NMPF and the U.S. Dairy Export Council (USDEC) submitted comments to the U.S. Trade Representative (USTR) on April 28 outlining dairy’s trade priorities as the Administration moves forward with its intention to negotiate a free trade agreement (FTA) with Kenya.

A strong FTA with Kenya will open new doors for the dairy industry. Kenya is a developing middle-income economy and a population growth rate nearly twice the global average. While Kenya imported nearly $50 million of dairy products from the world in 2019, U.S. dairy exports have been discouraged from entering this market due to high tariff rates and burdensome certification requirements.

Successful negotiations to remove these tariff and nontariff barriers will deliver tangible benefits for U.S. dairy farmers and manufacturers. Perhaps more importantly, it will set a critical precedent and lay the groundwork for such dairy provisions to become the guidelines for any future negotiations with African nations.

The comments submitted by NMPF and USDEC outline specific priorities that, if achieved, would constitute a successful FTA: namely, the removal of high tariff rates and nontariff barriers for dairy products, strong sanitary and phytosanitary standards, and concrete safeguards for common food names.

Slowing the EU on Food Names

NMPF and USDEC also are encouraging USTR to incorporate and build upon the advances made in the U.S.-Mexico-Canada agreement to slow predatory European Union policies that erect de facto prohibitions on the import of many non-EU products into third-party countries. This includes barriers that undermine market access rights of U.S. dairy products labeled with terms such as “parmesan,” “Asiago,” “feta,” “romano,” or “gorgonzola.” These technical barriers to trade must not be tolerated.

NMPF was encouraged in that effort by USTR’s firm rebuke of EU dairy trade policies in its annual U.S. Special 301 Report released April 29. “Rather than trying to compete on a level playing field, Europe has tried to effectively institute a blockade of U.S. dairy,” Jim Mulhern, president and CEO of NMPF, said in a statement responding to the report. “This is unacceptable and harms America’s dairy industry and the rural communities our farmers and processors support.”

NMPF is committed to making dairy’s voice heard and will conduct follow-up outreach to U.S. negotiators regarding the dairy industry’s priorities.

The U.S. and UK reaffirmed in April their commitment to negotiating a free trade agreement post-Brexit. A U.S.-UK agreement could present a new path forward for the unbalanced trade relationship between the U.S. and the UK, one of the world’s top cheese importers. Ensuring that the UK uses its exit from the European Union as an opportunity to move beyond the EU’s complex, often unfair trade policies is a critical element to that result.

Among NMPF’s top priority areas in UK negotiations is removing geographical indication (GI) restrictions that the EU has put into place to prevent the U.S. from exporting cheeses with common names to the UK and more broadly reforming how the UK deals with GIs.

To that end, NMPF and the U.S. Dairy Export Council (USDEC) have developed detailed policy recommendations outlining how to best tackle the issue of GIs and common food names. This draft language has been provided to U.S. trade negotiators to help guide successful negotiations. The text builds upon positive precedents that NMPF and USDEC helped champion in USMCA on these topics.

NMPF supports a comprehensive U.S.-UK trade agreement that uproots nontariff barriers to trade and opens up the market for U.S. dairy exports to the UK. The organization will remain engaged throughout the process to ensure that a final deal best positions U.S. dairy to fairly compete.

Highlighting a month of important regulatory activity extending beyond the coronavirus crisis, the long-awaited final Navigable Waters Protection Rule: Definition of “Waters of the United States was published in the Federal Register by the Environmental Protection Agency (EPA) and the Department of the Army on April 21. Publication of a final rule culminated a fight for clarity and common-sense in rulemaking that put NMPF and other farm organizations at the forefront.

This final rule establishes the scope of federal regulatory authority under the Clean Water Act. The Navigable Waters Protection Rule includes four simple categories of jurisdictional waters and provides specific exclusions for many water features that traditionally have not been regulated. Based on the expected publication date, the final rule would become effective on June 22, 2020. Information about the rule can be found on the EPA’s website at https://www.epa.gov/nwpr.

NMPF also submitted comments to the docket, “Simplifying Meal Service and Monitoring Requirements in the National School Lunch and School Breakfast Program,” on April 15, emphasizing milk’s role in meeting nutrient requirements for children and restating our support for the program. The rule aims to increase flexibilities focused on customers and to help state and local program operators overcome operational challenges that limit their ability to manage programs efficiently. Two specific proposed changes included making it easier to offer meat alternates — which include dairy options — with no minimum grain requirement in the School Breakfast Program and expanding the sale of calorie-free flavored water for all ages and grades.

NMPF’s comments supported the meat alternate change but urged the agency to gather more data about the impacts on milk consumption – and, in turn, student nutrition — when finalizing the proposal to expand the sale of calorie-free flavored water, including carbonated varieties, to children as young as kindergarteners.

In addition to submitting comments to the school nutrition docket, NMPF submitted joint comments with USDEC to the Codex Task Force on Antimicrobials Resistance (TFAMR) Draft Guidelines on Integrated Monitoring and Surveillance of Foodborne Antimicrobial Resistance on April 3. The comments touched on the need for significant revision due to aspirational elements that, if presented as requirements, would be unobtainable for many developing countries and could be used as nontariff trade barriers without any impact on mitigating the risk of anti-microbial resistance transfer through the food chain.

With the coronavirus crisis massively disrupting dairy demand and supply chains, margins under the Dairy Margin Coverage (DMC) program fell dramatically in March and April. Even so, they may not accurately reflect the true losses producers are facing due to the unusual effects of the crisis on milk-component prices, a public-policy concern as USDA allocates billions of dollars in emergency assistance.

The DMC margin for March was $9.15 per cwt., 35 cents below the $9.50 per cwt. maximum coverage level for the program. The situation has deteriorated further in April: The full-year margin as of the April 28 forecast by USDA’s DMC Decision Tool, shown in the chart, was forecast to be $7.69, $1.81 per cwt. below the $9.50 trigger. Farmers enrolled in the program at all coverage levels, both under and over 5 million pounds of production history, would collectively receive $515 million in government payments at that margin.

Still, even margins that low – the lowest since 2009, if current margin formulas were projected backward – may understate the full loss for dairy.

Under normal circumstances in the U.S. dairy industry, the NASS-reported all-milk price used for DMC calculations behaves as what can be termed a commodity milk price. This means that, although it is determined using a survey methodology, it closely tracks the prices of the four basic dairy products: butter, cheddar cheese, nonfat dry milk and dry whey. These product prices determine federal milk marketing order class prices, which in turn determine order blend prices, which have a strong influence on prices paid to all dairy farmers. Futures prices for the four commodities can be used to forecast the all-milk price when that price effectively behaves as a commodity milk price. This happens when milk supply and demand are in reasonable balance, virtually all milk sold is processed, very little milk is sold at distressed prices, and producers whose milk is pooled on federal orders receive close to the federal order blend.

None of that has been true in recent weeks, making the issue of what the all-milk price reflects a key factor in allocating billions of dollars in payments to dairy farmers under the DMC and, potentially, under the Coronavirus Food Assistance Program (CFAP) this year. This year, dairy farmers will get little to no payment for large volumes of dumped milk, and additional large milk volumes will be sold at seriously distressed prices, none of which is reflected in a commodity milk price.

The forecast of the U.S. average all-milk price during calendar year 2020 released last month by USDA’s World Agricultural Outlook Board in the April 9 World Agricultural Supply and Demand Estimates (WASDE) report appears to recognize this issue. The forecast, $14.35 per cwt., was about $2.00 per cwt. lower than commodity milk price forecasts were indicating at the time, and the report further commented that its forecasts included “additional milk marketed but not processed”, i.e., dumped milk.

The Decision Tool’s milk price forecasts are essentially commodity milk price forecasts. If the reported all-milk prices over the next several months also account for the milk prices dairy farmers actually received, payments as determined under USDA loss calculations would be much larger.

The DMC margin calculation is required by law to use the NASS-reported all-milk price. The CFAP direct payment calculations for dairy currently being formulated by USDA will involve estimating the prices that would have been received by dairy farmers if the coronavirus pandemic had not occurred, which would be commodity milk prices because the assumed scenario would be basically normal industry conditions. Still, such a scenario should be compared with prices received under the current crisis conditions, which will not be commodity milk prices.

Although commodity prices, and hence commodity milk prices, have fallen as a result of the pandemic, actual prices received by dairy farmers will have fallen even more. If these calculations use the NASS all-milk price, it will be important that they reflect this difference. It will be critically important to see if NASS takes its cue from the interagency experts who made the April WASDE forecast when it reports the all-milk price for April a month from now.

The DMC information page on NMPF’s website offers a variety of educational resources to help farmers make better use of the program.

Dairy will receive significant assistance from a federal package for producers USDA unveiled after Congress approved a $2 trillion coronavirus stimulus bill. But more work will need to be done to make sure all producers gain crucial aid as dairy farmers face an unprecedented crisis.

The National Milk Producers Federation expressed appreciation to Agriculture Secretary Sonny Perdue for including dairy in its $19 billion-dollar agriculture disaster assistance package released April 17. The plan includes up to $2.9 billion of cash aid for producers and purchases of at least $100 million per month in dairy products for distribution to the public through October.

“Federal dairy assistance is critically needed as the nation’s dairy farmers face an unprecedented collapse of markets resulting from the shutdown of much of the economy,” said Jim Mulhern, president and CEO of NMPF, the largest U.S. dairy-farmer organization. “Dairy’s fortunes have been especially grim, given the perishability of our product, its daily harvest and the fact that the virtual shutdown of the food service market has wiped out more than one-third of our product demand.”

The USDA plan included elements of an NMPF and International Dairy Foods Association joint plan of assistance to farmers and processors that had been sent to the department earlier this month. Still, as more information about the plan became available, some elements were of concern to NMPF:

• Payment caps are too low for the dairies that produce more than half the nation’s milk;
• USDA’s front-loaded its damages calculations toward the early months of 2020, which won’t match the timing of dairy’s deepest losses;
• Those loss calculations don’t reflect the full damage dairy will feel going forward, which USDA’s own calculations in its April WASDE report peg at roughly $8.5 billion; and
• A product-purchase program is unlikely to meet unprecedented food-bank demands.

 

Payment Caps a Worry

On payment caps, NMPF expressed its concerns over the possible USDA response even before the department’s plan was released, writing in a letter to President Trump on April 15 saying that “it is imperative that any program to provide relief to farmers accounts for the significant losses that all U.S. dairy farmers are facing.”

Later in the month, after research from Texas A&M indicated that dairy producers would face the steepest losses of any U.S. commodity group – with declines in net cash income outpacing the maximum federal payment available – NMPF again sounded the alarm. “The COVID-19 crisis presents grave danger for all dairies, from small operations to the producers whose milk nourishes the majority of U.S. consumers and keep supply chains running,” Mulhern said. “We have raised our concerns over payment limits with both President Trump and USDA, and with the Administration making important decisions in how it allocates aid, it’s important to highlight the very real impacts that lower support levels will have on dairy producers and the communities they serve.”

NMPF and dairy allies anticipate that progress in addressing these concerns can be made in coming weeks, as Congress readies another round of stimulus and USDA’s Commodity Credit Corporation receives funding for the next fiscal year in July.

Still, with a united dairy voice essential to prompt necessary change, NMPF is encouraging grass-roots activity in addition to its staff work on Capitol Hill. NMPF has set up a twitter hashtag, #dairyneverstops, to talk about farmer needs, and the NMPF webpage features calls-to-action items that encourage producers and their allies to contact lawmakers and urge more effective solutions for dairy in future stimulus.

As Americans – and American dairy producers – begin the third month of strain caused by the outbreak of COVID-19 in the U.S., everyone has been forced to adapt to a seemingly endless uncertainty.

But, just as lockdown orders across the nation will inevitably ease, we are also beginning to understand some of the details of our present circumstances, and what our future may look like. Outlines are becoming clearer. That doesn’t mean they look pleasant; but it does make problems more manageable, and in some instances, at least, provides some hope.

In the second half of April federal officials and lawmakers outlined two major pieces of the policy puzzle that will impact dairy’s future: USDA’s plan for agricultural stimulus, and a reaffirmation of agriculture’s eligibility for small-business loans under a crucial program meant to keeps businesses afloat.

First, the good news on the USDA plan: The department allocated needed funds to several of the commodities that have been hardest hit by the pandemic. Up to $2.9 billion in payments have been promised to dairy producers. This is an important start on helping address the destruction of demand from foodservices business loss. USDA has also pledged $1 billion in dairy-product purchases for food-distribution programs – an important mechanism that could help buoy dairy markets while helping consumers in need.

USDA’s efforts are important and will provide help to thousands of dairy farms. But this assistance alone won’t meet the challenge before us. Specific concerns we have on the proposals that have been announced to date include:

• USDA’s front-loading its damages calculations toward the early months of 2020, before dairy farmers felt their deepest losses;
• Payment caps that would severely limit the program’s aid for dairies that produce more than half the nation’s milk;
• Loss calculations that don’t reflect the full damage dairy will feel going forward, which USDA’s own calculations in its April WASDE report peg at roughly $8.5 billion;
• A product-purchase program that may not purchase enough dairy to help bolster markets or meet unprecedented food-bank demands.

We continue to engage with USDA and allies in Congress to address these, and other, problems as we seek relief adequate to the scale of damage, and we are confident that many of these concerns can be addressed.

The replenishment of small-business loans, and agriculture’s specific inclusion in them, was another April achievement. The Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loans (EIDLs) included in the $2 trillion response package Congress passed in early April had been both a hope and a frustration for dairy producers, who because of administrative issues didn’t have equitable access to the programs. Working with allied stakeholders, members of Congress from both parties, and administration officials, NMPF staff helped make certain that PPP and EIDLs are properly administered, improving dairy-farm access to these programs. The second round of signups, opened in late April, were more successful for dairy, and we will work for their continued effectiveness.

As is always the case, government programs alone are not a solution. But recent initiatives are far from the final word in aiding dairy during this time of need. NMPF will continue its efforts to help the dairy producer community in this challenging environment.

It is a certainly – perhaps the only certainty – to say the future will be challenging. Economic forecasts call for darker days before lighter ones, and every day that we’re further from the old normal, the clearer it appears that the new normal won’t look exactly like the past. Social distancing will continue even after cities and states re-open. Many restaurants won’t reopen at all, and the foodservices business could take months to recover.

But dairy never stops. And like the farmers and cooperatives we serve, we continue to forge ahead, to advance creative solutions, to work to make the best of the policy process, and to keep improving upon it tomorrow. Policy progress has occurred. NMPF will continue to do all we can to further it.

NMPF Senior Vice President of Membership Services and Strategic Initiatives Chris Galen discusses the latest updates on coronavirus relief for the U.S. dairy industry on Dairy Radio Now.

A new economic analysis projecting a 58 percent decline this year in net cash income for U.S. dairy farms due to coronavirus-related market disruptions further demonstrates the need to eliminate a proposed $125,000 payment cap in federal disaster assistance, according to Jim Mulhern, president and CEO of the National Milk Producers Federation.

As highlighted at the Texas Ag Forum yesterday, dairy losses will outpace those for cattle, cotton, and feed grains and oil seeds, with catastrophic losses for all producers. For example, a dairy of 1,000 cows in Wisconsin will see net cash income decline by $500,000, while larger operations in Texas and Idaho could see losses in the $1.2 million range, according to the analysis.

Average net cash income losses in dairy would be $345,000. The USDA assistance package for agriculture announced April 17 caps payments to producers at $125,000 per commodity. Many dairies only produce milk.

“Analysis shows what the dairy community already knows – the COVID-19 crisis presents grave danger for all dairies, from small operations to the producers whose milk nourishes the majority of U.S. consumers and keep supply chains running,” Mulhern said. “We have raised our concerns over payment limits with both President Trump and USDA, and with the Administration making important decisions in how it allocates aid, it’s important to highlight the very real impacts that lower support levels will have on dairy producers and the communities they serve.”

NMPF is supporting efforts by lawmakers and allied organizations to increase aid to producers and estimate losses and compensation in ways that reflect the true scale of damage to the farm economy. Last week, a bipartisan group of 126 House members and 28 Senators sent letters to the administration urging that this problem be solved.

The letters were spearheaded by Senators Jerry Moran (R-KS) and Dianne Feinstein (D-CA) and Representatives Jimmy Panetta (D-CA), Mike Simpson (R-ID), Jim Costa (D-CA), Dan Newhouse (R-WA), Henry Cuellar (D-TX), Fred Upton (R-MI), Xochitl Torres Small (D-NM), and Roger Marshall (R-KS). The House letter is available here, and the Senate letter is available here. NMPF’s letter to President Trump is here.

The U.S. dairy industry applauds the U.S. Trade Representative (USTR) for firmly rebuking the European Union (EU)’s protectionist dairy trade policies in its annual U.S. Special 301 Report, released today.

The U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF) endorse USTR’s findings that the EU has erected a complex regime of trade barriers that harm opportunities for U.S. exports to Europe. In addition, the EU has aggressively sought to restrict U.S. exports in global markets by weaponizing geographical indications (GIs) protections and blocking the ability of U.S. suppliers to use common names to market cheeses such as fontina, gorgonzola, asiago and feta.

“USTR has rightly taken Europe to task for their destructive and unfair campaign against American-made dairy exports, and in particular the high-quality cheeses produced by the dedicated men and women of the U.S. dairy industry,” said Tom Vilsack, president and CEO of USDEC. “I commend USTR for its recent actions to defend U.S. dairy and successfully negotiate groundbreaking GI provisions in both USMCA and the Phase One deal with China. USTR must continue to build upon this excellent precedent by making it a top priority to secure further commitments from our trade partners in future trade negotiations.”

The Special 301 Report found that “…the EU pressures trading partners to prevent all producers, other than in certain EU regions, from using certain product names, such as fontina, gorgonzola, parmesan, asiago, or feta. This is despite the fact that these terms are the common names for products produced in countries around the world.”

“Rather than trying to compete on a level playing field, Europe has tried to effectively institute a blockade of U.S. dairy,” Jim Mulhern, president and CEO of NMPF. “This is unacceptable and harms America’s dairy industry and the rural communities our farmers and processors support.

The dairy industry stands in full support of USTR’s efforts to confront EU’s anti-trade and anti-competitive policies and we will continue to proactively press for the full dismantlement of these trade barriers.”

USDEC and NMPF filed comments with USTR urging the U.S. government to confront the EU’s trade agenda against U.S. dairy in order to protect American jobs as well as the legitimate rights of U.S. food manufacturers, farmers and exporters.

 

Even as U.S. dairy struggles to meet the immediate challenges of coronavirus, its work on expanding overseas markets continues “not with an eye on what’s going to happen necessarily in the next week, but what needs to happen over the next year or two” to help the industry recover, said Shawna Morris, vice president for trade at the National Milk Producers Federation.

The outbreak of COVID-19 in China was an international trade concern before it became a major domestic issue in the U.S. The global response to coronavirus has had some hopeful aspects, Morris said – the importance of agriculture to the world’s economy is in the spotlight, and governments have responded to pressing needs by taking more practical approaches to regulations that have unnecessarily impeded trade, she said.

Despite the disruptions, trade officials need to keep long-range goals of open commerce that will be essential to returning dairy to prosperity in mind, she said. “We’re working with our government and others to outline the dairy industry’s priorities for upcoming trade agreements, notably with the UK and Kenya for instance, as well as ongoing work — issues and policy barriers that had existed prior to COVID-19 and are still in place that we’re working with our government allies and with other counterparts in other countries  to try to help address,” she said.

To listen to the full podcast, click 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.

 

Catastrophically low milk prices may decline further in May and June, making all-hands-on-deck efforts to find solutions for all dairy producers necessary, Peter Vitaliano, chief economist for the National Milk Producers Federation, says in a new NMPF podcast.

“These times are obviously very, very critical for U.S. dairy farmers,” Vitaliano says. “We are trying to turn over every stone and look over every rock for ideas that we might be able to find, including very creative ideas, basically to direct some relief to dairy farmers.”

NMPF’s special coronavirus webpage is devoted to dairy resources on how to weather the crisis, and the hashtag #dairyneverstops has become dairy’s meeting place to share stories and spotlight farmer resilience.

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

 

The U.S. Small Business Administration will resume accepting loan applications for the Paycheck Protection Program beginning today, April 27, at 10:30 a.m. EDT from approved lenders on behalf of any eligible borrower. Dairy farmers are eligible to apply for the PPP, along with a separate initiative, Economic Injury Disaster Loans, for which the application window is also imminent. Both initiatives are first-come, first-served, and funds are expected to be depleted quickly after Congress replenished them last week.

The National Milk Producers Federation is offering the materials below to aid farmers with their applications. All are available on the organization’s coronavirus page, www.nmpf.org/coronavirus. Note that PPP applications must be filed with a lending institution, such as a bank or credit union, while EIDL applications may be filed directly through the U.S. Small Business Administration website.

Paycheck Protection Program (PPP)

• Paycheck Protection Program – Overview, NMPF
• Paycheck Protection Program Webpage, Small Business Administration
• Paycheck Protection Program Eligible Lenders, Small Business Administration

COVID-19 Economic Injury Disaster Loan (EIDL) Program

• EIDL Information, Small Business Administration
• COVID-19 Economic Injury Disaster Loans – Overview, NMPF
• SBA Disaster Assistance in Response to the Coronavirus, Small Business Administration

ADDITIONAL RESOURCES

• PPP and EIDL information provided by U.S. Treasury Department
• Podcast: Small-Business Loans Program a Balm for Farmers – But Act Fast, NMPF’s Larson Says
• Webinar: CARES Act and SBA Loan Update Webinar
• NMPF Commends Progress Towards SBA Programs Better Assisting Farmers