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What happened? What’s next? - July 2018

Progressive Dairyman Editor Dave Natzke Published on 06 August 2018

You’re busy: milking cows, managing employees, making hay. In our regular conversations with our team of editorial advisers, we learned they not only wanted a recap of dairy news, but they were seeking brief insights into how that news might impact their dairy business going forward.

With that in mind, Progressive Dairyman is launching this column: What happened? What’s next? In recognition of your time, we’ll attempt to summarize recent events or actions making dairy headlines and reported in our weekly digital newsletter, Progressive Dairyman-Extra.

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Then we’ll seek out experts and sources putting that news into perspective and, most importantly, briefly describe how it might affect you.

Fluid milk, labeling 

What happened?

Fluid milk sales are in the news – a lot. Whole and flavored whole milk varieties were again the only categories to post year-over-year sales gains in May. At 3.9 billion pounds, overall sales of packaged conventional and organic fluid milk were down 3.2 percent compared to the same month a year earlier.

What’s next?

U.S. FDA Commissioner Scott Gottlieb said his agency will soon begin enforcing regulations that define milk as an animal product, not a plant-based food. After acknowledging “an almond doesn’t lactate,” Gottlieb said the agency will seek public input as a prelude to enforcing existing regulations on dairy labeling standards.

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The FDA was scheduled to hold a public hearing in late July on a wide range of food labeling issues.

“After years of inaction in response to our complaints about these labeling violations, Dr. Gottlieb’s announcement that the agency is intending to act on this issue is very encouraging,” said Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF). “The marketing of non-dairy imitators must comply with federal standards of identity, and consumers should not be misled that these products have the same nutrition as real milk, yogurt, cheese and other actual dairy products.”

In preparation for the FDA hearing, the American Dairy Coalition (ADC) has rolled out a new initiative – the Protecting Milk Integrity Initiative – to advocate on behalf of dairy. And leaders of several state Farm Bureaus met Gottlieb to express displeasure with the lack of enforcement for labeling of imitation dairy products using the term “milk.”

Separately, the California Milk Processor Board (CMPB) launched “You Can Always Count on Milk,” a new $16 million advertising initiative aimed at millennial families throughout California.

MPP-Dairy payments, by state

What happened?

As of July 11, the USDA’s Farm Service Agency (FSA) processed about $155.3 million in year-to-date indemnity payments issued under the Margin Protection Program for Dairy (MPP-Dairy). By state, top MPP-Dairy recipients were (Table 1): Wisconsin – $36.8 million; New York – $15.4 million; Minnesota – $15.1 million; Pennsylvania – $13.1 million; and Michigan – $8.5 million. Among other states, producers in California received $7.1 million; Idaho received $2.5 million; and Texas received $2.3 million.

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2018 Margin protection program

What’s next?

The FSA will update state-by-state payment totals monthly. As of Progressive Dairyman’s deadline, MPP-Dairy margins have been calculated for milk marketed through May, with indemnity payments assured for February through May for any producers with coverage at $7, $7.50 and $8 per hundredweight (cwt). June MPP-Dairy margins will be announced on July 30.

Based on milk and feed futures prices as of July 16, the Program on Dairy Markets and Policy and the USDA’s Margin Protection Program Decision Tool project monthly MPP-Dairy margins could climb above $7 per cwt for June, perhaps to $7.50 per cwt. However, based on current futures prices, margins are then expected to weaken again in July and August to $7 per cwt or lower and not surpass $8 per cwt until October.

LGM-Dairy participants on outside

What happened?

One group of dairy farmers, those who enrolled in a separate Livestock Gross Margin for Dairy (LGM-Dairy), won’t see any of those MPP-Dairy payments, even though MPP-Dairy program changes may have been made after they made other risk management decisions.

Published reports estimate up to 400 U.S. dairy farmers who had purchased LGM-Dairy policies for 2018 are blocked from participating in MPP-Dairy.

One of those is Mike Dominy, who operates a 400-cow dairy at Alto in southeastern Texas. He estimates his decision to purchase coverage under LGM-Dairy, prior to Congress making MPP-Dairy changes, has cost him about $25,000.

Dominy is disappointed in the bureaucratic shuffle that doesn’t seem to be able to help.

“I have beat this horse to the top,” said Dominy, who contacted other dairy media, the USDA, his milk marketing organization and his congressman. “You get passed around 14 times, but they can’t help you.”

Read Dominy’s story at State MMP-Dairy payments listed; LGM-Dairy participates on outside.

What’s next?

Progressive Dairyman reached out to the USDA and received the following statement from the Risk Management Agency:

“The Agricultural Act of 2014 prohibits producers from participating in both programs at the same time. RMA and FSA worked together to find a solution to allow producers to transition over to the MPP program once they completed all active marketings under the LGM Dairy program to comply with the Agricultural Act of 2014 (refer to MGR-18-002).

Producers needed to enroll in MPP-Dairy, and coverage begins once all of the targeted marketings are completed under the LGM-Dairy program. LGM-Dairy agreements are legal binding contracts between approved insurance providers and the insured.”

Dominy has been told the 2018 Farm Bill will offer producers the opportunity to participate in both MPP-Dairy and LGM-Dairy.

“I don’t care what’s in the next farm bill, I’m worried about right now; 2018, not 2019,” he said. “It’s a total, ridiculous injustice.”

Dominy wants to hear from other dairy farmers in the same situation. He can be reached via phone at (936) 676-4931.  end mark

Dave Natzke
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