Is mandatory dairy checkoff funding real milk’s demise?

Through futuristic lens: Is it time to end USDA control of dairy promotion?

No matter what innovations they come up with in the future, real dairy milk will always be the completely natural, minimally-processed, clean-label product with the superior combination of complete protein, healthy fat, and long list of essential natural nutrients, not additives. Treating real dairy milk like a cheap commodity must end. Innovative marketing may be more important in today’s times than innovative manufacturing processes. Government rules make it difficult to truly promote real dairy milk. It’s time to re-think the government oversight of the mandatorily farmer-funded milk promotion business so that truly competitive promotion can happen. (Istock photo).

By Sherry Bunting, Farmshine, March 29, 2019

“It’s not that the bad guy came and took it (fluid milk sales), it’s that us, the dairy industry collectively, did not keep growing and innovating and doing what we should do. Instead of getting in a lather about plant-based food companies, let’s do what we are supposed to be doing as an industry. Let’s do marketing. Let’s do innovation. Let’s have dairy-based protein in 3-D printers and whatever comes next. That’s where we need to be.”

These were the words of Tom Gallagher, CEO of Dairy Management Inc. (DMI) to his dairy checkoff board recently as shared here, and in the March 20, 2019 edition of Farmshine from a video of his comments.

A glimpse into what that might mean was revealed at the IDFA (International Dairy Foods Association) convention in January, where DMI’s vice president of global innovation partnerships, Paul Ziemnisky told attendees that 95% of households have milk and buy milk, but that these households engage in “fewer consumption occasions”, according to a recent convention report in Dairy Foods magazine.

To increase ‘consumption occasions’, DMI has been investing checkoff dollars toward innovations in “milk-based” beverage growth, he said.

Through its Innovation Center for U.S. Dairy, DMI has invested checkoff dollars in these types of “pre-competitive” innovations in the past — an example being fairlife.

It is interesting that in both Gallagher’s comments to the DMI board and in the presentation by DMI’s Ziemnisky’s to processors, the term dairy-based or milk-based is used.

As we’ve reported previously, the direction of dairy innovation over the past 10 to 20 years has not been lacking in its drive to pull out the components of milk for inclusion in a variety of products — taking milk apart and putting it back together again — in a way that is new and different or in a way that presents milk and dairy as a new product.

Expect to see this type of innovation increase via these investments of dairy checkoff dollars into developing combination beverages that include pieces of milk in entirely new beverages.

This is what is meant by innovation.

At the IDFA convention, DMI gave processors a glimpse into some of the innovations they are working on to address four consumer targets that DMI has identified:

1)      A milk- and nut-based combination beverage,

2)      A milk with lavender and melatonin to promote sleep,

3)      A yo-fir product (kefir plus yogurt) beverage,

4)      A milk beverage that provides just a hint of flavor,

5)      More concepts in high-protein milk-based beverages,

6)      A ‘plosh’ blend of tea, coffee and milk, and

7)      An all-natural concept of milk blended with fruit.

As the overall beverage sector is exploding with new beverages of all kinds every year — some winners and some losers — DMI is looking to do more in the re-creation of dairy in the beverage space with new combination beverages that include milk, or components of milk, but are not identified as milk. These beverages will compete with non-dairy beverages, but in a sense, this track would further compress real dairy milk into its age-old commodity posture. Of course, those who are engaged in promotion of real dairy milk can position it as the wholly natural choice in a beverage sector of further processed combinations and concoctions.

Something to watch and be aware of is that PepsiCo – a company the dairy checkoff organizations are forming stronger bonds with — is on the frontier of turning drink dispensing machines into a hybrid of 3-D printing and multi-source create-your-own beverage dispensers. On the CNBC’s early-morning Squawk Box business news a few months ago, this concept was discussed showing a prototype where consumers can create their own unique beverage by pushing buttons for a little of this and a little of that. Millennials look for unique and “personalized” foods and beverages — we are told. And we see this trend in the “craft beer” category, for example.

A caveat to follow in this trend is the importance of labeling by USDA and FDA as the new gene-edited cell-cultured animal-based proteins and genetically-altered vat-grown yeast-produced dairy-based proteins move from the lab to the market in the next 12 to 24 months via partnerships between the billionaire-funded food technology startup companies and the world’s largest agricultural supply-chain companies. 

While everyone is watching what happens in the cell-cultured fake-meat category and the partnerships there with Cargill, most of us do not realize how close the dairy versions are to scaling-for-market — since Perfect Day company partnered last fall with ADM (Archer Daniels Midland). That partnership is predicated on ADM providing the facilities and mechanisms to ramp up the production of ‘cow-less’ so-called dairy proteins, and USDA research labs do the gene-altering to provide the seed-source of yeast for the process.

As these other proteins are introduced into the food supply, it is yet unclear how – exactly – they will be identified and differentiated in the marketplace. While the dairy and livestock sectors pushed hard to soften the distinctions of proteins in food from animals that have been fed GMO crops, the downside of USDA’s new Bio-Engineered (BE) food labels is that these fake proteins that are on the horizon may not be labeled or differentiated when they are a part of the final food or beverage product.

On the bio-engineering side of animal-based cell-cultured fake-meat protein production (cell-blobs grown in bioreactors), USDA and FDA are still working out the details of their combined food safety requirements.

But on the bio-engineering side of the yeast that have been genetically-altered to possess bovine DNA snips to exude ‘milk’ protein and perhaps other components (grown to exude dairy protein and components in fermentation vats), there is far less discussion of inspection or oversight.

As for the labeling of both types of bio-engineered protein, there is little discussion of how foods containing them will be labeled.

Just three months ago, U.S. Agriculture Secretary Sonny Perdue announced the new National Bio-Engineered Food Disclosure Standard that will be implemented in January of 2020. It is the result of the July 2016 law passed by Congress that directed USDA to establish one national mandatory standard for disclosing foods that are – or may be – bio-engineered.

USDA Agricultural Marketing Service (AMS) has developed the List of Bio-Engineered Foods to identify the crops – and foods – that are available in a bio-engineered form throughout the world and for which regulated entities must maintain records that inform whether or not they must make this bio-engineered food disclosure.

Some are voluntarily complying already, as I have seen this BE statement in very small print on small containers of some Kraft ‘cheese’ spreads.

The bottom line in this mandatory BE labeling requirement is that it only pertains to the main ingredient of the further-processed food or beverage and only if there is “detectable” genetically-altered material in that food. This means that the BE labeling may not apply to fake meat or fake dairy. In the case of the fake meat, the bio-engineering is the editing of DNA to grow muscle (boneless beef for example). In the case of fake dairy, the bio-engineering is yeast altered to include specific bovine DNA, but the resulting cow-less ‘dairy’ protein would have no detectable difference, its creators say.  

All animal protein checkoff programs have a tough road ahead. If farmers and ranchers continue to fund promotion of the foods and beverages that come from dairy and livestock farms, these fake iterations of the real thing will benefit unless promotion can be targeted to the real thing and consumers see the difference on a label in order to make a choice for the real thing.

This all sounds so futuristic and like science-fiction, but in foods today, this is where we are headed and our checkoff programs should be aware and should be able to stand up for the real thing. They should be allowed to lobby regulators for fair treatment and distinct labeling because the government requires farmers to pay these checkoff deductions to promote their products. Thus, if the government does not provide a clear path to distinguish fake from real, then the fairness of requiring a checkoff should no longer be considered valid.

As for dairy farmer checkoff funds, specifically, the future is here and DMI is already moving down that road to innovate dairy-based or milk-based products that dilute the meaning of dairy and milk in the marketplace – in effect paving the way to new innovations and products in which real dairy-farm-produced milk components can be replaced by fake-dairy components from genetically-altered yeast grown in ADM fermentation vats.

Perhaps checkoff funding should be directed in these difficult and changing times toward true promotion of what is real. We see that starting to happen with the “love what’s real” campaign, launched by the Milk Processors Promotion and Education Program (MilkPEP) and supported by DMI’s Undeniably Dairy social media campaign.

More than ever, the future of our dairy farms will rely upon promotion of what is REAL – moreso than using dairy farmer checkoff funds to find ways to put pieces of milk into other products or into 3-D Printers. Profile those components. Provide the benefits of real dairy components for the manufacturers that are moving into 3-D printing of personalized foods and beverages, but keep the powder dry for a full-out real dairy campaign. If USDA does not allow real dairy farmer checkoff funds to talk about why they are so much better than the fake stuff that is here and that is coming… then it is time to get the government out of the promotion business and return these funds to dairy farmers so they can voluntarily use them to promote their real products, their true dairy brands.

In a future of murky food sources – farmers must be able to stand up for what they produce. They must be able to promote Real Milk that is unfooled-around-with, that is from the cow they have fed and cared for.

With the food revolution here, dairy promotion will need a marketing revolution to welcome people back to what’s Real — especially as more household decisions are made by people growing up without knowing what Real Whole Milk tastes like.There’s an idea. Real Whole Milk is tastier, healthier, with a truly cleaner label than about anything else that is here or that is coming to compete with it in the beverage sector.

Ditto for Real Yogurt and Real Cheese, etc. in the food sector. Undeniably Dairy – the dairy checkoff program – has a nice ring to it. Love what’s Real has a great message to it. But if dairy farmers can’t use their mandatory funds to take the fake stuff head-on, then it’s time to stop taking mandatory checkoffs and allow farmers to use their money to promote their product – no holds barred.

When the competition is funded by Silicon Valley billionaires, has the backing of major food and agriculture supply-chain companies, is sourcing genetically-altered material from USDA, and does not have government requiring distinctive labeling – then dairy farmers need a level playing field to use their hard earned $350 million plus to put a stake in the ground to promote why Real is better. Checkoff staff often say the competition is doing brand advertising and “we can’t.”

That being the case, perhaps give the money back to the farmers so they can form voluntary promotion groups or voluntarily give the funds to the brand that receives their milk to get in the game of head-to-head advertising instead of, in essence, funding a path to their own substitution and demise.

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