About Agmoos

I am a journalist writing primarily about agriculture for various newspapers over the past 30 years...and before that, I milked cows and tended calves and heifers. I am also a mother and grandmother with three grown children: A teacher, restaurateur and homemaker. Our two sons and one daughter all like to cook and they are food conscious... not paranoid. My "foodographic" Agmoos blog is a place to find stories and photos of the people and places behind the food we eat and for commentary and analysis on food, farm and marketing issues facing producers and consumers.

Mixed feelings prevail after Expo

There were plenty of new things to see among the 859 trade show vendors, but the trade show was down a bit from 887 businesses exhibiting a year ago. Attendance was reported at just over 62,000, down from over 65,000 a year ago and over 68,000 two years ago. International attendance at 2,133 people from 94 countries last week was off by about about 200 compared with a year ago and 500 fewer than two years ago. Photo by Sherry Bunting

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.

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DMI umbrella covers seen and unseen

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.

Newtrient LLC

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.

GENYOUth

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.

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.

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U.S. Ag Secretary Perdue: Small farms face difficult times

U.S. Secretary of Agriculture Sonny Perdue (right) and Wisconsin Secretary of Agriculture and Trade Brad Pfaff field questions and take in comments at dairy town hall meeting early Tuesday morning on the official first day of the 53rd World Dairy Expo in Madison, Wisconsin. Photo by Sherry Bunting

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.”

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DMI’s innovation = secret projects with strategic partners

By Sherry Bunting, Farmshine, Friday, Sept. 13, 2019

CHICAGO, Ill. – ‘Proprietary’ describes much of what the Innovation Center for U.S. Dairy initiates as a checkoff-funded industry collaboration under the umbrella of Dairy Management Inc. (DMI).

Some of that work is so proprietary, even the 81 voting DMI board members don’t see details as they vote to approve partnerships, new product developments, promotion grants to launch new products, as well as the ‘sustainability’ initiatives and alliances that come from this collaboration and filter down as requirements for all dairy farms through their respective processor and cooperative milk buyers via the FARM program.

Board members are quick to point out that USDA and DMI attorneys are privy to proprietary details that are kept confidential. They point out that food industry partners and processors must show they are investing more than they are receiving, and that their “innovation” has potential to be a ‘catalyst’ for others to follow.

DMI describes program accomplishments in the IRS 990 form, specifying that, “DMI partners with foodservice industry leaders to help create dairy-based innovation to drive dairy sales and build trust in dairy products.”

The description details the way partnerships are boosting dairy use, especially cheese, by restaurant chains.

At the same time, DMI describes its strategy to revitalize fluid milk by ‘reinventing the consumer milk experience.’ (Reinventing milk was examined in a separate article in the August 23 edition of Farmshine.)

The Innovation Center for U.S. Dairy (under the official tax-exempt name of “Dairy Center for Strategic Innovation and Collaboration, doing business as Innovation Center for U.S. Dairy”) fuels these partnerships with mandatory checkoff funds and is the place where these partnerships are born from the board of DMI staff and processor / co-op chairs and CEOs. (See related article).

Here, we examine the mainly cheesey partnerships DMI has pursued since 2009-10. That is the year in which the Innovation Center for U.S. Dairy was formed under DMI.

In 2017, (DMI) had four domestic, U.S.-focused partners: Dominos, Pizza Hut, Taco Bell and McDonalds. Based upon the success of our U.S. partnerships with Yum! Brands, which includes Taco Bell, Pizza Hut and KFC, we expanded our partnership focus and added two pilot international partnerships in 2017 — KFC, focused on Latin America and Pizza Hut, focused on Southeast Asia.

“The goal of the international partnerships is to increase U.S. Dairy Exports to these markets,” the DMI 990 form states. “DMI partners with these large catalytic companies because they are industry leaders who have the potential to deliver incremental and sustainable dairy sales. Moreover, these partners are closely watched by others in foodservice. Their innovation, whether product-based or technology based, created a catalytic effect, where others follow their actions. These partners were chosen because they commit to invest in innovation and marketing in support of dairy-based products: and they are willing to partner on other dairy industry priorities.”

According to the report, DMI supports a range of programs and initiatives with these influential and global foodservice industry leaders. The programs focus on providing dairy expertise and investment in the areas of consumer insights, new product development, new store and new technology testing, consumer communications and corporate social responsibility. Further, DMI provides on-site scientists and/or culinary experts who lead product development of dairy-based food and beverage products.

The main agencies of DMI handling these proprietary partnerships are the Innovation Center for U.S. Dairy and the U.S. Dairy Export Council (USDEC), which are both listed under the control of DMI on the form and are both under the leadership of former Secretary of Agriculture Tom Vilsack.

DMI also “provides expertise and consultants in the areas of marketing, consumer insights and research, nutrition, sustainability, animal care, food safety, regulatory environment and dairy communications.”

As a signal of success, DMI states that dairy is represented in 70% of their collective menu items among these partners and that these partners spent $11.1 billion between 2012 and 2017, collectively, on advertising their menus, including items that are “dairy-based” like pizza, tacos, ice cream and coffee drinks. But there is no data on how much of the total $11.1 billion was spent on actually advertising the dairy-based menu items.

DMI states that since these partnerships began in 2009, the combined milk equivalent tonnage of these partners, collectively, “has grown by 2.2 billion milk pounds, averaging 4% growth per year (since 2009).”

This is close to the overall global trend of 3% growth in cheese consumption annually.

In the 990 discussion, specific menu items are noted as examples, as well as how ice cream and cheese are reformulated by in-house experts provided by DMI.

Working with Domino’s, DMI helped “create the ‘Smart Slice’ School Pizza, which was in more than 10,500 schools by 2017 and meets the USDA dietary guidelines for being fat-free or lower in fat than regular cheese pizza.”

Also in 2017, Dominos began promoting awareness of the Undeniably Dairy campaign by including “farmer messaging” on 7 million pizza boxes weekly nationwide. DMI states that this “helped Dominos grow milk equivalent tonnage by 8.5% in 2017.”

DMI also partnered with Pizza Hut on the “cheese in more places” products, including the Ultimate Cheesy Crust Pizza with 16 pockets stuffed with nearly one pound of cheese.

As for Taco Bell, DMI states that this partnership has helped the restaurant chain evolve in how they use dairy, from incorporating it as a garnish to being more of a key ingredient …growing their milk equivalent tonnage by 7% in 2017.

However, partners like Taco Bell have also initiated “stealth health” menu-boarding since 2017, to encourage customers to consider condiments other than cheese and sour cream, such as salsa and pico de gala. And partner McDonald’s removed the ‘cheeseburger’ option from the Happy Meal menu last year. A customer can ask for a slice of cheese on the burger, but that option does not appear on the menu board. It’s called “stealth health.”

As for the international partnerships, DMI states that U.S. cheese sales at Pizza Hut Asia Pacific increased 29% in 2017. In fact, DMI leaders communicate that consumers in China, for example, look to the U.S. with confidence in food safety. They say their market research shows that the larger and more technologically progressive our farms are here, the happier moms are to buy U.S. dairy there. In fact, dairy checkoff leaders note in communications that small farms with older facilities conger-up images of concern for consumers in China who have not forgotten their 2014 melamine scare, which the Chinese government ultimately blamed on milk handlers for the network of small farms in China.

While cheese sales increased through these partnerships from 2009 through 2017, according to DMI, fluid milk sales declined even faster in those years than the 30-year trendline

Global supply chain structures also became more prominent as multi-national dairy ingredient suppliers connect with DMI partner-brands.

On the fluid milk side, DMI’s stated goal is to “reinvent the milk experience for consumers.” At the same time, the overall goals are focused on dairy innovation via business plans and structures that are more global in nature, focus on foodservice chains that represent domestic and overseas markets and utilize further processed, reformulated, and blended dairy ingredients while also creating menu items that use these proprietary ingredients to fit USDA’s low-fat dietary guidelines as the restaurant trade moves into ‘stealth health’ mode.

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Community supports family as surreal arrest adds to barn fire’s burden

The fire marshal has not determined the cause of the fire, which appears to have started in this second story of the 1800’s bank barn.  Photo courtesy Renee Troutman

Author’s Note: Since this story appeared in Farmshine Sept. 13, the petition to drop charges against Tim Getz has grown to over 36,000 signatures and counting.

By Sherry Bunting, Farmshine Sept. 13, 2019

MYERSTOWN, Pa. —  For Marlin and Gloria Getz and their sons Todd and Tim, of Myerstown, Lebanon County, Pennsylvania, the events of the barn fire Wednesday evening, Sept. 4 are a blur that took a turn no one could have expected. Amid the heartbreak of loss, the cleanup, decision-making, and now legal concerns, it is the support of their community that is holding them up.

While part of the basement and the tiestalls are still standing, the rest of the two-story bank barn, and all of the feed, are a complete loss.

Of the cattle, 22 head perished in the fire, including 12 cows, 8 yearling heifers and 2 calves, with an additional cow euthanized from injuries the following day. The Getz family is milking their 45 remaining cows in nearby Schaefferstown where John Zimmerman, offered his now vacant barn while the family decides their future.

And then there is the legal concern facing Tim Getz, who was clobbered, handcuffed and arrested as he worked with his father, brother and others to rescue cows in their smoke-filled barn as the hay mow above them was burning.

A Pennsylvania State Police Trooper arrived just ahead of the firefighters, demanding they all leave the barn. He did not comprehend the dedication and knowledge of a family trying to save their cattle when they ignored him and he grabbed Tim from behind, resulting in a flailing throw of the arm interpreted by the officer as assault and leading to felony charges of assault on a police officer.

By the next morning, Carrie Boyer of Lebanon had started a petition online, now filled with 9,443 signatures and growing. 32 pages showing the first 8000 signatures were presented to Lebanon County District Attorney David Arnold on Tuesday, requesting the charges be dropped. It will be days before they learn the outcome, and a preliminary hearing has been set for October 3.

Neighbor Anna Furlow, 15, also wanted to help. She saw the fire trucks go by that night on the road that adjoins her family’s property and the farm. She started a Go Fund Me site, with a goal to raise $10,000 in donations for the family. So far $3,125 has been raised, and the link for donations can be found here.

“I have known the family my whole life, and they have always been really kind to me and my family, so I wanted to do something kind for them,” the teenager said. “They are just really good people, and now they have the financial concerns and decisions about the future.”

Anna and her mother Kristy report that many people from the community are helping out and bringing plenty of food.

“We are holding up,” says Todd Getz in a Farmshine interview Tuesday. His brother Tim is home after a friend of the family raised the $15,000 to bail him out of jail. “It’s kind of hectic, and it is heartbreaking, but we have a lot of people helping us through.”

Todd reflected on the night of the fire. “We were milking in the barn, and at a few minutes before 8 p.m., I was going to go mix feed. I saw fire at the eaves and yelled to my brother that the barn was on fire. He noticed it the same time and called it in,” Todd recounts. 

“Everything became chaotic. I ran up back to see if there was something I could do to stop it and then came down and started letting cows out. I was at the near end of the barn and heard mom yelling that a police officer said we had to get out. The next thing I knew, the officer came in and told me to get out, but I kept working at untying cows until I got to the end of the row at the split and went out with him.”

Todd says he then re-entered the barn at the far end “because I knew my dad and brother were in there. The officer stood at the doorway yelling for us to get out, and so the cows we were trying to get out could not get out the doorway because he was standing there.”

Todd recalls his father yelling back to the officer that they weren’t leaving until they got the cows out. At this point, there was smoke but no fire where they were working.

“The officer walked past my dad and went to Tim, who ignored him and kept untying cows. The electric was out, it was getting dark, there was smoke. I don’t think Tim knew it was the policeman grabbing the back of his arm when he flailed his arm backward to break free. The next thing we knew, the officer took Tim down and put him in cuffs,” Todd reports, adding that there were three other people besides Tim at that end of the barn trying to get cows out and the firefighters were already working at the other end of the barn at that point.

In fact, for a few moments, Todd wasn’t sure who was being handcuffed. “I couldn’t see clearly to the front of the barn where they were. I thought they were arresting my dad.

“I want to be clear that we are not criticizing the trooper, it’s just that I don’t think he understood the situation. I think that is what it really comes down to. He didn’t understand. In fact, the area where he arrested Tim, that part of the barn, is still standing. The fire didn’t reach it.”

With his brother under arrest and the fire raging above them, family, firefighters, the herd veterinarian and others were still stepping in and out of the barn. “You could pick your way in, and the cows were still coming,” Todd recalls.

He says the firefighters were invaluable. One went back in the barn and cut every cow loose they hadn’t gotten to. “We have a pen of calves at Zimmerman’s right now that wouldn’t be there if not for the firefighters getting them away from that end of the barn.”

The family is grateful to their longtime veterinarian Dr. Gary Brummel of Lebanon.

“When I got there, most of the cattle were out,” says Brummel, who has been the herd vet for the Getz family’s Autumn-Mist Holsteins for over 20 years. “Within an hour, the fire chief had me come look at cows under the barn. We were able to get 8 to 10 more animals out, and there were still 4 trapped with the splits. I euthanized them. Others with burns and abrasions, I treated.”

It was an hour of looking at animals and euthanizing any trapped with severe injuries that were still in the part of the barn where Tim, an hour earlier, had been working to free cows before being arrested.

“When I finally went to Marlin and Gloria to let them know I was there, that’s when I learned what had happened with Tim,” said Brummel. “They asked me to go talk to Tim and the officer. One of the firefighters was with me, he knew where the squad car had been, but when we got there, the car was gone.”

Brummel notes the firefighters and ambulance crew didn’t know what happened or where they went. They got on central dispatch to talk to the officer and learned Tim was being taken to the Jonestown barracks and placed under arrest.

He was also taken to the hospital and treated but no one in his family was ever notified.

It was 12 hours later, the next morning, before the family learned that Tim had been taken to the hospital for the injury to his head where the officer hit him with the flashlight before placing him in handcuffs.

While the primary duty of a police officer is human safety, and that may mean telling people to leave a barn that is on fire, family, friends, professionals, and now the local community and dairy community at-large argue whether the officer had the right to physically try to remove one person, leaving four other individuals still in the burning barn doing what he was doing.

The family understands the officer thought he was doing the right thing, but the situation that transpired reveals a deep void in understanding when it comes to the handling of livestock.

When asked what can be learned from this situation, Brummel had some sage advice, “Have an emergency plan. Make sure fire extinguishers are charged and that you have multiple ones. Have an exit plan. Know how you will handle it if the unthinkable happens.”

And now this situation shows additional steps. Farmers and veterinarians should consider meeting and talking with local first responders and law enforcement to have some education and integration in the handling of livestock.

Brummel notes that as communities, including first responders, become farther removed from a farming background, efforts to integrate with first responders and law enforcement may be more important than ever, perhaps even designating a local first responder with livestock knowledge.

While one press report indicates the officer, Jorge DeJesus, may have been on the force less than a year, the majority of people interviewed for this report believe the main factor in this situation is the lack of understanding about farming and livestock. And while they appreciate that the officer was doing what he thought was right to save human lives, the lack of understanding for the situation has now presented a grave legal concern for the family.

What it boils down to is Tim Getz had not committed a crime. The officer had no warrant. This reporter can find no law on the books stating that an owner can’t be in his barn freeing cows during a barn fire.

By all accounts, Tim is keeping his chin up. He spent part of that night at the hospital, then at central booking at the Jonestown State Police barracks.  He was told he would get a phone call when he was transferred to jail but was bailed out before that occurred.

A police report indicates a trooper interviewed Getz at Jonestown barracks at 9:50 p.m. In the interview, without counsel or a phone call, Getz related that he heard the trooper yelling, felt him reach the back of his arm, and he reached back and struck out, but was not sure where or who he struck with an arm up over the shoulder.

The family has hired a criminal defense attorney.

The fire marshal has not determined the cause of the fire, which started in the second story of the bank barn.

The Getz’s have insurance and are sorting out their future with so many mitigating circumstances amid an already difficult time in the dairy business.

“We can’t answer questions about what we’re going to do until we get answers to the questions we have. Our priorities right now are taking care of the animals we have and deciding where we go from here,” says Todd. “We love the cows and love milking and would like to keep doing that, but there is the matter of can we?”

The farm has been in the family four generations, and Todd says it is difficult knowing that his brother is facing charges mainly because people don’t understand that these dairy cows are not just their heritage and livelihood, “they are an extension of our family.”

“People have really rallied around us, and it is amazing and humbling, what that means to our family,” says Todd. “The number of people who were here that night to get cows loaded to go to another barn and coming here after cleaning up. It’s humbling and means the world to us right now.

Despite the heartache, Todd says, “We have seen how big everybody’s heart is in these past few days.”

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While part of the basement and tiestalls are still standing, the rest of the two-story bank barn, and all of the feed, are a complete loss. Of the cattle, 22 head perished in the fire, including 12 cows, 8 yearling heifers and 2 calves. Photos courtesy Renee Troutman

DMI by the numbers, proprietary path of partners is paved

By Sherry Bunting, Farmshine, August 30, 2019

CHICAGO, Ill. — As the path of dairy checkoff promotion continues to evolve — especially since 2008 when a series of memorandums of understanding were signed by Dairy Management Inc. (DMI) and the National Dairy Council (NDC) with then USDA Secretary Tom Vilsack — the money flows increasingly toward DMI partnerships, agency services and executive staff through sub-agencies of DMI that facilitate the proprietary partnerships.

Innovation Center for U.S. Dairy, U.S. Dairy Export Council, GENYOUth, Newtrient LLC, are a few of the vehicles for “proprietary” industry partnerships, which DMI refers to as ‘leveraging industry resources.’

In particular the Innovation Center, working closely with USDEC, is the vehicle for pre-competitive “proprietary” dairy innovations.

In fact, this innovation really began through a relationship between Fonterra USA and DMI as early as the 2006-08 time frame. Their respective ‘test kitchens’ are just three miles apart on the outskirts of Chicago, where milk proteins and ingredients, concentrators, extenders and utilization characteristics have been the focus of proprietary work.

As DMI CEO Tom Gallagher stated at a dairy conference in Wisconsin in March, food scientists from DMI have “cracked the code” on cheese-melting characteristics for partners like Taco Bell and Pizza Hut. He also talked about the new pizza cheese innovations with Dominos to meet USDA school lunch rules, calling them “wildly popular with students.”

From that March presentation at the Professional Dairy Producers of Wisconsin conference in Madison, the Wisconsin State Farmer quoted Gallagher summing up his job: “My job is real simple. I have to get the industry to do things with your product after it leaves the farm — that consumers want.”

Toward that end, Gallagher explained to the shift away from television ads and other “one-way” promotions to social media “conversations” and industry “partnerships.” It has shifted from promoting milk and dairy to providing product development specialists working for DMI’s partners — like McDonald’s, Dominos, Taco Bell and others — to get them to “do stuff” that puts more dairy in the fast-food pipeline (look for more on this in a future article).

A key driver of the shifting direction of checkoff promotion is the world renown Edelman company, with its headquarters in Chicago — 17 miles east of DMI’s offices and just two miles from the Chicago headquarters of Fairlife LLC, two miles from the Chicago offices of Coca-Cola and a mile and a half from PepsiCo’s Chicago offices.

According to Richard Edelman, in his May 2017 blog post at the company’s website, the Edelman company (known worldwide simply as Edelman) has been the public relations and communications firm for DMI for over 20 years. 

In this particular post, Richard Edelman writes about the launch of DMI’s Innovation Center for U.S. Dairy in 2008 and how he is looking forward to the leadership of the former USDA Secretary Tom Vilsack coming on board that year (2017) as president and CEO of checkoff-funded USDEC and Innovation Center for U.S. Dairy (after signing MOU’s with DMI while Secretary in 2008-09).

This Edelman blog post covers the launch of the Undeniably Dairy campaign that month (May 2017), calling it the first time Edelman has had a project “bringing together a fully integrated campaign at this scale.”

With offices worldwide and mergers throughout the advertising and public relations industry, Edelman is the world’s largest such firm and is open about their re-alignment of clientele around “social responsibility” and  “global environmental sustainability.” In fact, they’ve dropped clients with businesses not deemed “environmentally sustainable.”

Edelman and its clients — such as PepsiCo, Danone, Unilever and others — are listed as prime sponsors buying-in to the EAT Forums that are pushing the EAT Lancet report about the ideal global diet of cutting per-capita animal protein consumption – meat, dairy and eggs – by more than 75% over the next 10 years to “reduce the environmental impact of feeding 10 billion people.”

The firm was instrumental in setting up GENYOUth in 2008 and recommending CEO Alexis Glick as its coordinator. Not only are DMI and PepsiCo clients of Edelman, so is the National Football League. The NFL has a longstanding relationship with PepsiCo that predates the GENYOUth / Fuel Up to Play 60 alliance with dairy checkoff.

And, while PepsiCo is an Edelman client, Coca Cola is a headline client of Edelman’s spinoff Zeno Group, a global integrated communications agency founded 20 years ago by Richard Edelman’s father Daniel J. Edelman after Richard had taken over the reins of Edelman.

Edelman, fairlife (Coca Cola) and NFL Properties are the Top 3 Contractors paid by DMI in 2017, as shown on the IRS 990.

So what do the numbers tell us about the above-mentioned relationships?

According to the IRS 990 forms filed by DMI for tax-year 2017, the Daniel J. Edelman, Inc. company, mind-bending mastermind of “social marketing”, was paid $15.3 million in 2016 and $17.8 million in 2017 for “agency services.” That was 11.5% of DMI’s total budget of $155 million in 2017.

DMI paid NFL Properties LLC, New York, N.Y., $5.12 million in 2016 and $5.63 million in 2017 for “Promotion.” Is this the pay-to-play cost of the GENYOUth alliance and MOU? After all, the NFL is positioned as a partner with dairy farmers in the “dairy-farmer-initiated” GENYOUth. The NFL was in on the MOU signing with DMI and Tom Vilsack while he was Secretary of Agriculture.

But, while the NFL’s annual contributions to dairy checkoff’s GENYOUth are listed on GENYOUth IRS 990s as ranging from $370,000 in 2014 to $945,000 in 2017, DMI lists checkoff payments to NFL Properties of between $5 and $6 million for 2016 and 2017 on the DMI IRS 990.

It’s all about the kids, right? There’s more here than kids and breakfast carts.

Meanwhile, fluid milk sales continued to decline, even more rapidly over the 2008-18 decade as low-fat and fat-free school promotion and provision was dairy checkoff’s best play while the plant-based alternatives continue blitzing consumers with – you guessed it — television ads and “one-way” promotions that DMI says “don’t work.”

The alt-beverage industry has worked with Edelman client PepsiCo on its low-fat product portfolio through a variety of incubator projects involving plant-based alternatives for dairy products.

The alt-beverage industry is working closely with Edelman client Danone, which has set a goal to transition much of its yogurt market into plant-based alternatives over the next 5 to 10 years, opening the world’s largest plant-based yogurt facility in upstate Pennsylvania earlier this year.

The alt-beverage industry has even convinced the nation’s largest dairy-farmer-owned cooperative, DFA, to invest in alternative beverage production assets and to innovate with a DMI-checkoff-funded product innovation — a new blend of low-fat, lactose-free dairy milk combined with 50% almond or oat beverage that rolled out in Minnesota in August 2019, with sights set on the Northeast by 2020.

DMI is spending checkoff dollars in search of the next fairlife on which to hang dairy promotion’s hat.

Incidentally, Fairlife LLC received $8 million in DMI checkoff funds in 2017 for “promotion,” according to the most recent publicly-available IRS 990 documents.

So, what else can be learned from DMI’s IRS 990 returns in 2017?

For starters, they had $2 million fewer dollars to work with compared with 2016. Total revenue controlled by DMI was $155 million, along with the unified marketing plan that filters down through regional agencies spending the other half of the dairy farmer checkoff revenues that total right around $320 million. Some state dairy promotion order boards, like in New York, automatically give 25% of their budget (2.5 cents of the state’s dime) to DMI as a matter of course. For other boards, the pass-through may be more, or less.

Looking at program areas, the most recent IRS 990 for 2017 shows that $110 million of the $155 million in checkoff funds under direct management of DMI was described to the IRS as “program funding revenue,” $39.5 million as “core funding revenue” and $5.6 million as “contract services revenue.”

Of the total $155 million in revenue for 2017, DMI categorized $82.2 million as “domestic marketing”, $17.1 million as “export”, while $7.85 million was research, and nearly $7 million for contract services and other expenses.

Since we know that Edelman received $17.6 million from DMI for “agency services” in 2017, it’s clear that some of that is in a category other than “contract services.”

Compensation of board officers, directors and trustees totaled just shy of $3 million.

Other salaries and wages totaled $17.6 million, with pensions and contributions $3.1 million, other employee benefits $2.3 million, and payroll taxes $1.37 million.

Legal, accounting and other totaled around $550,000, office expenses $1.5 million, information technology $2.7 million, rents or occupancy $1.65 million.

In total compensation from DMI and related agencies under DMI control, the highest paid staff in 2017 was executive vice president Dr. Greg Miller (Doctor Dairy), who heads up NDC’s Dairy Research, at $1,546,760.

Listed as a “former highest-compensated employee”, Daniel Chavka, one of several DMI chief financial officers, was paid $769,475. Chief financial officer Carolyn Gibbs was second-highest, paid staff at $1,191,557 through July, and another CFO Quinton Bailey earned $246,542 in 2017.

DMI CEO Tom Gallagher was paid $899,810, followed by executive vice president Jean Ragalie-Carr at $857,406. She is a registered dietician serving as National Dairy Council president.

Fifth-highest paid officer is former Secretary of Agriculture Tom Vilsack in his first year as a DMI executive vice president, serving as president and CEO of DMI’s USDEC. From DMI and related agencies under DMI control, Vilsack was paid $800,557 in 2017.

DMI president Barb O’Brien was compensated $649,419 in 2017.

Additionally, two other DMI executive vice presidents Mark Leitner and Elizabeth Engelmann were compensated $638,041 and $478,809, respectively, in 2017.

The total for items related to salaries, other compensation, and employee benefits for 2017 was listed at $27.37 million – 17.7% of total revenue in 2017.

The agency services of Edelman, at $17.8 million, was 11.5% of total 2017 DMI revenue.

The $8 million paid to Fairlife LLC was 5% of total revenue.

DMI travel was listed at $3.55 million, while the line item for conferences, conventions and meetings was $1.46 million in 2017.

The DMI board chair (listed as Paul Rovey in 2017) was paid $25,000. Other board officers and members of the executive board saw compensation ranging from $1800 to $8600, while many board directors were listed as receiving zero compensation.

To be continued

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DMI’s mission has undeniably strayed

By Sherry Bunting, Farmshine, August 23, 2019

CHICAGO, Ill. – Since Dairy Management Inc (DMI) was formed, it has grown to include (and control) many agencies and partnerships that put much of the work into the zone of “proprietary,” even to the 81 voting DMI board members.

In the portion of the most recent 2017 IRS 990 form, where DMI is asked to describe its program accomplishments, the responses specify that, “DMI partners with foodservice industry leaders to help create dairy-based innovation to drive dairy sales and build trust in dairy products.”

The response describes 2017 activity in detail. 

While the work done to boost cheese use by restaurant chains resulted in increases of milk equivalent tonnage that are quite impressive, according to DMI (look for more on that in a future article), it is the fluid milk sector reinvention that we will examine here.

In its 990 description of fluid milk partnerships, DMI states: “The dairy checkoff program, working with committed milk processors, embarked on a comprehensive revitalization strategy to reinvent the milk experience for consumers.”

What does that mean? 

DMI explains: “The focus includes milk as a standalone beverage as well as an ingredient in other beverage segments such as coffee, tea, smoothies, energy drinks and more.”

As part of this “comprehensive revitalization” effort, the DMI board approved partnerships since 2010 with eight companies they deem as leaders and innovators in the milk and beverage arena, including: Dairy Farmers of America (DFA), which just recently launched the Live Real Farms Dairy + Almond and Dairy + Oat ‘milk’ comprised of half low-fat lactose-free dairy milk and half almond or oat beverage; Darigold/Northwest Dairy Association, which among other new fluid milk products markets a fat-free creamer it calls ‘fat-free half-and-half’ (a contradiction in terms).

Also among the eight are these current partners as of 2017: The Kroger Company, which sources 80% of its milk to Select Milk Producers / Fair Oaks;  Shamrock Farms, which partnered with DMI on the Rockin Refuel brand found in chains like Subway nationwide; and Coca-Cola/Fairlife.

Specifically, the 990 form reports that, “The Checkoff program supported Lactaid innovation, marketing and health professional outreach, which spurred innovation and growth in the lactose-free segment overall.”

The 990 description states that the dairy checkoff supported innovation in extended shelf-life brands as well.

But its signature is fairlife, according to the 2017 form 990, which states: “DMI assisted and invested in the national 2015 launch of fairlife milk. The goal was to create a national fluid milk brand leveraging the resources and scale of Coca-Cola. Fairlife has been a tremendous success and continues to grow, achieving dollar sales of $250 million,” according to DMI.

“This is a feat that fewer than 1% of new products achieve,” DMI states further, adding that, “About 50% of consumers repeat their purchase of fairlife, a good predictor of its success moving forward. Based upon fairlife’s initial success, fairlife’s owners have announced (in 2017) the addition of two new production lines to meet consumer demand.”

Those production lines, according to DMI, were planned for installation in 2018. Production lines are also planned for Canada as the product was piloted there in 2018.

According to DMI, a new fairlife plant in Arizona is set to begin production in late 2019.

Other partnership products, such as Shamrock’s Rockin Refuel and the coffee and tea latte drinks with Shamrock and with Kroger were mentioned in the fluid milk portion of DMI’s 990 description of accomplishments.

In summary, states DMI, “Our partnerships are already stimulating change in the industry and fundamentally changing the way the fluid milk industry does business by driving investment in modern infrastructure and by creating new products.”

In fact, according to the DMI 990 form, the agency states that the lactose-free milk segment grew by 15% in 2016 and 11.5% in 2017.

Meanwhile, diet and health professionals are increasingly recognizing the benefits of regular whole milk and the A2 milk on digestive sensitivity. This is something that is not promoted by any mandatory dairy checkoff organization and whether it is conventional whole milk or A2 milk, there is no need to further process the milk to obtain the benefits on digestive sensitivity or lactose intolerance.

For example, New York City registered dietician, certified diabetes educator and author Laura Cipullo writes: “When someone eats full-fat dairy versus low-fat dairy, the fat will actually delay the absorption of the milk’s sugar (lactose). As a result, blood sugar rises more slowly over a longer period of time. Consequently, insulin follows this same pattern. Less circulating insulin means less risk for development of insulin resistance and diabetes.”

This was further supported at the recent hearing in Harrisburg, Pa. that focused on getting whole milk back in schools.

During the hearing and rally, registered dietician and nutrition professor Dr. Althea Zanecoskey stated that whole milk provides ‘satiety’, helping those consuming it stay fuller, longer. She said studies show how children consuming whole milk, compared with low-fat (1%) milk, had lower body fatness and less risk of obesity. They also had higher vitamin D status. It took three cups of low-fat milk to get the vitamin D status seen in children after consuming just one cup of whole milk. Vitamin D is a nutrient of concern, according to medical professionals finding it lacking in children and youth.

Whole milk, in and of itself, checks all the boxes.

According to Cipullo, the milkfat found in whole milk “calms digestive sensitivity.”

In fact, according to various expert comments at the USDA Dietary Guidelines docket in the Federal Register, the beneficial milkfat consumed in Whole Milk, reduces the amount of lactose per 8-oz serving, and even more important, as stated above, the milkfat in Whole Milk slows the absorption of the lactose.

Cipullo explains: “Full-fat dairy is lower in lactose, making it easier for individuals with lactose intolerance to digest compared to low-fat or no-fat dairy,” she writes. “Meanwhile one specific fatty acid contained in dairy is known to aid in gastrointestinal health, and according to a 2013 review from Polish researchers, may actually hold promise in the treatment of IBS and promoting healthy gut bacteria.”

While the innovators partner with dairy checkoff to “reinvent the milk experience”, there is evidence now that a simple solution — that would benefit all dairy farmers paying into the mandatory dairy checkoff from all markets — would be to promote and support real, simple, un-fooled-around-with whole milk.

USDA’s oversight and the flawed Dietary Guidelines are the only obstacles standing in the way, despite a growing list of research-based information showing that whole milk holds beneficial keys to health, not harm, when it comes to long-term cardiovascular disease risk, obesity, body mass index, diabetes and other metabolic disorders, digestive health and sensitivity, vitamin D status, nutrient density, nutrient absorption, satiety (feeling fuller, longer), memory and cognitive focus, as well as mood and mental sharpness. Not to mention the more than a dozen essential nutrients that ride along when people choose whole milk because it tastes good instead of opting for empty calories from other non-dairy beverages.

DMI shows its goals for innovation, further processing, blending, and marketing of ‘dairy-based’ or ‘dairy-included’ beverages as a market-building path for the future.

But at the same time, stronger promotion of the original, purely perfect Real Whole Milk would resonate with consumers, because most do not know anything about milk, and when they learn the truth, it opens their eyes to whole milk as a choice.

Whole milk could be ‘reinvented’ just as it is, with better packaging and the freedom to actually promote it. But due to USDA’s control of the message and direction of dairy checkoff, and the proprietary nature of the many partnerships that the checkoff funds, it may be time to reinvent the mandatory dairy checkoff.

Does milk need reinventing?  Simply-unfooled-around-with whole milk checks all the boxes for health and flavor. Meanwhile, DMI states in a 2017 IRS form 990 that it has a “comprehensive revitalization strategy to reinvent the milk experience for consumers.” Since whole milk was pulled from schools in 2009, more young people are growing up believing they are lactose intolerant. Meanwhile, the innovations brought to market with DMI partners over this time period are dairy-based low-fat lactose-free and blended beverages. However, a growing body of research shows science-based reasons why the fat-free and low-fat milk consumption promoted to youth by the dairy checkoff through FUTP60 and GENYouth, in partnership with USDA, may actually be creating much of the new and milder forms of digestive sensitivity that could be avoided by simply consuming regular whole milk. Graphic by Sherry Bunting

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