Tag: dairy industry
NMPF’S GALEN DISCUSSES CHANGING FLUID MILK PRICING SYSTEM
Chris Galen, NMPF’s senior vice president of member services and governance, discusses the fifth week of USDA’s national hearing on Federal Order modernization, which focused on returning to the “higher of” Class I fluid milk price system. Galen also discussed what may happen to the hearing process if the federal government shuts down in October.
Driving Interest From Butter Bombs to Cookies
By Christopher Galen, Executive Director, The American Butter Institute
In a year when dairy commodities have been hit hard by slumping prices, butter has remained at the head of the class, barely dipping below $2.50 per pound at the wholesale level and recently rebounding to $2.75 per pound heading into the holiday baking season. Part of the reason for the strong demand, even with high inflation over the past two years, has been the American Butter Institute’s consumer awareness campaign about the value of butter in so many uses.
Our “Go Bold With Butter” campaign — funded mostly through the national dairy checkoff — reminds consumers of how useful butter is compared to plant-based oils and spreads. It also offers new recipes and product use ideas, from butter boards to butter bombs. You’ve probably heard of butter boards; basically, they are party-ready charcuterie trays featuring softened butter rather than meats and cold cuts. Meanwhile, butter bombs are a social media-worthy creation of a hollow sphere of butter filled either with savory ingredients like herbs, which people can melt on a grilled steak, or sweet ingredients like cinnamon sugar, suitable for use on breakfast foods like pancakes.
We also recently started a new consumer education program we’re calling “Butter Bits.” These are digestible snippets of friendly education we are sharing on social media that highlight butter as the solution to everyday cooking and baking challenges. This series of videos will follow a problem-and-solution format in a fast-paced, engaging, and entertaining way.
Since we are approaching the prime Christmas cookie-baking season, one of our regular seasonal promotions is our recipe contest. Each fall, the contest invites consumers to submit as many original cookie recipes as they wish. The “Go Bold With Butter” experts narrow the field of entrants to a few dozen and then bake up a (baker’s) dozen of the finalists to determine the best of that year’s class. The contest is open from now until November 1, and the rules and entry requirements are at www.goboldwithbutter.com.
Butter has clearly won the hearts, minds, and stomachs of many consumers whose preference for real dairy over vegetable spreads in the past generation has forced competitors to start calling their margarines “vegan butter.” But we can’t rest on our laurels: The “Go Bold With Butter” campaign reminds us that even though retail butter prices may rise, the elevated value real butter offers is worth it.
This column originally appeared in Hoard’s Dairyman Intel on September 18, 2023.
NMPF’s Cain Breaks Down FMMO Hearing Progress
NMPF Senior Director of Economic Research & Analysis Stephen Cain discusses progress thus far in USDA’s Federal Milk Marketing Order hearing on the Agriculture of America podcast. “We haven’t had a major update like this in over two decades, so it’s time for an update, and we’re trying to make sure we do it right,” Cain said. “So it’s going a go slowly, but we’re making progress and we’re moving through a lot of the key issues here to make sure that the orders are operating as effectively as they can.”
Butter Buoys Milk Prices as Inflation Ebbs
IDF World Dairy Summit Comes at a Great Time
The International Dairy Federation’s World Dairy Summit will be in the United States this year. Shawna Morris, senior vice president of trade policy for the National Milk Producers Federation and the U.S. Dairy Export Council, says the summit is coming to the U.S. at a good time. “We had a record year in exports last year, we’re very well-poised to continue to grow in the years to come, and we’re leading on so many of the sustainability fronts that are such an increasing focus for international markets,” she said.
Farmer Milk-Price Outlook Challenging
Price and Margin Outlook Challenge Farmers
By Peter Vitaliano, Chief Economist, NMPF
The price and margin outlook continues to challenge the nation’s dairy farmers, with little sign of immediate relief.
CME futures markets, which I use to project prices, indicate a 2023 calendar year U.S. average All-Milk price within a penny or two of $20.45 per hundredweight (cwt.); combined with an annual average Dairy Margin Coverage (DMC) feed cost of $14.20 per cwt., prices and costs at these levels would result in an annual average DMC margin of $6.25.
The USDA’s DMC Decision Tool has a different take on the CME futures, but it too shows roughly the same three average numbers for this year. Meanwhile, USDA’s World Agricultural Supply and Demand Estimates (WASDE) report from June 8 was even more dour, with a $19.95 per cwt. milk price forecast for this year.
The worst of the trough
And those are just the averages — the worst of the trough may be happening right now. Both the CME futures markets and the USDA tool indicate DMC margins well below $5 per cwt. for the three months during the May to August period, which for the first time would trigger Tier 2 payments. Tier 2 coverage at that level costs only a half cent a hundredweight, the same as equivalent Tier 1 coverage. Neither forecast expects the margin to top $9.50 per cwt. before the year is out.
Milk production isn’t usually cited as the root cause of this gloom – but it deserves a closer look. Production growth has been experiencing an unusually short and mild expansion cycle following its extended period last year below year-earlier levels. Production growth maxed out this year at 1.4% in January and was headed down since, hitting just 0.4% over a year ago in April, but annual growth ticked back up to 0.6% in May and has averaged 0.8% for the first five months of 2023.
But assessing the role of milk production with respect to milk prices can’t be done only with reference to historic patterns but rather with respect to current available demand. USDA reports of plentiful supplies for manufacturing, milk selling well below class prices, and busy production schedules suggests that milk production is definitely part of the problem. And production itself needs to be understood, because milk solids production is a more reliable indicator of the aggregate supply of dairy products available in the markets. And that’s up by 1.1% during the first third of the year.
A top-level look at the supply-demand situation for key products and total milk use during the first third of 2023 provides further insights. American cheese production has been an important outlet for recent additional milk production, which isn’t surprising given the recent expansion of U.S. cheese production capacity. Production has grown by 2.6% during the first four months of this year while total commercial use, domestic consumption, and exports are up by 1.6%. Even with these increases, stocks are still below last year’s peak levels.
Total commercial use of other than American-type cheese is up by just 0.8%, as food service use is weak following more than a year of retail price inflation that has forced consumers to tighten up on spending. But production of this type of cheese is down by half a percent. Total fluid milk sales are 2.7% lower than last year, which is in line with long-term trends that were broken in recent years only during the first pandemic year when fluid sales experienced modest growth. Butter consumption suffered last year from its extreme price inflation but has showed improved consumption in recent months. Total exports are on par with last year’s record levels so far in 2023 but have recently slowed in pace. During March and April last year, exports sent 18.4% of domestic milk solids production overseas. This year, this was just 17%.
The current weak price and margin situation isn’t attributable to one single factor; rather, it’s an accumulation of many small weaknesses in many areas, with some further deterioration in just the last couple of months. The futures markets’ projected improvement during the second half of the year will need to be driven by consumers returning to bolder spending behavior as inflation continues to ebb, and for the current low prices to perform their proverbial supply-side function of curing themselves.
This column originally appeared in Hoard’s Dairyman Intel on June 26, 2023.
NMPF’s Larson on Whole Milk in Schools
NMPF Senior Director of Government Relations Claudia Larson discusses the Whole Milk for Healthy Kids Act, which has bipartisan support in the House and Senate. The legislation would return whole milk to schools, encouraging better nutrition and reducing food waste. Larson speaks on the Rural Radio Network.
NMPF’s Bjerga on the Whole Milk for Healthy Kids Act
NMPF Senior Vice President of Communications Alan Bjerga discusses the Whole Milk for Healthy Kids Act and the importance of bringing back whole milk as an option in school meal programs. The Whole Milk for Healthy Kids Act was introduced in the House of Representatives on Tuesday, and is another step acknowledging the increased understanding of the benefits of whole milk in diet. Bjerga speaks on RFD-TV.
NMPF Board of Directors Approves Comprehensive Farm Bill Recommendations
NMPF’s Board of Directors approved June 7 a suite of farm bill policy priorities covering the commodities, conservation, trade, and nutrition titles, working to enhance federal support for producers and expand access to nutritious dairy products for consumers at home and abroad.
With the current farm bill set to expire Sept. 30, Congress is working to enact a new bipartisan five-year farm bill. NMPF’s recommendations will aid in enacting an on-time farm bill that provides dairy producers the certainty they need as they manage their risks and resources while seeking market opportunities at home and abroad.
“The farm bill is crucial both to dairy farmers seeking to effectively manage their risk and to the consumers who benefit from the nutritious products dairy farmers work every to provide,” said Randy Mooney, chairman of NMPF’s board and a dairy farmer outside Rogersville, MO. “We stand ready to work with lawmakers as they craft this complex, extremely important legislation that touches everyone.”
In the Commodities title:
NMPF seeks to build on its successes in the last farm bill to strengthen the dairy safety net and provide producers with access to a range of risk management tools. NMPF’s board voted to support continuing the Dairy Margin Coverage safety net while updating the program’s production history calculation. The board also voted to prioritize improving the Livestock Gross Margin-Dairy and Dairy-Revenue Protection programs should new funding become available.
The board also voted to seek farm bill language to direct USDA to conduct mandatory plant cost studies every two years to provide better data to inform future make allowance reviews. This would complement the near-term make allowance update NMPF is pursuing through its Federal Milk Marketing Order initiative via the USDA hearing process announced last week. Similarly, the board also voted to pursue restoring the previous “higher of” Class I mover in the most expeditious manner possible, either administratively via the FMMO process or legislatively through the farm bill, in which the mover was last changed in 2018.
In the Conservation title:
NMPF is advocating for policies that better position the dairy industry to meet its voluntary, producer-led goal of becoming greenhouse gas neutral or better by 2050. NMPF’s board voted to support maintaining robust funding for voluntary conservation programs, such as the Environmental Quality Incentives Program that supports dairy farmers in their ongoing land and water resource management efforts, with additional emphasis on feed and manure management both of which are major areas of opportunity in sustainability. The board also voted to seek relief from program payment limitations that prevent the family farmers that produce most of the nation’s milk supply from fully using these programs.
In the Trade title:
NMPF will support policies recognizing the growing importance of trade for U.S. dairy, with exports accounting for one-sixth milk of all U.S. milk production, a share expected to grow. NMPF’s board voted to support enhancing funding for trade promotion programs like the Market Access Program and the Foreign Market Development program, which promote American-made dairy and agriculture products that compete with heavily subsidized foreign products and return well over $20 in export revenue for every dollar invested.
The NMPF board also voted to seek language to protect common food names, as embodied in the bipartisan, bicameral SAVE Act that would establish an official list of common food and beverage names and direct USDA and the U.S. Trade Representative to prioritize this issue in international trade negotiations.
In the Nutrition title:
NMPF will support policies that reflect dairy’s role as an excellent source of 13 essential nutrients, some of which are under-consumed, according to the most recent Dietary Guidelines for Americans. The Supplemental Nutrition Assistance Program is vital to linking the food we produce as farmers to families across the country facing difficult circumstances. NMPF’s board voted to support the enhancement of federal nutrition programs to provide nutritious dairy products to beneficiaries. NMPF also supports the bipartisan Dairy Nutrition Incentives Program introduced in the Senate to encourage SNAP participants to choose healthful dairy products at the grocery store.
FARM provides insights on labor laws
Keeping up with changes to state and federal labor laws can be daunting. However, given the tight labor markets, dairy farms must redouble efforts to attract and retain employees.
The National Dairy Farmers Assuring Responsible Management (FARM) Workforce Development program offers free resources. These include state and federal legal fact sheets as well as human resource (HR) and safety templates to help dairy owners and managers increase worker engagement, reduce employee turnover, and manage safety hazards associated with dairy farming.
As part of its programming, FARM Workforce Development hosts quarterly educational webinars for program evaluators — the individuals who conduct on-farm assessments and support farmers with continuous improvement. For this year’s first webinar, Dan Deacon of Conn Maciel Carey LLP highlighted recent and potential upcoming changes to federal labor laws, including independent contractor definitions, overtime and wage rules, and Occupational Safety and Health Administration (OSHA) regulations. While FARM’s on-farm assessment tool does not evaluate legal compliance, understanding the legal and regulatory context is essential for advancing adoption of HR and safety best practices.
The Wage and Hour Division of the Department of Labor issued a proposed update to the Employee vs. Independent Contractor classification in October — restoring the “totality of the circumstances” analysis to determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act. A final rule would limit when a worker may be properly classified as an independent contractor and may be subject to legal action. The Wage and Hour Division is currently reviewing feedback from their public comment period and will provide next steps in the coming months.
The Wage and Hour Division has also held industry stakeholder listening sessions regarding overtime regulations and indicated it will issue a proposed rule to update the salary exemption threshold this year. It is not clear at this time whether the division is also exploring further updates to overtime regulations.
In January 2023, OSHA issued enforcement memos to field offices and state plans that significantly expand the potential for higher fines issued to employers for safety and health violations. One memo expands the circumstances for instance-by-instance citations, while the other reiterates OSHA’s discretion to limit the grouping of citations. OSHA also initiated a rulemaking in January 2023 for the Worker Walkaround Representative Designation Process, which would allow union representatives to participate in OSHA inspections at non-union workplaces, at the request of employees, and be more involved in the OSHA process. Prior to those actions, in March 2022, OSHA also issued a proposed rule to expand the e-recordkeeping requirements planned to be implemented this year, which would require certain high hazard employers to submit OSHA 300, 301, and 300A data to OSHA on an annual basis.
FARM Workforce Development supports dairy farmers in identifying and implementing HR and safety best practices to enhance safe and thriving work environments. Dairy cooperatives and processors representing 60% of the U.S. milk supply participate in the initiative. More than 400 assessments have been completed across 23 states. Visit FARM’s website for FARM Workforce Development resources, including federal and state legal fact sheets.
