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Dairy Farmers Seek Fairness

by Lee Mielke

Published: Friday, September 24, 2021

The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."

Dairy farmers testified last week on Capitol Hill at a hearing called by Senate Agriculture Committee dairy subcommittee chair Sen. Kirsten Gillibrand (D-NY). Senators were examining potential improvements to the Federal Milk Marketing Orders (FMMOs) in the wake of negative producer price differentials that cut into many farmers' revenue last year during the pandemic.

Wisconsin-based Edge Dairy Farmer Cooperative reported that one of its members told the panel that reform is needed for a "distorted system that is now coming unglued." Christina Zuiderveen, who farms in Iowa and South Dakota, focused among other things on disparities in the prices farmers are paid, the negative impact of pricing factors on farmers' ability to utilize risk management tools, and the potential benefits of pricing transparency.

"This system was put in place decades ago to prevent dairy processors from making one dairy farmer bid against the other. In other words, FMMOs promise dairy producers that if their milk is as good as their neighbor's, they will be paid the same price," she said.

"But, after decades of decline in sales of fluid milk, that promise now seems to be broken."

She said that although her business benefited under the system last year, she was advocating for change "because I want a fair system where everyone can compete on a level playing field."

A leader of Vermont-based Agri-Mark Cooperative and a member of NMPF's Economic Policy Committee, charged that "Congress must do additional work to ensure dairy farmers are fairly compensated for losses rooted in a change to the pricing formula for Class I milk."

Catherine H. de Ronde, vice president for economic and legislative affairs for Agri-Mark, said "The pandemic has created an even greater urgency to revisit orders. Negative PPDs had milk checks looking incredibly bizarre, de-pooling at a level never-before seen became a new phenomenon for many. The change to the underlying Class I mover was a key catalyst of these outcomes."

NMPF said, "The 2018 Farm Bill changed the Class I mover, which determines the price of fluid milk under the Federal Milk Marketing Order system, at the urging of dairy processors who sought greater price predictability. The change contributed to substantial market volatility last year and has led to an estimated $750 million in losses for farmers compared to the previous Class I formula. Without a fix, dairy farmers will permanently bear unfair and unnecessary price risk compared to processors during times of unusual market volatility."

In other news from "the Hill," the Capital Press reports that the USDA is taking comments on what to call food cultivated from animal cells, asking how labels should distinguish between "beef on the hoof and beef from a lab."

"The USDA has posed more than a dozen questions, soliciting terms to describe the source and nature of products that are promoted as meat, but were never part of a live animal," said the CP. "In asking for suggestions, the USDA used 'cultured' for food comprised of cells multiplied in a controlled environment. The agency says it's not establishing or even suggesting a future practice."

Donna Berry writes in the Sept. 7 "Food Business News," "All proteins are not created equal was a phrase repeated many times during the joint annual conference of the American Dairy Products Institute and the American Butter Institute, which took place virtually Aug. 16-20."

"When referencing the phrase, the consensus was the superiority of dairy proteins needs to be better communicated to consumers, and the industry is ready to help product developers fuel their products with the power of dairy proteins."

"While we know there are definitely headwinds with plant and lab-grown proteins, we all have a responsibility to get behind telling the powerful story of dairy proteins," said Daragh Maccabee, chief executive officer, Idaho Milk Products of Jerome, Idaho, during a session on value-added proteins."

Plant-based beverages have certainly added to fluid milk's declining consumption which fell 6.3 percent in July (I'll have complete details next week). The dairy industry needs to address this threat in its advertising and promotional efforts. I have often challenged consumers to simply read the labels and ask yourself, do I really want to put stuff in my body that I can't even pronounce?

I couldn't help but think back on the allegations of "Franken foods" leveled against recombinant bovine somatotropin, or BST, not that long ago. We all know what happened to that, along with 45 rpm records and cassette tapes. Let's hope consumers opt for the real and natural.

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