Last month the U.S. and China struck a Phase One trade deal that covers a wide range of issues, including many relevant to U.S. agriculture. At the time of this newsletter’s publication, details of the deal remain under wraps and available only on a strictly confidential basis to trade advisors. NMPF’s staff that serve in that capacity are therefore prohibited from sharing information on the agreement until the U.S. government releases it more widely.

The agreement includes results on important areas NMPF, working side by side with USDEC, has championed the need for progress on such as geographical indications, resolution of non-tariff barriers to U.S. dairy exports, and additional purchases of U.S. agricultural products.

A major determinant of the positive impact of this agreement will be the extent to which it includes or is linked to a roll-back of the punitive retaliatory tariffs imposed on our dairy products by China. This element is one NMPF has consistently pointed out is the linchpin to restoring inroads to the Chinese market.

NMPF hosted the National Conference on Interstate Milk Shipments (NCIMS) Liaison Committee November 19 and 20 for a two-day discussion on how Grade “A” (GA) milk plants will be inspected under the Pasteurized Milk Ordinance (PMO) and the Food Safety Modernization Act (FSMA).

The Food and Drug Administration (FDA) and the Liaison Committee have been discussing the matter for several years without much success, but progress is finally being made. The long-term goal is to have a single inspection that will cover all products made at the facility, GA and Non-Grade “A” (NGA).  In 2018, FDA tried back-to-back inspections, first a PMO inspection, followed by an FSMA inspection. Plant personnel described that as an overwhelming experience and NMPF urged the FDA not to conduct inspections that way in the future.

The current concept is for the Office of State Cooperative Programs, Division of Milk Safety (DMS) Milk Specialists to be responsible for inspectional coverage and regulatory compliance of all food products manufactured at NCIMS-listed dairy processing facilities, with some exceptions. Those exceptions include infant formula, low acid canned food and seafood. Milk Specialists will expand their Preventive Controls for Human Foods (PCHF) review for compliance to all food products, GA and NGA products manufactured at GA plants. They will also use guidance provided by the Office for Food Safety (OFS) for decision making.

The Milk Specialist’s check rating and inspection may count as the Title 21 CFR Part 117 Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Human Food inspection (limited scope Preventive Control (PC) inspection), provided that the firm had an adequate food safety plan that includes environmental testing and monitoring, and was verified by the Milk Specialist during the PC inspection.

FDA’s Milk Specialists, as part of the Check-Rating (CR) every three years, must verify that the firm has adopted comprehensive controls for both GA and NGA products as part of a food safety plan, and that the state had been doing comprehensive inspections to address preventive controls for all dairy products. If these criteria are not met, the FDA Milk Specialist, or state under contract, will conduct a traditional PC inspection for the NGA products. In most cases, one FDA Milk Specialist staff performs the inspection and check rating for all listed manufacturing facilities.

The FDA, in collaboration with state liaisons, will pilot this approach this year.

NMPF signed on to comments with the Agriculture Nutrient Policy Coalition and wrote a letter of support for Newtrient’s comments, which were submitted to the water quality trading docket December 18. The comments detailed support for Water Quality Trading as an important tool for water quality improvement in the United States.

NMPF has a long history of supporting water-quality trading, serving on the steering committee of the National Network on Water Quality Trading that published “Building a Water Quality Trading Program: Options and Considerations” and “Breaking Down Barriers: Priority Actions for Advancing Water Quality Trading.” NMPF has also been involved with Maryland’s effort to launch a water quality trading program and Pennsylvania’s water-quality procurement legislation.

In November, Clay Detlefsen, NMPF’s senior vice president for regulatory affairs, provided oral comments stating its strong support for the Environmental Protection Agency’s (EPA) efforts to promote water quality improvements at a lower cost than traditional regulatory approaches, agreeing with EPA that the Clean Water Act allows for pollutant reductions from water quality trading to achieve compliance with regulatory requirements.

Detlefsen also said NMPF appreciated EPA‘s efforts this year to update its water quality trading policy to  encourage technologies and practices that reduce nonpoint source pollution.  NMPF also concurred with the six principles laid out in the 2019 Memorandum, namely:

• States, tribes and stakeholders should consider implementing water quality trading and other market-based programs on a watershed scale.
• EPA encourages the use of adaptive strategies for implementing market-based programs;
• Water quality credits and offsets may be banked for future use;
• A single project may generate credits for multiple markets;
• Financing opportunities exist to assist with deployment of nonpoint land use practices; and
• Encouraging simplicity and flexibility in implementing baseline concepts

In a guest column featured in Cheese Reporter, NMPF president and CEO Jim Mulhern offered an alternative approach to comments by the Cheese Importers Association of America (CIAA) regarding the WTO-authorized tariffs on European cheeses.

Mulhern noted that current dairy trade between the U.S. and the EU is mostly a one-way street. The EU’s restrictive trade policies have resulted in a deeply unbalanced, $1.6 billion dairy trade deficit, with the United States importing about $1.74 billion worth of dairy products from the EU, while the EU imported only $144 million in U.S. dairy in 2018.

That imbalance, in addition to the EU’s flooding of the global dairy market last year with government-held stocks of milk powder, has crucially contributed to the economic pressures that have driven thousands of American dairy farmers out of business.

Mulhern pointed out that cheese importers have access to some of the best cheese in the world in the U.S. and encouraged them to embrace this opportunity to support America’s dairy farmers and manufacturers by choosing to sell high-quality American products in place of European ones.

Many European cheeses and butter will still be imported if the WTO-compliant tariff penalties stay levied at their present 25% rate; higher tariffs are necessary for the United States to take the strongest stand possible against the EU’s mistreatment of American dairy products. NMPF is encouraging the administration to keep the existing dairy products on the retaliation list and increase tariffs on European dairy products, particularly those the United States is barred from shipping to the EU by geographical indications monopolies on common food names, in order to elicit action from the EU and truly establish a level playing field for U.S. farmers.

NMPF filed comments to FDA’s draft guidance, “Recommendations for Sponsors of Medically Important Antimicrobial Drugs Approved for Use in Animals to Voluntarily Bring Under Veterinary Oversight All Products That Continue to be Available Over-the-Counter” on December 24, emphasizing the dairy industry’s commitment to prudent and responsible antibiotic use and general support for the guidance.

NMPF has recognized that the availability of over-the-counter (OTC) antimicrobials has decreased over the years and has made the Veterinarian Client Patient Relationship a cornerstone of the FARM Animal Care Program.

FDA’s intent with GFI #263 is for animal drug pharmaceutical manufacturers to voluntarily change the marketing status of the remaining approved animal drugs containing antimicrobials of human medical importance from OTC to prescription (Rx) under the oversight of licensed veterinarians. This draft guidance comes as part of FDA’s five-year plan for supporting antimicrobial stewardship in veterinary settings as part of a strategy to address antimicrobial resistance associated with the use of antimicrobial drugs in animal agriculture.

GFI #213 was FDA’s first step to increase oversight of antimicrobial use through voluntary industry action to change marketing status of medically important antimicrobials used in feed or drinking water for food-producing animals from OTC to VFD/Rx. This also resulted in the elimination of the use of these antimicrobials for production practices. While GFI #263 will be voluntary, NMPF anticipates that pharmaceutical manufacturers will change the marketing status of the limited number of dosage forms of medically important antimicrobials still available from OTC to Rx for both food-producing and companion animals.

NMPF recognizes that there may be geographic and farm size challenges for some dairy farmers to have access to large-animal veterinarians. These concerns were outlined in our comments.

The National Dairy Farmers Assuring Responsible Management (FARM) Program, the dairy industry’s on-farm quality assurance program, released a proposed Workforce Development evaluation tool for input from industry stakeholders with comments accepted through January 20.

FARM Workforce Development (WFD) is the FARM Program’s newest initiative. It focuses on human resources and safety management and has brought together stakeholders from the entire dairy value chain to create educational materials for U.S. dairy owners and managers.

FARM WFD is developing an on-farm evaluation tool that FARM Participants can choose to implement with their dairy producers. The tool is meant to help farms:

• learn about HR and safety management best practices;
• identify which best practices will be most useful to implement on their farm; and
• track improvement over time.

Also, by performing on-farm evaluations, FARM Participants can provide important assurances to supply chain customers: our dairy buyers and retailers.

The evaluation tool was developed in consultation with the FARM WFD Task Force and Working Group members, along with subject matter expert input.

FARM is getting direct feedback from dairy producers through a pilot program that runs through the end this year. Nine cooperatives have volunteered to test the evaluation tool to solicit feedback. About 60 dairy producers are participating from across the cooperatives. Public comment will complement the pilot.

After the comment period ends, FARM staff, the WFD Task Force and the NMPF Executive Committee will review and consider revisions based upon the comments, then present a final proposed evaluation tool for approval by the NMPF Board of Directors in March. The FARM Program encourages all those involved in the dairy supply chain to participate. To review the draft evaluation tool and provide feedback, please visit this link.

Heading into 2020, two major actions provide cause for optimism that momentum is building for the Food and Drug Administration to finally enforce dairy-product standards of identity.

First, the Senate confirmed Dr. Stephen Hahn to lead the Food and Drug Administration (FDA) December 12.  In an exchange with Senator Tammy Baldwin (D-WI) during his confirmation hearing, Dr. Hahn stated his support for “clear, transparent, and understandable labeling for the American people.”

“We congratulate Dr. Hahn on his bipartisan confirmation and are hopeful that he will act on his words from the hearing and begin enforcing the FDA’s own standards of identity, which clearly reserve dairy terms for real dairy products, not plant-based imposters who mislead consumers by mislabeling nutritionally inferior products,” said Jim Mulhern, NMPF president and CEO.

More recently, the House and Senate included language in the report accompanying the final Fiscal Year 2020 government funding measure to urge FDA to complete its job and enforce dairy-product standards.  Both the House and Senate versions of the Agriculture-FDA bill report included language reaffirming bipartisan congressional concern with mislabeled imitation dairy products and directing FDA to enforce its own rules on labeling.

The report reaffirms Congress’s concern “about the proliferation of products …. that include the names of dairy products that do not contain milk or ingredients derived from milk,” as stated in Senate language. To address the problem, the Senate asks FDA to report on “steps taken to enforce against dairy imitation products marketed using dairy names,” while House language “urges the FDA to continue its work toward ultimately enforcing standards of identity for dairy products.”

The House and Senate passed the final compromise funding bill before adjourning for the holidays. President Trump signed the measure into law December 20.

The margin for November under the Dairy Margin Coverage (DMC) program was $12.21 per cwt., $1.33 per cwt. higher than the October DMC margin. This was the highest margin since December 2014, even allowing for this year’s change in the formula to increase the alfalfa hay cost factor, and the largest month-to-month increase in the margin since September 2016. The September to October increase was a combination of a $1.10 per cwt. increase in the all-milk price and a $0.23 per cwt. of milk lower DMC feed cost calculation. The lower feed cost was contributed mostly by a lower price for corn, assisted by a lower price for soybean meal. The alfalfa hay factor in the formula was essentially unchanged from a month earlier, as a lower average price for all alfalfa was almost offset by a higher price for dairy-quality hay.

As of December 26, USDA’s DMC Decision Tool, which can be accessed online, projected the November margin would be its maximum value through at least all of next year, yet remain above $9.50 per cwt. during that time. The falloff from the November peak is expected to be due mostly to an expected drop in the milk price during the first half of 2020, followed by a modest recovery in the second half.

As of December 9, USDA reported that 23,229 dairy operations that signed up for the DMC program for 2019 were estimated to receive a total of $310.1 million in payments. The signup represented 82.3 percent of all operations with milk production histories under the program. As of January 6, the Department reported that 12,866 operations, or 47.2 percent of operations with production histories had enrolled in the 2020 program. Enrolling in the DMC program at the generous coverage and affordable premiums available will always be a highly-recommended risk-management option for dairy farmers.

The DMC information page on NMPF’s website offers a variety of educational resources to help farmers make better use of the program. NMPF also posted a video explaining how farmers can benefit from the DMC.

NMPF commended the House of Representatives for passing the bipartisan Farm Workforce Modernization Act (H.R. 5038) December 11, before adjourning for the year. The bill includes critical provisions to address dairy’s unique workforce needs and represents the first House-passed agricultural labor reform measure in more than three decades.

NMPF thanked Immigration Subcommittee Chair Zoe Lofgren (D-CA) and Congressman Dan Newhouse (R-WA), the lead sponsors of H.R. 5038, as well as the more than four-dozen co-sponsors drawn from each party, for their work on this legislation, which has drawn wide support from prominent groups in the agricultural, business, worker, and humanitarian communities.

“The passage of legislation that helps address dairy’s unique workforce challenges is certainly a milestone and an opportunity we must pursue to the fullest,” said Jim Mulhern, president and CEO of NMPF. “Agricultural labor reform is long overdue. With the House having acted it is now imperative that the Senate strive to fully address the needs of dairy farmers and all of agriculture, helping farmers do what they do best: feed our nation, and the world.”

“The urgency to reform the agricultural labor system cannot be overstated for dairy farmers,” said Mike McCloskey, dairy farmer and chair of NMPF’s Immigration Task Force. “House members on a bipartisan basis have shown us that they are taking our labor crisis seriously. We will use this momentum to work with the Senate to build consensus in drafting an improved bill that further addresses dairy’s workforce needs.”

NMPF has begun discussions with senators on a bipartisan basis, working in partnership with other agricultural organizations.

After months of negotiations between Congress and the White House, the House overwhelmingly passed an improved U.S.-Mexico-Canada trade agreement on Dec. 19. The next step is for the Senate to swiftly ratify the deal, which provides tangible benefits to dairy producers.

The trade pact contains several provisions specifically focused on improving export prospects for the U.S. dairy including USMCA’s elimination of Canada’s harmful Class 7 dairy program and the deal’s assurances that the use of many common food names will not be impeded in Mexico. The agreement is expected to add $548 million in dairy-farm revenues in its first six years of implementation.

In addition, important advancements made during negotiations between lawmakers and the White House will strengthen USMCA, including more-effective enforcement measures that will give the dairy industry greater assurance and improves tools that will put USMCA’s reforms into place.

America’s dairy farmers are counting on the Senate to move quickly to finalize USMCA, without which the industry will continue to wait for the agreement’s upgrades to NAFTA.

“USMCA will expand trade opportunities with our most valuable partners and secure immediate benefits for our rural communities,” said Jim Mulhern, NMPF president and CEO.

USMCA promises to become a template for future deals as it helps restore international confidence in the U.S. as a trading partner and encourages progress toward other agreements. Tools to keep up the pressure on Congress to complete USMCA can be found here.

Dairy farmers ended 2019 with a string of positive steps that have set the stage for more progress in 2020 – progress that, with just a few more steps, will mean real gains for U.S. dairy producers.

The success that’s closest in sight is final congressional approval of the U.S.-Mexico-Canada Agreement (USMCA) to succeed NAFTA. Thanks to some fruitful negotiations between the White House and House Democrats, the House approved the agreement December 19, just in time to raise some holiday cheer before Christmas. Dairy’s gains under USMCA would be substantial – an estimated $528 million in increased revenues over the agreement’s first six years, as well as protection for common cheese names and enforcement mechanisms to ensure repeal of Canada’s problematic Class 6 and Class 7 milk price schemes.

This achievement wouldn’t have occurred without the patient determination of trade advocates in Washington – including our own staff in collaboration with the U.S. Dairy Export Council and the entire dairy community – and the grassroots efforts of farmers across the country. Still, the effort isn’t over. Senate Majority Leader Mitch McConnell has said no Senate vote on USMCA will occur until after an impeachment trial is finished early next year.

We’re hopeful this delay won’t be long. But they’re always nerve-wracking, as political tectonics can shift quickly, especially in a presidential election year. Until the ink is dry from President Trump’s pen, we won’t let up in advocating for USMCA’s passage. It’s already come a long way. 2020 will see an immediate, final push for passage, and we will continue to lead that effort.

The next December accomplishment that will require more lift in 2020 is agricultural labor reform. The House reached an important milestone on December 11, when it approved its first farm-worker labor package since 1986. That, along with Senate passage of agricultural guest-worker provisions in a failed immigration reform effort in 2013, have been the closest Congress has come toward resolving the agricultural labor crisis in more than a generation.

We supported the House bill because it would create a workable guest-worker program for dairy, a major improvement over current policy. The overall bill is far from perfect. But it can only be improved – and a final law passed – if the Senate passes its own plan, which then opens a path for negotiation and modification with the House. That places our focus on the Senate as it crafts its own legislation. Such legislation is essential to alleviate dairy’s unique labor needs. It will be important in coming months for the Senate to pass a bill, then work through a conference committee to achieve final congressional approval. It is a tall order, but a necessary one, and one we feel is possible in 2020.

Finally, we are encouraged by the arrival of new leadership at the U.S. Food and Drug Administration (FDA). Through his statements in a colloquy with Senator Tammy Baldwin at his confirmation hearing, Dr. Stephen Hahn showed an understanding of the importance of mislabeled plant-based beverages as a public-health issue, pledging to explore the issue of fake dairy immediately after his confirmation. With the facts, public opinion and a significant part of the marketplace on our side, it’s crucial to keep this item on the FDA’s agenda in 2020 and usher in its successful resolution.

Securing FDA enforcement of rules against misuse of dairy terms on plant-based products has long been difficult — not because it’s unimportant, but because the FDA’s wide portfolio, which ranges from opioids and teen vaping to drug approvals and food-safety inspections, makes it easy for other important matters to be brushed aside. That simply can’t happen this time. Given the attention paid to it by Hahn’s predecessor, Scott Gottlieb, increased consumer interest in this issue, and congressional urging to get the job done, 2020 is a golden opportunity for real progress in the regulatory fight against dairy imposters.

On each of these issues, we have the power to influence. On our website, we have pages that help direct response on these and other important issues. Engagement is crucial in the year ahead. As always, we will devote our full resources to the betterment of our members, and we hope for your help as well.

Happy New Year. We’ve made a lot of progress. The best is yet to come.

ARLINGTON, Va. – “Big Dairy.” One of the strangest terms attached to the industry. As seen in fear-mongering headlines, Big Dairy is used to de-personalize individual dairy farmers and imply some large, faceless force foisting an agenda on unsuspecting consumers. So, who exactly is it? Maybe by figuring out what Big Dairy is – or isn’t – some light could be shed on what’s real, and what’s contrived, in debates about dairy and its presence in the marketplace.

Perhaps Big Dairy means dairy farms themselves. Consolidation has been a fact of life for all of agriculture for generations, and family farms indeed are getting bigger. Even so, according to the latest USDA Census of Agriculture, nearly three-quarters of U.S. dairy farms have fewer than 100 cows on them. Of course, most production comes from the largest farms, but even the biggest ones – the 189 U.S. dairies with more than 5,000 cows as of 2017 – are too numerous and geographically dispersed to create a monolithic giant. And more than 95 percent of all dairy farms, regardless of size, are family-run farms. That’s far from faceless.

That rules out farmers. But what about dairy corporations? The dairy industry boasts some impressive-sized businesses. Land O’Lakes is ranked #212 on the Fortune 500, and Dairy Farmers of America would make the list too, if it were publicly traded. That might be Big Dairy, except – DFA and Land O’Lakes are farmer-owned cooperatives. If that’s what people mean when they talk about “Big Dairy,” then­­­ Big Dairy contains an awful lot of small and medium-sized family farms. And these cooperatives are tiny compared to, say, Big Healthcare, (four entries among Fortune’s top 10 companies) Big Oil (four of them in Fortune’s top 25), or Big Tech (six in the top 50).

But maybe it’s not about raw size. Maybe Big Dairy is a myth invented by those who want to make family dairy farmers seem “big” to advance some contrasting image of their competitors – who want to be seen as plucky, usually plant-based, upstarts taking on Big Dairy with highly touted “innovation.”

Let’s explore this. Take, for example, Perfect Day, allegedly just a humble innovator with nothing to offer but a thousand $20-a-pint tubs of imitation ice cream … and startup funding from Temasek – a venture-capital arm of the government of Singapore — and Archer-Daniels-Midland, an agri-business behemoth with $64 billion in annual sales that ranks #49 on the Fortune 500. Other plant- and cell-based alternatives are financed by Jeff Bezos (worth roughly $115 billion, the world’s richest man at the end of 2019) and Bill Gates (net worth over $100 billion) – not exactly little guys, to say the least. In fact, if you added up the gross receipts of all 40,000 dairy farmers in the United States last year (an estimated $39.9 billion), you’d only be worth about two-fifths as much as Jeff Bezos. So-called “Big Dairy” will never compete with that.

To be sure: Dairy is a significant U.S. industry. As cited on the “Got Jobs?” campaign organized by dairy groups, including NMPF, the sector as a whole is responsible for nearly 3 million U.S. jobs and has an overall economic impact of more than $620 billion, including indirect effects. Dairy directly employs nearly 1 million Americans, with an impact of more than $206 billion. In agriculture and in the U.S. economy, we aren’t David to someone else’s Goliath. Whatever success we have is because we work hard and work together.

But dairy isn’t Goliath either, and wannabe Davids shouldn’t get a pass peddling false narratives. Dairy is family farmers, cooperatives and companies, of all sizes and types, who believe deeply in the health and nutrition of their products and stand up for it against its opponents — who usually aren’t anywhere near the underdogs they pretend to be. Creating nutritious products, day in and day out, is a big task. But it’s a challenge met collectively by a diverse set of people from farm to fork, who work together to feed the U.S. and the world.

Dairy issues matter. They warrant a robust discussion. Putting the term “Big Dairy” to rest would make it a more honest one.