMF) and 1.2 pounds of cream cheese. The product is going to customers in Asia, Central and South America, Europe, the Middle East, North Africa and Oceania. The product will be shipped during the months of February through August 2021.

These transactions bring the 2021 total of the CWT-assisted product sales contracts to 8.117 million pounds of cheese, 7.277 million pounds of butter, 6.495 million pounds of whole milk powder, 2.013 million pounds of AMF, and 3.530 million pounds of cream cheese. These contracts will move the equivalent of 368.4 million pounds of milk on a milkfat basis overseas in 2021.

Assisting CWT member cooperatives to 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 www.cwt.coop/membership.

DMC’s January Payout Exceeds Annual Premium Costs

The margin in January for the Dairy Margin Coverage program, the main federal dairy safety-net initiative, was $7.14 per cwt, down from $8.78 per cwt in December. That generated a payment of $2.36 per cwt for $9.50 per cwt coverage for January – which, by itself, was already more than enough to repay the full cost of signing up for the program at the maximum coverage level for the entire year.

The January all-milk price dropped another dollar from December to $17.50 per cwt. Meanwhile, the remaining $0.64 per cwt monthly drop in the margin was generated almost entirely by increases in corn and soybean meal costs. The one-month increase in the margin’s feed cost was the highest for the DMC as well as for its predecessor, the Margin Protection Program, which was initiated in 2014.

With current futures prices indicating that the all-milk price won’t rise above January’s level for several months and that corn will keep rising and soybean meal will not get much cheaper over the same period, the program is expected to generate substantial payments in 2021.

Dairy Leadership Crucial in U.S., Global Climate Debate

The recent below-zero temperatures in Texas and a blast of late-winter snowstorms aren’t the only signals that climate conversations are destined to become more prominent in agriculture. The Biden Administration is showing its desire to participate actively in global decision-making, rejoining the Paris Climate Accord and making climate an early focus of executive orders. Congress is expected to tackle climate-change legislation this session. And newly confirmed Agriculture Secretary Tom Vilsack has pledged to make climate change – and climate-friendly incentives for farmers – central to his agenda in his leadership return at USDA.

And that’s just in the United States. Globally, climate concerns and food-production discussions are merging, with sustainability increasingly moving from buzzword to marketplace demand, to potentially a requirement to participate in the global food system.

The United Nations is convening a Food Systems Summit in September in which agriculture and sustainability will be the central discussion, and we are working shoulder-to-shoulder with our colleagues at Dairy Management, Inc. and the U.S. Dairy Export Council to make sure U.S. dairy’s leadership is recognized and to partner with other organizations in underscoring the nutritional value of our products as well as the sustainability advances already achieved. But the UN conversation could easily turn negative for dairy, given the role that anti-animal agriculture voices are playing in driving it.

Real movement domestically – and real threats globally – make it imperative that dairy be active as important choices are made. Fortunately, the dairy community, through the hard work of farmers and support for their efforts throughout the entire supply chain, has a proactive, positive story to tell. The Summit offers an opportunity we must seize to tell our story, which is essential in this new era.

We in dairy know just how effective we are in sustainably managing our operations. The U.S. dairy industry is responsible for less than two percent of the nation’s greenhouse gas emissions. Much of that is methane, a relatively short-lived gas that has an impact many scientists say is likely overstated. Meanwhile, according to the Food and Agriculture Organization of the United Nations, North American dairy – which is dominated by U.S. production – is the only dairy region in the world where absolute emissions decreased from 2005 to 2015, by a total of 5 percent. That occurred even as milk production increased over that same period.

Dairy is already part of agriculture’s climate solution, but U.S. dairy is going even further. Our Net Zero Initiative will make domestic dairy production carbon-neutral by 2050 and is accompanied by quantifiable, verifiable goals that will guide the industry to that destination.

We are also playing a leading role in seeking the public-policy solutions and incentives necessary to make plans reality. Last week we announced our membership in the Food and Agriculture Climate Alliance, a coalition of organizations across food, agriculture and the environment that collectively seek voluntary, incentives-based and market- and science-driven approaches to tackle climate policy and build resilient rural communities. Through leading by example in agriculture and building consensus among its constituents, U.S. dairy farmers can meet ambitious goals that will improve our prosperity as well as the planet’s health, with benefits for all.

But before we paint an outlook that’s too rosy, an important note: For all our leadership within the U.S., numerous vocal advocates in the world are in a different place.

While we seek solutions, others, many of whom have an interest in agriculture but live outside it, are calling for certain farmers not to be part of a “solution.” Instead, such farmers would be swept up (and perhaps swept aside) by “revolution,” one they envision would create a sector with less (if any) livestock, fewer farm inputs, and a bias against technological innovation. As U.S. dairy relies more on global markets, and as global actions on climate-change increasingly affect how the U.S. does business, these realities become ever-more-important to address.

As always, the solution is to never shrink from the challenge. The common goal of improving the planet requires neither surrendering to a misguided agenda nor ignoring the problem. Again: We all know what a positive story dairy can tell and the sizable sustainability investments that the U.S. dairy sector in particular is making. Tangible progress on emissions. Innovative practices that can be widely adopted in all regions, on farms of all sizes, with proper incentives. Ambitious goals backed by data. The reality is the world would be better off if the rest of the global dairy industry became as efficient – in milk production and resource use – as U.S. dairy. But much of the global audience, through misunderstanding or simple self-interest, is skeptical of this message.

This is our task in advocacy. As we’ve seen in recent years, in our response to the coronavirus crisis and to our own economic challenges, we can get things done when we’re united and clear in what we set out to achieve. Dairy can and will be – and in fact, always has been – a positive contributor to sustainability solutions. Our products nourish people around the world, and we care for its resources well. Tumultuous weather will always be with us – but with growing shifts in climate, those challenges are becoming more calamitous. We are rising to the challenge as well, as a domestic and global solution and as an informed voice in all debates. We look forward to the opportunity.

FARM Program’s Yeiser Stepp on Rethinking Dairy Engagement

Emily Yeiser Stepp, NMPF’s vice president for the National Dairy FARM Program, discusses how 2020 changed the way dairy-sector engagement has pivoted into the virtual world. She speaks on RFD-TV.

https://www.rfdtv.com/story/43427310/rethinking-engagement-strategies-in-the-dairy-industry

NMPF Statement on Additional COVID Relief Package

“NMPF is grateful to Congress for working to enact additional COVID-19 stimulus legislation. The pending bill includes critical additional agriculture and nutrition support intended to help farmers, rural communities, and food-insecure households throughout the nation.

“Throughout the COVID-19 pandemic, the federal government’s strong response has proven invaluable to dairy producers as they keep working, day-in and day-out, to sustainably provide families here at home and abroad with an abundant supply of nutritious dairy products. However, while the availability of a vaccine is cause for hope, difficult months remain ahead.

“NMPF appreciates the additional $3.6 billion Congress would provide to bolster food supply chains and facilitate additional purchases and donations of dairy and other food products to those who need them most. NMPF also supports the legislation’s increased funding for the Supplemental Nutrition Assistance Program and the Commodity Supplemental Food Program, which will provide dairy and other nutritious foods to those households and senior citizens who have faced added hardship and unique struggles during this challenging period.

“Finally, the package includes important provisions that strengthen resilience and improve equity in rural America and take critical steps to improve the livelihoods of historically underserved farmers, including debt relief and access to credit. These actions will better position all parts of the country to recover from the stresses of the pandemic and strengthen our communities for years to come.”

NMPF Statement on Confirmation of Tom Vilsack as Secretary of Agriculture

From NMPF President and CEO Jim Mulhern:

“All of U.S. agriculture has an effective advocate in Tom Vilsack, and the nation will be well-served by his return to public service leading the U.S. Department of Agriculture.

“We in the dairy community who have had the opportunity to work with him have seen first-hand his deep passion for rural America and his commitment to advancing agriculture and the communities it serves, from farmers and food-sector workers to the consumers and businesses that depend on USDA to meet their needs every day, in every way. That’s especially important in light of today’s pressing challenges, which include a farm economy battered by the COVID-19 pandemic; climate change, sustainability and the environment; nutrition and food insecurity; international trade policies that limit U.S. exports; labor shortages that are worsening with time; and the legacies of societal injustice that need to be addressed.

“Tom Vilsack’s experience and leadership will be crucial to meeting these challenges, and more. We congratulate him on his confirmation and pledge to do our best to contribute to his successful service.”