MILLERSBURG, Ohio — Healthy cattle on summer pasture. That’s the scene that makes Alan Kozak happy. That, and some of the exciting new things he and his wife Sharon are doing with the high-quality milk from their 429 Jersey cows at Clover Patch Dairy here in Holmes County, Ohio. Alan credits Sharon as the “calf […]They have a knack for niches, and the #4 GJPI herd in the nation — Profiles in comfort and quality
By Sherry Bunting, Farmshine, Friday, October 11, 2019
MADISON, Wis. — On the business side of the 53rd World Dairy Expo last week, I came away with feelings as mixed as the weather — gloomy skies and a deluge of rain at the beginning of the week gave way to sunny skies and brisk breezes at the end.
There were plenty of new things to see among the nearly 859 trade show vendors. Annual attendance is reported at around 62,000. U.S. and international attendance did appear to be down from previous years.
For many, the first three days of the show felt slow in comparison even to last year. Some observed that the steep loss of family farms over the past 18 months was “being felt” at Expo.
Some pointed to the weather as heavy rains produced flooding Tuesday into Wednesday.
Others blamed the discouraging — and twisted — headlines that came out of a town hall meeting with U.S. Secretary of Agriculture Sonny Perdue at the start of the week. The town hall was attended by around 200 dairy farmers, agribusiness representatives and organization leaders, along with dozens of reporters and television cameras.
What followed the hour of honest and detailed discussion (reported here as in Farmshine last week) were press accounts that warped Sec. Perdue’s comments and went viral through the wire services, starting with the Washington Post and Chicago Tribune and continuing into various agricultural press.
By Thursday, Wisconsin Farmers Union had sent op-ed responses to high profile news outlets, taking on the Secretary for his supposed comments about how we supposedly do things in America.
The stage was effectively set to cast the current Trump administration as purveyors of a factory farm model, attributing to the Secretary a proclamation that, “In America, the big get bigger and small get out.” This is now playing right into the hands of Democratic presidential hopefuls who are pal-ing around with HSUS in the Midwest, pretending to care about cows, farms and fly-over country.
Well, maybe some Democrats do care, but we know HSUS does not, and we know what the purveyors of the Green New Deal think of our cows. That’s another story.
Trouble is, the Secretary never said the words that have started this chain reaction. Or, at least, not in the order in which his words were parsed together in print.
You see, many other words were omitted. Context is everything.
From the sidelines and super busy with other pursuits at the Expo — but having attended the town hall meeting in person and having written my own coverage of the event in last week’s Farmshine — I began to see the headlines erupting on social media as share upon share made the news travel rapidly from Tuesday into Wednesday and then it was off to the races.
I began wondering how I could have missed such a derogatory comment. And I learned by Friday that, no, my notebook and partial recording had not failed me. Full transcripts were released by other reporters — providing that important context.
Transcripts showed clearly that the offending quote from Sec. Perdue was pulled from a very long and detailed response to a question and spliced together to make new statements. Not only is context everything, so is punctuation.
Too late, the discouraging and depressing headlines continued to beat small and mid-sized family farmers over the head all week. They began to feel as though even the USDA could care less about their survival – wanted them gone in fact to make way for “factory farming.”
The narrative was discouraging and many farmers confessed to me just how it made them feel. Several said reading those words made them feel like – why bother even going to Expo?
“Stick a fork in us. We’re done, according to Perdue,” a Wisconsin dairy farmer said to me Thursday.
Bad enough that the headlines erupted after Tuesday’s town hall were discouraging. Worse, that they were false in what they signaled to family farms. But there is also much truth in Sec. Perdue’s observation. He was describing “what we’ve seen in America,” not making a proclamation of how things will be done in America.
And the advancements in science and technology ARE what we have seen in America. Yes, they help smaller farms too, but it is science and technology that are contributing to the progress that is allowing rapid consolidation to take place.
For the record, I am pro-science and pro-technology and pro-innovation. But I also believe we are at a crossroads where it has gone so fast and so far, that we need to walk back and look at outcomes and impact and have a national conversation.
Just one day after the Expo closed, Land O’Lakes CEO Beth Ford and member farms like Dotterer’s Dairy, Mill Hall, Pa. were on CBS 60-minutes talking about how high-tech dairy is today and the market challenges being faced by dairy farmers at the same time.
The twisted quotes from Tuesday’s dairy town hall meeting at Expo gave the impression that Trump’s USDA is proclaiming a factory farm model for the future of agriculture. In a sense, as we embrace rapid technological advancement, we are embracing that transition. These are inescapable facts that must be sorted out and dealt with.
The Secretary was merely observing the reality of what has been happening in America’s rural lands with increasing speed over the past decade.
While some of Perdue’s specific answers to specific questions were disappointing and other responses were encouraging, none of those specifics were reported elsewhere with any attention. All attention was placed on the twisted quote.
We have a Secretary who can see what is happening and who can have an honest discussion about it, while being pragmatic about what the potential solutions are that can be accomplished without the help of a paralyzed Congress.
No matter what we think of Dairy Margin Coverage, it was put in place to help smaller farms withstand these difficult times and figure out their place in the future. That’s just reality.
At the same time, what was lost in those press reports is we have a Secretary that at least took time to cheer-lead for the small and mid-sized family farms by using his bully pulpit to advocate for whole milk in schools. No one picked up on that, except for Farmshine.
Perdue also touted “local” food as a way to bring value back to farms. I haven’t seen any other press reports talk about that.
Most reporters ignored those thoughts. They also ignored the fact that the stage for the rapid consolidation in dairy — that is occurring today — was set 10 years ago under former Secretary of Agriculture Tom Vilsack, who today has his salary paid by dairy farmers through their mandatory checkoff as president and CEO of the U.S. Dairy Export Council and defacto leader of the Innovation Center for U.S. Dairy that is streamlining “U.S. Dairy” through various checkoff funded innovations and programs.
Think about this for a moment: U.S. dairy has progressed with technological advancements that are unparalleled in the world. American farmers have always looked to technology and to the future to produce food for the growing population and to be good stewards of the land.
It is the love of science and technology – along with the love of cows — that draws throngs of U.S. and international visitors to the World Dairy Expo each year. They want to see what’s new. They want to learn from each other. They want to make progress to do more with less.
Technology allows farmers to do more with less. That has meant producing more food from fewer cows. At some point it also means producing more food from fewer farms.
Perhaps it is time to not just praise science and technology with the eagerness of children on Christmas morning, but to have an honest conversation about where science and technology are leading the food industry.
Sec. Perdue was not very well informed when it came to the topics of fake meat and fake milk that are ramping up through USDA science and technology into cell-cultured and DNA-modified yeast factory vats and bioreactors. Instead of talking about factories replacing farms, he stated that “consumers will choose”, and he said currently those who are choosing fake meat and fake milk aren’t consuming the real stuff anyway.
That was the short-sighted comment that raised my eyebrow, not the parsed-together quote about big and bigger.
It’s time to dig into the structure of things.
Perhaps the real concern and conversation to be addressed is the structures and alliances that have been formed over the past 10 years as they are now coming to light. In former Secretary Vilsack’s talk at Expo about exports and dairy innovation, and in DMI’s workshop about what’s on the horizon, my initial impressions are that we are at a place where the industry is speeding up innovation and wanting more latitude on standards of identity at a time when we should be saying: “let’s push pause please.”
The race to feed the world has produced immeasurable waste and loss already, will it now change the face of agriculture forever?
Where is science and technology supportive for the family fabric that has made our food production the envy of the world? And where is science and technology promoting a path that leads us away from that model of food production to take it out of the hands of many families enriched by competitive markets and put it into the new emerging models of fewer hands, consolidated markets and lack of competition.
Don’t blame Secretary Perdue for these wheels that have been in motion. Don’t expect the government to solve it. But what we can do is have the honest conversation, ask the questions, hold leaders accountable, and move the needle far enough to provide a more level field of play for the small and mid-sized family farms.
You can count on Farmshine to break away from the narratives on both sides of this thing to do exactly that.
New tax-exempt entities form — some with aliases — as checkoff funds flow to partnerships
By Sherry Bunting, Farmshine, Sept. 20, 2019
CHICAGO, Ill. — The Dairy Management Inc. (DMI) umbrella keeps expanding to include a growing number and assortment of tax-exempt 501c3 and 501c 6 organizations, all having addresses of record being either DMI headquarters at 10255 W. Higgins Road, Suite 900, Rosemont, Illinois, or National Milk Producers Federation (NMPF) headquarters at 2107 Wilson Blvd., Suite 600, Arlington, Virginia.
Several file their public IRS 990 forms under alias names, so these forms are a challenge to find. Some of the boards of these related organizations are not announced except on these IRS forms.
In reviewing IRS 990’s, many of these boards are comprised of the executive staff of prominent multinational dairy supply chain companies as well as executive staff and board chairs for prominent dairy cooperatives based in the U.S. and from other countries.
In addition to those IRS forms we could find for 2016-17, there are new organizations that are being formed since 2016-17, for which no IRS forms are yet publicly available.
One up-and-coming new organization is the so-called Center for Dairy Excellence, which is the product of the U.S. Dairy Export Council and the Innovation Center for U.S Dairy under their Dairy Sustainability Initiative and Dairy Sustainability Alliance.
At a recent dairy risk management seminar in Harrisburg, Pa., a panel of DMI staff mentioned the new “Center for Dairy Excellence”, which they said is unrelated to Pennsylvania’s Center for Dairy Excellence, it just happens to use the same name.
An internet search shows the information about this new center is available in the password-protected “members-only” area of USDEC’s website, but the word is that it will be a new hub for product innovation and sustainability.
One point the DMI panelists made really hit home: “We want to move consumers away from the ‘habit’ of reaching for the jug and get them to be looking for these new and innovative products.”
Products that are rooted in what is increasingly the very hands-on work of national dairy checkoff through these proprietary partnerships that are facilitated by this growing series of related tax-exempt organizations that are then able to push decisions about how checkoff funds are used further into the proprietary pre-competitive hands of the global dairy supply chain and multinational corporations that serve on these related boards.
The companies involved benefit from DMI’s ability to use tax-exempt status to conduct new product research and market testing paid for by dairy farmers under entities such as the Dairy Research Institute — a 501c3 organization that files under the alias name of Dairy Science Institute Inc. and includes several university laboratory sites, including Cornell, where the new fake butter made with water and 10% milkfat was recently discovered and paid for by New York dairy promotion dollars (reported in Farmshine Sept. 6, 2019).
The Dairy Research Institute is referenced at the websites for National Dairy Council and the Innovation Center for U.S. Dairy, but most of the links to their work are in a password-protected “members-only” area. Attempts to sign up to view this information were denied.
Yes, dairy farmers pay for the research, the market testing, and so forth, and the companies then bring these products into the marketplace via the national dairy checkoff funding stream via the tax-exempt status of the Innovation Center for U.S. Dairy.
Having gathered as many related IRS 990 forms as we could find (due to the confusing use of alias names), there are some interesting things to learn about how the vehicle of dairy industry consolidation and trends in promotion and research have been forming since 2008 — right under our noses — and how the mandatory dairy farmer checkoff continues to fuel the global supply chain engine.
IRS 990 forms show how executive staff for large multi-national companies – some of them based in other countries – are influential in charting this course under the mantra of “pre-competitive collaboration”, which of course makes it all confidential and proprietary.
These related organization boards include leaders of companies and cooperatives based not just in the U.S. but also in New Zealand, China, Netherlands, Canada and Denmark as they acquire assets and form joint ventures in the U.S.
The 2011 implementation of the 7.5-cent import promotion checkoff that perhaps gave entities like Fonterra the entitlement to help shape this direction, leading UDIA to transfer ownership of the Real Seal to NMPF, which now charges companies a licensing fee to use the Real Seal. (More on that another day.)
While a main focus of the USDEC and U.S. Dairy efforts is to increase exports, it is interesting to note that these gains have had a reverse effect on dairy farm milk price revenue, according to a recent study by dairy economist and supply chain expert Chuck Nicholson (more on that, too, another day).
Suffice it to say for now that export volumes were higher in 2016 and 2018 compared with 2017 and 2019, while dairy farm level milk prices were lower in 2016 and 2018 compared with 2017 and 2019. In fact, former Ag Secretary Tom Vilsack called 2018 “a banner year for exporters.” For dairy farmers, 2018 was anything but banner.
Meanwhile, Tom Vilsack, president and CEO of USDEC and a primary leader on the board of U.S. Dairy, is heavily promoting two of DMI’s new internal campaigns: 1) The “Next Five Percent” campaign wants to move exports from 15% of U.S. milk production to 20% within the next two years, and 2) The Net Zero Initiative wants the entire dairy supply chain at net zero emissions by 2050.
Let’s open the DMI umbrella with a short summary on some of the DMI-funded 501c3’s and 6’s by their known names and aliases. (We published a timeline for some of the major pieces under the umbrella in Keep in mind that NMPF is intrinsically involved in at least two: USDEC and Innovation Center for U.S. Dairy. These are the two organizations spawning a growing number of new tax-exempt organizations under DMI’s umbrella.
U.S. Dairy Export Council
USDEC and NMPF share offices at 2107 Wilson Blvd., Suite 600, Arlington, Virginia, just outside of Washington D.C., according to forms filed with the IRS. According to financial audits, DMI and NMPF trade and buy services from each other, and NMPF rented offices from DMI in Arlington until 2016 when these offices were sold.
In 2017, USDEC listed NMPF as an independent contractor paid $1.85 million for “trade services”.
USDEC paid DMI $6.5 million for management services in 2017, while also listing $6.4 million in salaries and employee compensation.
USDEC’s total revenue was $24.6 mil in 2017, of which $1.43 mil came from membership dues, $5.7 mil from government grants and $17.1 mil from DMI. This means that USDEC received 71% of its funding from national mandatory dairy checkoff and 23% from government grants with just 6% of its funding coming from the membership dues paid by the corporations and cooperatives that are significantly represented on the USDEC board of 140 directors.
The chief financial officer for USDEC in 2017 was Carolyn Gibbs, who was also listed as the CFO for the Innovation Center for U.S. Dairy. Halfway through 2017, she left this position to become a principal officer of Newtrient LLC, another related organization formed under the DMI umbrella in 2017. IRS forms for this organization are not yet publicly available.
Before coming to DMI, Gibbs spent 13 years at Kraft Foods, Inc. Her consulting work today with Newtrient LLC is described as “industry outreach, strategy, Net Zero Initiative, and project continuity.”
Innovation Center for U.S. Dairy
The Innovation Center for U.S. Dairy — a 501c6 formed in 2008 — is officially known to the IRS as Dairy Center for Strategic Innovation and Collaboration doing business as Innovation Center for U.S. Dairy. The national dairy checkoff organizations increasingly refer to this organization simply as “U.S. Dairy,” and the website for some of its activities is USDairy.com.
According to DMI’s IRS 990 form, this organization is directly controlled by DMI.
The “collaboration” has a small budget of around $115,000 for each of the past three years and no paid staff. But it is the hub of new tax-exempt organizations as well as trademarked initiatives.
Innovation Center for U.S. Dairy describes its reason for tax-exempt status on the 990 forms, as follows: “…to provide a forum for the dairy industry to identify opportunities to increase dairy sales through pre-competitive collaboration. It combines the collective resources of the dairy industry to provide consumers with nutritious dairy products and foster industry innovation for healthy people, healthy products and a healthy planet.”
On its 990 forms, U.S. Dairy lists its board of directors — a who’s who of chief executive officers and board chairs for prominent dairy cooperatives as well as multinational dairy processors. The board also includes DMI CEO Tom Gallagher and of course Vilsack.
The Dairy Sustainability Alliance
A key subset of The Innovation Center for U.S. Dairy is The Dairy Sustainability Alliance, trademarked by DMI in June 2017. A search for The Dairy Sustainability Alliance at guidestar.org, a database of non-profits, brings up Global Dairy Platform Inc.
Global Dairy Platform Inc.
Global Dairy Platform is a tax-exempt organization formed and incorporated as a 501c6 in 2012 and it lists its physical address as DMI headquarters in Rosemont, Illinois.
It describes its tax-exempt justification as follows: “A pre-competitive collaboration of dairy sector organizations, the Global Dairy Platform works with its global membership, scientific and academic leaders and other industry collaborators to align and support the international dairy industry to promote sustainable dairy nutrition.”
Chaired by Rick Smith, president and CEO of Dairy Farmers of America (DFA), the Global Dairy Platform (GDP), has a board of 12 executives representing the following corporations, cooperatives and organizations: Fonterra (New Zealand), Saputo (Canada-based multinational), Leprino (multinational), Land O’Lakes, Meiji Holdings Ltd. (China), FrielandCamprino (Dutch multinational), Arla (Denmark multinational), China Mengniu Dairy Company and the International Dairy Federation.
Donald Moore was paid nearly $600,000 as GDP executive director in 2016, the most recent IRS 990 form available. Moore currently also serves as chairman of the International Agri-Food Network and the Private Sector Mechanism to the United Nations Committee on World Food Security.
DMI senior vice president Dr. Greg Miller is listed as the research lead for the GDP, and he is currently also serving on a food and sustainability committee with the UN World Health Organization. He was the highest paid DMI executive in 2017 at $1.49 mil (including benefit package and deferments).
GDP had revenue of $3.74 million from DMI in 2017 — $2.6 mil for program services and $1.12 mil in the form of grants in 2016. According to the IRS 990, $583,329 of this revenue came from the import checkoff assessment. Research projects accounted for $1.85 million of expenses.
Until July of 2017, Carolyn Gibbs was listed as chief financial officer of USDEC and the Innovation Center for U.S. Dairy, where she assisted with the launch of Newtrient LLC, another tax-exempt 501c6 formed in 2018, according to Gibbs’ bio at newtrient.com.
Newtrient falls under the Dairy Sustainability Alliance (Global Dairy Platform), which comes under the Dairy Sustainability Initiative.
No IRS 990 forms are available yet for Newtrient LLC.
Newtrient is described at its website (newtrient.com) as “an entity focused on turning waste into renewable energy and other commercially viable products, while reducing dairy’s environmental footprint and improving economic returns for dairy farmers.”
Dairy Research Institute
The Dairy Research Institute is a name trademarked by DMI, but the IRS recognizes this 501c3 as Dairy Science Institute Inc. doing business as Dairy Research Institute with a physical address at DMI headquarters in Rosemont, Ill.
The Institute describes its tax-exempt status to the IRS as “created to strengthen the dairy industry’s access to and investment in the technical research required to drive innovation and demand for dairy products and ingredients globally. The Institute works with and through industry, academic, government and commercial partners to drive pre-competitive research in nutrition, products and sustainability on behalf of the Innovation Center for U.S. Dairy, the National Dairy Council and other partners.”
The Institute is primarily funded by DMI with reported revenue of $1 million in 2016 and $785,935 in 2017. However, from 2013 through 2017, the Institute received a total of $24.3 million from DMI, including it’s first-year startup grant of $19.16 mil. in 2013.
Its officers are listed as Dr. Gregory Miller, president, Tom Gallagher, chairman and Carolyn Gibbs, CFO through July 2017 (before heading over to Newtrient and being replaced by Quinton Bailey).
Dr. Miller is also the research lead for Global Dairy Platform and chief science officer for the National Dairy Council (NDC), a 501c3 tax-exempt organization formed in 1969 and today controlled by United Dairy Industry Association (UDIA) and managed by DMI.
While the sustainability organizational rollouts have been ongoing since 2009-10 memorandums were signed between USDA and DMI, another organization was simultaneously formed while Tom Vilsack was Ag Secretary in 2010 through a three-way memorandum of understanding between National Dairy Council, USDA and the National Foodball League.
This 501c3, of course, is Youth Improved Inc. doing business as GENYOUth, describing its tax-exempt status as “activating programs that create healthy, active students and schools, empowering youth as change-agents in their local communities, engaging a network of private and public partners that share our goal to create a healthy, successful future for students, schools and communities nationwide.”
DMI is listed as GENYOUth’s controlling organization and paid one of its partners, the NFL, $5.6 million for promotion in 2017, according to IRS filings.
At the same time, in 2017, GENYOUth’s most expensive “charitable activity” was listed as Fuel Up to Play 60, costing $5.4 million and giving considerable advertising exposure to the NFL among future fans. That year, the NFL contributed less than $1 million to GENYOUth, and that year the NFL also received $5.6 million from DMI.
Alexis Glick, a television personality until 2009, has been GENYOUth’s CEO since its inception in 2010. In both 2016 and 2017, she was paid $259,584 as “compensation for services provided under an independent contractor agreement.”
Other employee compensation totaled $517,165, including vice president Mark Block, at $221,000. Pension plans and other employee benefits totaled $110,026 and other professional fees paid to contractors totaled $2.36 million.
Since 2010, the organization has brought donors to the table including some of the multinational dairy and foodservice corporations DMI is working with in other tax-exempt product innovation and ‘sustainability’ ventures.
By Sherry Bunting, Farmshine, Friday, Oct. 4, 2019
MADISON, Wis. – Grabbing the headlines from a town hall meeting with U.S. Ag Secretary Sonny Perdue during the opening day of the 53rd World Dairy Expo, here in Madison, Wisconsin, was a comment the Secretary made about the viability of small family farms.
He was asked whether they will survive. To which he answered, “Yes, but they’ll have to adapt.”
In fact, the Secretary said that the capital needs and environmental regulations that impact farms today make it difficult for smaller farms to survive milking 50 to 100 cows.
“What we’ve seen is the number of dairy farms going down, but the number of dairy cows has not,” said Perdue. “Dairy farms are getting larger, and smaller farms are going out.”
But in additional discussion, Perdue said that consumers want local products. He said that marketing local, even without the buzzwords, can be done successfully to bring value to farms.
He noted two things about dairy farms. First, they can’t be sustainable without profitability and second, he described the dairy industry as prone to oversupply.
Picking up on these comments, recently retired northwest Wisconsin dairy producer Karen Schauf said Farm Bureau is looking at the Federal Milk Marketing Orders and how make some adjustments on the milk pricing.
“But what we really need to do is balance supply and demand of dairy products much closer,” she said. “I would ask if you would support a flexible mandatory supply management system to help producers keep that supply and demand in closer relationship.”
Perdue asked if she wanted the short answer or the long answer, stating that when his children want a quick answer, it’s always “no.”
Schauf replied, “Mr. Secretary, I just want you to think about it.” The subject went no further.
At another point in the questioning, a Wisconsin producer observed the disheartening price levels and said last year was a record high level of exports, while prices to farmers were worse than this year and worse than 2017.
He noted that exports hit 17.6% of milk produced, and settled out at 16% last year, which is a record, but his milk price averaged $14.60. He went on to say that, “our exports are off 2% this year, but I’ll probably come close to an average of $17 on my milk price.” He also noted that National Milk Producers Federation recently put out a press release stating 2015-18 as record years in domestic dairy consumption.
“This is all good,” the dairy farmer said, “but in Wisconsin we are losing 2.5 farms per day and I think the call centers are full with distressed farmers calling in, so beyond trade and some of these things you promote at the federal level, what can we be looking at so we never experience another five years like this?”
Perdue thanked the producer for his facts and said it is amazing that things “can be good and yet feel so bad.” He acknowledged that dairy has been under the most stress, and he said that the 2018 Farm Bill did “exactly the right thing” with the new Dairy Margin Coverage. He pointed out that this coverage is specifically in place for smaller dairy farms.
“Milk prices are cyclical, and I think we’ve met that trough, and things will improve for 2020,” said Perdue.
Referencing the 2% milk on the table in front of him, Perdue said: “You pretty much know what happened to milk in our schools, with the whole milk and the accusations about fat in milk. We hope to get some benefit, maybe, from the Dietary Guidelines this year, which drive a lot of this conversation.”
Noting that USDA “is leading” the Dietary Guidelines along with Health and Human Services, the Secretary said: “We have a great panel and they will bring together the best scientific facts about what is healthy, wholesome and nutritious for our young people and our older people and all of us, so we’re looking forward to that.”
On trade, the Secretary was hopeful. He cited the recent trade agreement with Japan, but did not have exact numbers for dairy, just that it will be beneficial for dairy. On China, he was optimistic and said progress is being made, but that it has been important to take this stand because they have been “cheating” and are “toying with us.”
One area he mentioned in regard to trade with China is that U.S. agriculture has become too dependent on “what China will do.” He said the administration is really working on trade with other nations in the Pacific and elsewhere that do not represent such large chunks as to disrupt or distort markets as they come in and out of the game. This has held true for dairy exports from the U.S., which are rising in so many other parts of the world.
On the USMCA, Perdue said the outcome will depend on whether the Speaker of the House brings it to the floor for a vote. “It will pass both caucuses, but it has to come to the floor. We hope to see that happen by the end of the year, that distractions won’t get in the way,” said Perdue.
The town hall meeting covered a wide range of other questions and comments, and often, the answer to the toughest questions was “it’s complicated and we’ll be happy to look into it.”
On the Market Facilitation Program, several had questions about why alfalfa-grass is not included as a crop, just straight alfalfa. Perdue explained that alfalfa is a crop exported to China and that the crops in the eligible crops for MFP payments have to be “specifically enumerated.”
As with other questions, he emphasized the local FSA Committees who implement some of the more subjective pieces of these programs that farmers can appeal to their local committees if they’ve been denied.
In the prevent plant flexibilities for harvesting forage, Perdue said USDA is looking at this as perhaps something to be made permanent – the ability to harvest forage on prevent plant acres in September rather than waiting until Nov. 1.
Paul Bauer from Ellsworth Cooperative Creamery focused his comments on the spread between Cheddar blocks and barrels on the CME and how this is deflating the price paid to dairy farmers – especially in Wisconsin – but also across the U.S. because of how it affects the Class III pricing formula.
“For the last four years, the spread between blocks and barrels has been greater than 12 cents. Historically, the spread has been three cents or less per pound for the prior 50 years,” he said, noting that the spread at the end of the previous week stood at just shy of 35 cents per pound!
“The common thought is that this bounces back to a normal range, but it doesn’t,” said Bauer, noting that last year’s average spread cost dairy farmers 60 cents per hundredweight on their milk price. “Those farmers who ship to barrel plants, such as Ellsworth Cooperative Creamery, were affected by $1.20/cwt on their milk price due to this wide spread.
He noted that last week’s 34 ¾ cent spread between blocks and barrels cost dairy farmers $3.40/cwt, which is 20% of their base price.
Acknowledging that this is a complex issue, Bauer asked the Secretary if USDA will take the first step and admit there is a problem instead of “rolling their eyes because of the complexity.”
“This is unfavorable to our farmers and unfair to our producers,” said Bauer, explaining that all dairy products are priced off the block-barrel on the CME, ultimately.
“It’s important to get it right,” said Bauer, explaining that it is a problem when the industry can build barrel inventory to create this divergence in block / barrel prices on the CME, which in turn suppresses the price they pay to producers for the milk used in a multitude of other “modern” products.
“Barrel production comes from 16 plants (nationwide), and represents 6% of the nation’s dairy supply, and yet has had a 58% of the impact on all producers’ milk checks,” said Bauer. “When the system is out of sync, that negative value affects us all.
“It’s time for USDA to formally take action and for the data to come to light that are influencing the market,” said Bauer.
He explained that the system is there to protect farmers and local buyers but is now being influenced by foreign cooperatives that keep one product – barrels – in oversupply in order to keep milk prices lower for products that are priced off the higher blocks in short supply.
Bauer said the secrecy of buyers and sellers on the CME protects this practice. “It’s time to update the system to keep up with modern times to protect our farmers and our food supply also in terms of quality and safety.”
Secretary Perdue drew laughter when he asked Bauer: “Would you repeat the question?” But he took it in and asked for a written copy of the question to look into it. Perdue said that concerns are often raised about the Federal Milk Marketing Orders.
“They are a fairly complex issue, but we’d be happy to investigate. The government’s role in general is to be the balance between the producer and the consumer and ensure no predatory pricing practices,” said Perdue, “while not interfering with commerce and contracts.”
He gave the example of the fire at the Tyson beef plant in Holcomb, Kansas and the staggering loss to cattle prices since that fire over a month ago that have resulted in packer margins at an unprecedented $600 per head.
“We saw a spike in the delta – the difference between the live cattle price and the boxed beef price at historic highs, and we are investigating that, to make sure there was no pricing collusion,” said Perdue. “I’ve asked those packers to come in and give me their side of the story. That’s the role of USDA.”
Pete Hardin of the Milkweed asked about the cell cultured meat, citing a publicized comment by the Secretary last summer pointing to the value of this science. Hardin asked if any studies have been done on the safety of this technology.
Perdue did not know if any specific studies have been done, and he confessed to trying an Impossible Burger, adding “There’s now one restaurant I no longer attend.”
He stressed that these products cater to people who aren’t eating meat anyway for whatever reason, and he said: “In the end, consumers will be the ones to choose.”
Picking up on this in a separate question about how dairy and livestock farms can remain viable with all of the imitation products competing for consumers, the Secretary observed that, “As farmers we are independent and like to sit behind the farm gate and produce the best, most nutritious food in the world at the lowest cost anywhere in the world, but we’ve never told the story.
“It’s up to every one of us to speak out locally and statewide and federally, nationally in that area and tell the story of what’s happening. No longer can we hide behind the curtain,” said Perdue.
“There’s a growing movement about knowing how you do your job, what’s in the milk, how the animals are treated, and there’s no going back from that. We have to engage with consumers. We have to tell the story loudly and proudly.”