NMPF Announces Staff Reorganization as Doud Begins New Role

The National Milk Producers Federation announced a significant staff reorganization as it transitions to new leadership, as incoming President & CEO Gregg Doud began work with the organization this week as the organization’s Chief Operating Officer, a position he will hold until current President & CEO Jim Mulhern retires in January.

“I am excited to announce these changes, which will enhance the efficiency and effectiveness of our organizational structure,” said Mulhern. “They also recognize the significant contributions of the affected individuals to our overall success in recent years and position the organization well for even greater success in the future.”

NMPF named three Executive Vice Presidents – Paul Bleiberg, Shawna Morris and Alan Bjerga – as part of the reorganization, recognizing responsibilities that are expanding across NMPF teams. Bleiberg will serve as Executive Vice President, Government Relations; Morris as Executive Vice President, Trade Policy & Global Affairs; and Bjerga as Executive Vice President, Communications and Industry Relations.

Other promotions include David West to Chief Administrative Officer; Stephen Cain to Senior Director, Economic Research & Analysis; Beverly Hampton Phifer to Senior Director, FARM Animal Care; Theresa Sweeney-Murphy as Senior Director, Communications and Outreach; Miquela Hanselman to Director, Regulatory Affairs; and Tony Rice to Director, Trade Policy. Staffers receiving title changes in line with new responsibilities are Chris Galen, who will serve as Senior Vice President of Member Services and Governance, and Claudia Larson, Senior Director, Government Relations & Head of Nutrition Policy.

Jim Mulhern to Retire as NMPF CEO; Gregg Doud Named Successor

NMPF President and CEO Jim Mulhern announced Tuesday he will retire from his position at the end of this year, concluding a decade of service leading the organization and capping a 45-year career in U.S. agricultural and dairy policy. Gregg Doud, a globally recognized agricultural leader and former Chief Agricultural Negotiator for the U.S. Office of the Trade Representative, was named his replacement by NMPF’s Board of Directors later that day.

“Directing the policy efforts of the nation’s dairy farmers and their cooperatives has been the highlight of my professional career,” said Mulhern, who was asked to lead the organization in 2013 and guided NMPF through two completed farm bills, the .COVID-19 crisis, and an ever-quickening pace of change in an industry that in some ways is unrecognizable from that he entered in 1979, when he began his career working for a Midwest dairy cooperative.

Mulhern leaves NMPF in a commanding position, with the organization spearheading a once-a-generation update of federal milk marketing orders and advancing both a fairer economic and regulatory environment for dairy farmers and a more transparent marketplace for consumers amid the proliferation of plant-based dairy imposters. Through its partnerships with the U.S. Dairy Export Council and others, NMPF has supported policy changes to boost dairy exports, which are reaching records; and through its stewardship of the National Dairy FARM Program, it is enhancing dairy’s leadership agricultural sustainability and animal care.

“Dairy farmers have numerous reasons to be thankful for Jim Mulhern’s leadership at NMPF,” said NMPF Board of Directors Chairman Randy Mooney. “Jim has been a leader, a visionary, and a friend to dairy, and through that, a leader in agriculture. The combination of his depth of knowledge, his energy, and his unflagging passion for dairy producers is impossible to replace, but we all will know that his influence and achievements will resonate in this industry for years to come.”

Doud has served in numerous leadership roles in trade association and government work in his more than 30-year career in agricultural policy and economics, most recently at Aimpoint Research, a global intelligence firm specializing in agriculture and food. As Chief Agricultural Negotiator for the U.S. Office of the Trade Representative, from 2018-2021, he led numerous successful efforts to create a fair, prosperous environment for U.S. agricultural exports, including the U.S.-China “Phase One” agreement and the USMCA negotiations.

Before that role, he served as president of the Commodity Markets Council, a trade association for commodities exchanges and industry counterparts; as senior professional staff on the Senate Agriculture Committee; and as chief economist for the National Cattlemen’s Beef Association, among other roles.

Doud said that as the organization’s next leader, he’s excited to engage on critical issues facing dairy farmers. “From the policy arena to new technologies, there are many great new opportunities for dairy producers at home and internationally,” he said. “It is a tremendous privilege to have the opportunity in these exciting times to lead NMPF, one of Washington’s oldest, most prestigious and well-respected agricultural trade associations.”

Doud was born and raised on a 1,000-acre grain, hog and cattle farm near Mankato, KS. He is a graduate of Kansas State University, where he earned a bachelor’s degree in animal science and a master’s in agricultural economics. He remains actively engaged in production agriculture through partnership in a cow-calf operation and lives with his wife and two children on their horse farm in Lothian, MD.

Doud will begin official work at NMPF in September as its chief operating officer before assuming the role of president and CEO upon Mulhern’s retirement.

“Dairy farmers across the nation are pleased to endorse a true champion of agriculture, someone who both understands the hard work we do and the opportunities and challenges we face both here and abroad,” Mooney said. “NMPF has long been blessed with leadership that’s been able to take its advocacy for dairy to a higher level. We strongly believe that Gregg Doud more than amply provides the expertise, the background, and the passion we will need as we navigate a challenging, but promising, new era.”

On Nutrition, It’s Defense That Wins for Dairy

While advocating for dairy farmers is always rewarding work, some of its most frustrating, but necessary, challenges come when, instead of working to push policy forward to improve dairy farmers’ lives and businesses, we at NMPF have to push back against proposals that would threaten the progress we’ve made.

Unlike achievements in which the results are clear and tangible – an excellent example is this week’s announcement of $100 million in reimbursements to medium- and larger-sized dairy farmers for pandemic-related losses that weren’t included in an earlier round of payments – sometimes, simply keeping bad things from happening is a policy win.

That’s especially true in the world of nutrition, where diet fads, pseudo-science and well-intentioned, but flawed, plans can work against the benefits of dairy that have been proven over generations. Many of those battles become years-long slogs over arcane definitions, filled with behind-the-scenes meetings with federal officials and full-throated efforts that use up energy to keep bad things from happening rather than make good things happen. In those cases, success isn’t celebrated with a news release and a victory lap – often, it’s the quiet satisfaction of seeing nothing happen at all.

Fortunately for NMPF and dairy, we have a top-notch team of regulatory experts ready for the slogs, working with our government relations and trade staff to provide a formidable defense for dairy and keep a sharp focus on efforts to ensure that consumers can maximize the health benefits of milk, despite short-sighted and misinformed attempts to limit them.

One critical effort underway right now is to ensure that dairy access isn’t reduced in the Women, Infants & Children (WIC) Program, which provides critical nutrition assistance for lower-income mothers and children. A USDA proposed rule released last November has its positive points, including approaches that would expand options for yogurt and cheese varieties and authorizes lactose-free milk as an option. But it also includes provisions that would decrease overall access to dairy products. That wouldn’t only reduce access to dairy’s nutrients in WIC – because dairy is one of the most popular parts of the program, reducing access to dairy foods could harm WIC participation altogether.

The USDA rule isn’t final yet, and we are working across the dairy community, including with our counterparts at the International Dairy Foods Association and others, to make sure WIC continues to reduce food insecurity, malnutrition, and diet-related disease while improving health outcomes by making it easier for all Americans to access healthy, affordable dairy foods. This work goes in tandem with our efforts to maintain legislative support for nutrition programs such as WIC, and of course our collaboration with the nutrition community to back critical Farm Bill initiatives such as SNAP (the Supplemental Nutrition Assistance Program) and the Dairy Donation Program.

Another crucial recent fight has been to stymie the cynical exploitation of a true crisis – the infant-formula shortages U.S. families experienced throughout 2022 – by certain agenda-driven groups  and various foreign manufacturers that want American consumers to become dependent on their product, to the detriment of the U.S.’s own dairy manufacturing sector, and consequently U.S. jobs. Last year, we strongly supported well-defined measures that temporarily boosted imports as a way to make sure family needs were met when a critical plant in the highly centralized U.S. formula industry went offline. But as the crisis has faded, foreign interests are attempting to turn short-term reliance into longer-term dependence – and exploit a free-pass on the regulatory process normally required to ship formula to the U.S.

The U.S. is a major supplier of dairy products around the world. It is one of the most reliable dairy industries, with a large pool of high-quality milk. The real reforms needed to ensure we can best handle any potential future supply disruptions are not further unilateral tariff cuts to encourage foreign imports, but rather an overhaul of U.S. policy that makes domestic formula companies better able to invest in new facilities here, as our cheese and ingredient sectors already do. Protecting U.S. families and developing common sense policies doesn’t make an industry “protectionist” – it makes it more robust, and better able to withstand any future disruptions that may occur. That’s why we won’t back down from pursuing policies that will allow the U.S. infant-formula industry to expand.

Those are only two recent efforts we’ve made in defending the key nutrition contributions of U.S. dairy farmers and their cooperatives. There are many others. By mid-month, NMPF, working with its allies, will submit comments on a proposed Food and Drug Administration rule governing the word “healthy” as applied to food products. No one’s opposed to being “healthy,” but FDA’s broad-brush approach in its proposed rule, which relies on old science about fats and fails to adequately distinguish milkfat from other fats, in some cases may not best capture the essential nutrition dairy provides.

Meanwhile, FDA guidance on plant-based beverage labeling still looms, and we’re working to ensure that dairy’s standard of identity is respected. Also on tap is the next Dietary Guidelines for Americans, due in 2025; that process inevitably comes along with the standard interest-group lobbying against dairy, even though the guidelines themselves cite how nearly 90 percent of the U.S. population consumes less dairy than it recommends.

Of course, we’re not always playing defense on these issues. The latest science on dietary fats helps us support the benefits of whole milk within the dietary guidelines and in federal nutrition programs, and the nation’s nutritional needs alone argue for increased support for dairy at the federal policy level. But due to opposition from vegan groups, environmental and other activists who don’t want to hear our story, our successes sometimes come from the bad things we prevent as well as the progress we achieve.

On nutrition, we know that consumers, science and the strength of this industry are on our side. We defend our values and positions well — and that sets us up to keep moving ahead.


President & CEO

National Milk Producers Federation

 

Dairy Wins on Facts in Looming ‘Lab-Based’ Labeling Battle

The marketers are at it again, breathlessly promoting “innovation” as a storm of startups gather, each hoping to cash out their venture capital before their business models crash and burn. It’s happened in “meat,” it’s happened among some plant-based food manufacturers, and the consumers are always the ones left holding the bag, with nutritional needs that aren’t met and a Wild West government attitude toward food labels that creates confusion over what a food is and isn’t.

That’s why we’re warily watching the rise of so-called lab-based dairy – the dressing up of pre-existing fermentation technology as innovation, all the better to bilk customers with inferior, overpriced goods. To avoid the frustration of the past four decades, in which plant-based imposters have proliferated as the U.S. Food and Drug Administration turns a blind eye to its own rules on dairy terms, it’s ever more important for the agency now to create clear labeling guidelines for such products, making clear distinctions to protect consumer health and safety, and avoid past mistakes.

First, a primer on what companies such as Perfect Day, which advertises itself as providing “Sustainable Animal-Free Dairy and Protein,” provide. Using “precision fermentation” technology, an imitator can duplicate an individual dairy protein – for example, a single whey protein among numerous proteins found in natural whey – and reproduce it at a commercial scale without using its natural source of creation, an animal.

The technology isn’t new: In fact, the dairy industry pioneered it, using fermentation to produce calf rennet for cheesemaking. But through the wonders of marketing and a loose definition of what “dairy” is, startups are creating the impression that they’re using cutting-edge technology to develop a true dairy product. In fact, nothing could be farther from the truth.

Here’s why. In food science, an important principle is this: We don’t know what we don’t know. Appreciation for food’s complexity – how nutrients interact, how much the food-creation process matters – has advanced from the 20th century, when cereal marketers could slap “Fortified With 8 Vitamins and Minerals” and deem sugary breakfast products a healthy food.

Milk isn’t just a single synthesized protein or a simple collection of nutrients. It’s a complex biologic product evolved over millennia, with nutritional and health benefits created via innumerable interactions within an animal that only the arrogant and foolish would claim it can perfectly reproduce. While in a sense, these lab-synthesized products come closer to the mark than plant-based fakes – at least they have overlapping strands of some matching DNA – a single dairy protein is no more “milk” than a steering wheel is a car. These products do not come anywhere near replicating natural dairy.

And, given the necessity of the animal to the process, they never will. The U.S. Food and Drug Administration’s stated standard of identity for milk as “the lacteal secretion … obtained by the complete milking of one or more healthy cows” isn’t the result of industry lobbying or an outdated conception of dairy. It reflects a solid grounding in scientific reality, one that isn’t changed by a fermentation vat and a misleading marketing pitch.

About those vats. Beyond the simple scientific refutation of synthesized, lab-based products as dairy, it’s important to note that the purported advantages of these products, specifically regarding their sustainability, can be wildly overstated.

It’s true that dairy cows contribute to greenhouse gas emissions, for the same reasons you do — they eat, drink, and use land. But a well-managed, 21st century dairy also fits well into an environmental lifecycle that includes using a cow’s four-chambered stomach to convert plants that are inedible for humans into milk and dairy products we can consume and enjoy, as well as creating byproducts that can displace fossil fuels. That’s why we’re so excited about and confident in our sector’s highly achievable Net Zero Initiative.

Lab-based dairy sustainability is less certain. What’s the electric bill for the industrial bioreactor used to make small product batches of casein into larger ones? What’s the carbon footprint needed for the large-scale reproduction of a single protein, versus the effort used by an animal that can perfectly create every single necessary substance on its own? And what are the prospects of producing at competitive cost and scale in a factory what cows produce naturally and is sold relatively inexpensively? If the benefit exists, where are the studies that verify it? And who funded them?

All of this, and more, argues for extremely clear labeling of technologically primitive dairy-protein replicants sold in the marketplace that, without regulatory intervention, are guaranteed to mislead and confuse consumers more than they benefit them. We’ve seen that in the proliferation of mislabeled plant-based products. A factory-synthesized dairy protein, for example, can still trigger milk allergies. But what choice might a consumer with such allergies, upon seeing an “Animal Free” marketing claim, make? And in the real world – the one where consumers eat food, not DNA sequences – what’s the safest, most honest way to inform them that what they consume is nutritionally doing what dairy naturally does, even when we ourselves don’t necessarily know exactly what’s creating that experience?

Here’s how: By relying on clear labeling guidelines that have existed for decades and are grounded in well-established science and consumer understanding.

In some ways, the looming labeling battle over industrially duplicated “dairy” may seem more difficult than the plant-based challenge. But from another angle, the need for labeling integrity is obvious and the arguments clear. Dairy has been, is today, and always will be, the product of an animal-based production system. It’s what makes it what it is. Despite the attempts to blur these crucial distinctions that are already under way and promise to proliferate, that must always be kept top-of-mind. We certainly will. And we’ll do everything we can to make sure that FDA, members of Congress and consumers do too.


Jim Mulhern

President and CEO, National Milk Producers Federation

Dairy’s Certainties Help Guide the Industry

Note: This is an abridged version of NMPF President and CEO Jim Mulhern’s speech at the organization’s annual meeting on Nov. 16 in Las Vegas.

One of the greatest challenges dairy faces today is the incredible amount of uncertainty in the world we live in. We didn’t have to worry that much about supply chains or closed restaurants and schools just two years ago, but now they mean dollars and cents to our bottom lines. And as our industry grows larger, the dollars and cents involved only get bigger.

But along with the uncertainty, we’ve learned a lot as well. In some cases, we have perhaps even more certainty than we had two years ago.

The first, most basic certainty is this: People want our product because they love its taste, and they know they need it. In a year when store shelves were emptied of milk across the country, schools shuttered nationwide, restaurants closed and cheese prices hit records, U.S. dairy consumption increased three pounds per person last year — to the highest consumption level since 1960.

We also know from the past year that exports more than ever are not only dairy’s future, they’re dairy’s present. U.S. dairy farmers can serve these markets more sustainably than anyone else in the world, and other countries are increasingly recognizing that. So we know that customers here and overseas support us. But we also know a lot more than that.

NMPF is the voice of dairy farmers in our nation’s capital. We’re well positioned to meet the many challenges that lie ahead. Here are a few numbers that show what we’ve done and point at what needs to be done:

$6 billion. It’s a big number, but it’s the amount of federal aid we’ve been able to procure for the dairy industry as needed assistance during the pandemic.

And here’s an individual, farm-level number that in some ways best illustrates our efforts to make a challenging policy climate work for our members: $750,000. It reflects the extent to which the federal government committed important resources to help individual dairy farmers all across this country. It’s also six times larger than what USDA first announced as the payment limit for dairies and all of agriculture under the Coronavirus Food Assistance, or CFAP program. When USDA announced CFAP, it said there would be a payment limit of $125,000 per commodity or person. We knew that was too little to be meaningful for many farms, so we went to work, and we got the maximum raised to $750,000.

$400 million. That’s the money allocated for the new Dairy Donation Program, an effort we conceived and shepherded through the legislative process, working closely with our partners in the food bank community who provide food to folks in need every day. The Dairy Donation Program connects our nutritious products to the families who ask for dairy more than anything else from their local food banks. Again, we worked hand in glove with lawmakers from both parties to get this through.

$1 billion and counting. That’s what’s been paid out this year under the Dairy Margin Coverage Program. The program is fast, it’s market-responsive, and we’ve continued to work to improve it. Changes we helped make happen this year will give us more dedicated federal funding to work within the next farm bill as we seek further improvements for producers of all sizes.

But DMC is only part of a suite of programs we’ve made better. Dairy Revenue Protection, LGM Dairy — These programs worked better because the funding caps that hobbled past dairy risk management efforts were eliminated thanks to our work. We’re proud to have led those efforts.

One final number. $750 million. That’s the amount of money that due to the wild market gyrations of the pandemic we lost with that change in the Class I pricing formula made in the 2018 Farm Bill. The data is clear and so is the cause. When USDA began the pandemic food box purchases, they were heavily weighted toward cheese, creating disorderly markets.

We warned USDA this would happen, but we also knew that if there were no purchase program, many dairies would not survive. We can’t ignore the lessons learned from the unintended consequences of the government’s actions. The Class I mover needs to be fixed. The losses violated the spirit of our revenue-neutral agreement between farmers and processors that we’re working to make right. We’ve recovered $350 million of our losses. But as we all know, it’s not a complete win. We’ve been working with members of Congress since the announcement of this program, to try to get up to an additional $400 million, funding that beyond what we’ve already been able to achieve, that would cover the balance of the losses.

It’s still a work in progress. We will fight for every dollar we can to make every dairy receive its fair compensation. Beyond that, we also need to tackle thorny issues related to the Federal Milk Marketing Order system, which has gone two decades without a thorough re-examination. This won’t be easy, but as the only dairy organization with the depth and breadth of membership to lead the industry on this issue, we move forward with confidence.

Our work for the industry goes beyond numbers. When our producer community has a concern about a regulation, we respond. Our regulatory work ranges from policy improvements to serving as a resource for farms concerned about everything from water regulations to workplace safety rules.

And our work goes beyond Washington policy to our efforts to ensure that customers and consumers understand and trust our industry and our on-farm practices through our FARM Program. As the threat of climate change and the importance of sustainable food production become increasingly important, we’re guiding Washington’s priorities in ways that will help our dairy farmers be part of the solution. The Net Zero Initiative is a model, one that other agriculture sectors are starting to follow.

Dairy’s been blessed with great leadership from the farm to the boardroom, but it only works through collaboration, honest communication and good-faith awareness of each other’s needs. These are a few of the certainties we can share today. We have much to look forward to. It’s a tribute to the work we’ve done, and it shows that we have the strength we need to achieve what we need. Let’s keep harnessing that strength and move forward together.

NMPF Touts Dairy’s Policy Gains in Annual Meeting

NMPF Chairman Randy Mooney and President and CEO Jim Mulhern touted dairy’s gains in 2021 at NMPF’s joint annual meeting Nov. 15-17, as record exports and per-capita U.S. consumption at a more than 60-year high point to a bright future for the industry.

“The past 20-plus months have shown us that life can change quickly, and in ways beyond our control,” said Mooney, a dairy farmer from Rogersville, Missouri, in remarks before dairy-farmer leaders from NMPF’s 24 member cooperatives. “It’s also shown that when that happens, people turn to what they know and trust. They turn to dairy.”

NMPF joined with the National Dairy Promotion and Research Board and the United Dairy Industry Association in the theme of “Make Every Drop Count,” returning to an in-person gathering this year as industry challenges evolve.

NMPF President and Chief Executive Officer Jim Mulhern highlighted NMPF’s work for its members in his remarks, including leading policy efforts that brought more than $6 billion in federal aid to dairy farmers at the height of the COVID-19 pandemic as well as regulatory initiatives and advances in trade.

“We are ‘The Voice of Dairy Farmers in Our Nation’s Capital,’ and we take that mission very seriously. And through our experience over the past year and a half, I know we are well-positioned to meet the many challenges that lie ahead,” Mulhern said. “When we are strategic, patient, and act with intelligence, and realistic expectations, we can meet our challenges.”

Deputy Agriculture Secretary Jewel Bronaugh also spoke to the meeting via video, highlighting dairy’s leadership in climate-smart agriculture initiatives and environmental stewardship.

“It is inspiring to see the dairy industry as leaders in advancing solutions to the challenges we face in agriculture through inclusive, accessible innovation technology and approaches,” she said. “You are leading the way as United States dairy embraces a 2050 Net Zero Initiative to help dairy farms of all geographies and sizes continue to implement new technologies and adopt economically viable practices in feed production, animal care, energy efficiency and manure management.”

Also providing remarks via video were Sen. Debbie Stabenow, D-MI, chairwoman of the Senate Agriculture Committee; Rep. G.T. Thompson, R-PA, ranking member of the House Agriculture Committee; and Sen. Mike Crapo, R-ID.

NMPF also held governance meetings and revived its annual, nationally recognized cheese contest – successfully conducted virtually last year – as an in-person celebration. Results here.

Mooney was reelected Chair of the organization, and Dave Scheevel of Foremost Farms was reelected Treasurer.  New officers including Simon Vander Woude of California Dairies, Inc., First Vice Chair; Cricket Jacquier of Agri-Mark, Second Vice Chair; and Jay Bryant of Maryland-Virginia Milk Producers, Secretary.

Those five officers are joined ten others elected this week to NMPF’s Executive Committee:

Steve Schlangen, Associated Milk Producers, Inc.; Rob Vandenheuvel, California Dairies, Inc.; Melvin Medeiros, Dairy Farmers of America; Dennis Rodenbaugh, Dairy Farmers of America; Pete Kappelman, Land O’Lakes; Doug Chapin, Michigan Milk Producers Assn.; Allan Huttema, Northwest Dairy Association; Tony Graves, Prairie Farms Dairy; Craig Caballero, United Dairymen of Arizona; and Jimmy Kerr, Cooperative Milk Producers.

New directors elected to the Board of Directors approved by NMPF delegates in 2021 include:

  • Neil Zwart – California Dairies, Inc.
  • Travis Fogler – Dairy Farmers of America
  • Ed Gallagher – Dairy Farmers of America
  • Karen Jordan – Dairy Farmers of America
  • Melvin Medeiros – Dairy Farmers of America
  • Perry Tjaarda – Dairy Farmers of America
  • Greg Schlafer – Foremost Farms
  • Duane Hershey – Land O’Lakes
  • Doug Chapin – Michigan Milk Producers Assoc.
  • Tony Freeman – Northwest Dairy Association
  • Joe Jenck – Tillamook County Creamery Assoc.
  • Craig Caballero – United Dairymen of Arizona

NMPF also recognized two retiring board members, Greg Wickham of Dairy Farmers of America and Ken Nobis of Michigan Milk Producers Association, as Honorary Directors for Life.

NMPF also held its annual Young Cooperators gathering in conjunction with the annual meeting.

Sponsors supporting the meeting at the Partner level and above included CoBank; Edelman; Food Minds; Inmar Intelligence; mischief.; Rise Interactive; Team Services; the U.S. Dairy Export CouncilBoehringer-Ingelheim;  Leprino Foods; MMSPhibro Animal HealthNelson-Jameson; StoneXElanco; Cheese Market News; Charm Sciences Inc.; Strategic Solutions; Vanguard Renewables; and Watkinson Miller LLC.

NMPF’s Mulhern Speaks on Tom Vilsack’s Nomination to Lead USDA

NMPF President and CEO Jim Mulhern talks about Tom Vilsack’s nomination to become USDA Secretary on Brownfield Ag News. “He has a deep understanding of our industry and frankly, I think a deeper understanding of all of U.S. agriculture,” Mulhern says in the broadcast.

Looking To 2021, All Dairy Farmers Should Sign Up for DMC, NMPF Says

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 is urging farmers to sign up for maximum 2021 coverage under the U.S. Department of Agriculture’s Dairy Margin Coverage program. DMC signup begins today.

“The DMC emphatically proved its worth this year, as payouts rapidly reacted to unprecedented price plunges and protected farmers exactly when they most needed help,” said Jim Mulhern, president and CEO of NMPF. “Coronavirus-related volatility in dairy markets is expected to continue well into 2021, with DMC payments a possibility. That makes it essential that farmers include DMC coverage in the robust risk-management plans they will need to ensure financial stability.”

DMC, the main risk-protection tool for dairy farmers enacted in the 2018 Farm Bill, is designed to promote stable revenues and protect against financial catastrophe on some or all of a farmer’s milk. Despite forecasts in late 2019 predicting that DMC assistance wouldn’t be needed by farmers in 2020, margins instead fell to their lowest levels in more than a decade in the first half of this year, triggering payments that undoubtedly kept many participating dairies afloat. And unlike difficult-to-predict federal disaster assistance that’s provided via specific legislation or administrative action, DMC coverage offers certainty in times of need, allowing for better financial planning and faster payment when necessary.

DMC also offers:

  • 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. Recent margin trends in reference to that $9.50 threshold is included in the graphic below.
  • Affordable $5.00 coverage that offers meaningful catastrophic coverage for farms of all sizes.

NMPF has a resource page on its website with more information about the DMC.

A Crisis Should Bring Opportunity – Not Opportunism

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.