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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.

Politics of whole milk: Dairies go bankrupt, Vilsack gets top pay

When it comes to ‘politics,’ DMI talks out of both sides of the mouth: Top paid executive Tom Vilsack shown here in June asking Senate Ag Committee for government ‘support’ to pay DMI’s ‘pilot farms’ to develop practices for ‘U.S. Dairy’ to reach Net Zero emissions. But ask if DMI can  support whole milk in schools and the response is: “Oh no, that is ‘political’ and we aren’t ‘allowed’ to be ‘political.'” Truth is, DMI’s current top-paid executive — Tom Vilsack — is the one who while serving as Ag Secretary, spearheaded the removal of whole milk from schools in the first place.

By Sherry Bunting, Farmshine, Friday, Dec. 6, 2019

The former Ag Secretary who was instrumental in removing Whole Milk from schools is now the highest-paid executive at Dairy Management Inc. (DMI) whose virtual $1 million/year in 2018 came from mandatory checkoff funds paid by dairy farmers who are going bankrupt. 

On Monday (Dec. 2), the Milwaukee Journal Sentinel reported that their early look at DMI’s IRS 990 forms for fiscal 2018 show that Tom Vilsack became the highest paid DMI executive earning $999,921 in 2018, which was his first full year as an executive vice president of DMI, president and CEO of DMI’s U.S. Dairy Export Council (USDEC), and defacto leader of the Net Zero Project and sustainability and innovation platforms of the Innovation Center for U.S. Dairy.

Let’s go back a decade. Think back to 2009. The bottom fell out of the dairy markets. It was arguably the worst of economic times in memory for dairy farmers as farm level milk prices fell to $10, and equity in the value of cow herds plummeted. 

As farmers were busy trying to save their farms, and the industry and lawmakers were busy outwardly debating National Milk’s version of “supply management” in the Farm Bill that year, dairy leaders and regulators holding overlapping former and current positions within USDA, DMI, NMPF, DFA and IDFA, began charting a future for dairy in terms of pursuing international dominance, developing “sustainability” frameworks, partnering for “innovation”, and focusing on the zone of investment for consolidating the milk production footprint with ultrafiltration technology as the way to move milk without the water.

It all fits together, like pieces of a puzzle — with no picture on the box to show outwardly what it will all look like when complete.

Back in 2010, the Innovation Center for U.S. Dairy was busy on “sustainability” and getting fairlife ‘the better milk’ up and going, with the DMI Innovation Center’s sustainability council leader being none other than Fair Oaks’ / fairlife’s Dr. Mike McCloskey. 

Then Secretary of Agriculture Tom Vilsack was busy too that year. In addition to restricting school milk to fat-free and 1% and promulgating rules that listed Whole Milk as “prohibited” on school grounds during school hours, Vilsack was signing Memorandums of Understanding (MOU’s) with National Dairy Council to create GENYOUth to promote that dogma, and with DMI to link the “sustainability” framework of Vilsack’s USDA to the “sustainability” framework of DMI’s fledgling Innovation Center for U.S. Dairy.

Dairy farmers were coming out of 2008-09 devastation — starved for good news — and were encouraged by all this talk of innovation and sustainability and international markets because they thought it meant the industry was looking to sell more milk and dairy products in such a way as to raise prices paid to them for their milk. 

Who could question this high pursuit of innovation and sustainability and exports – right? That’s the trifecta, the holy grail.

2014’s high milk prices seemed to validate that all was going to be right with the dairy world. But most were not paying attention to the USDA / DMI alliance that was formed and growing — and what it might mean for the future.

Quietly – without much fanfare or protest – USDA began tightening milk restrictions in the school lunch program during this time. In fact, so quiet was this shift that many parents to this day do not realize their kids are getting watered-down milk, cheese, imitation butter, and half-beef-half-soy patties at school.

As the 2010 Dietary Guidelines were implemented, a democrat-controlled Congress passed the Healthy Hunger-Free Kids Act – under the avid lobbying efforts of President Obama’s USDA Secretary Tom Vilsack for the legislation that would tighten school lunch screws even more.

The dairy checkoff had already been called “government speech” in its 2005 Supreme Court defense, so with USDA’s blessing and encouragement – under Vilsack – the low-fat and fat-free dogma became entrenched and proliferated through the GENYOUth alliance. 

And it set the stage for a new era in dairy that today’s leaders speak of. We are hearing it now. A recent DFA newsletter tells members “milk must evolve to remain relevant.” DFA / NMPF chairman Randy Mooney stated last month that the industry needs to consolidate plants to make new products. Northeast DFA leaders heard from a food science writer and DMI contractor about how dairy proteins will complete plant-based diets during their recent meeting in Syracuse. Dairy dilution is all around us. And the industry points to Dean Foods’ bankruptcy as proof that Real Whole Milk isn’t good enough, isn’t sustainable. (Well, of course not, no one is truly marketing it and the government thanks to Vilsack is prohibiting kids from having it. This is not rocket science folks.)

Yes, folks, hindsight is 20/20. And here we are on the eve of 2020 with former Ag Secretary Vilsack – who was paid a $999,421 salary in 2018 from mandatory dairy producer checkoff funds and is now the top-paid DMI executive — to thank for the removal of Whole Milk and whole dairy products from our schools.

And no one cares to ask him to testify to Congress about why Whole Milk should be allowed in schools, but he is politically involved endorsing presidential candidates and writing their rural platforms, testifying in so many other discussions, including climate change and sustainability and seeking Senate approval of funds for Net Zero pilot farms.

Yes, folks, the dairy industry had and has Tom Vilsack — or vice versa.

See part two.

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The time has come to disrupt the disruptors

Opinion: Dean bankruptcy offers opportunity we should earnestly pursue

By Sherry Bunting, Farmshine, Friday, Nov. 29, 2019

If ever there was a time for state governments to sit down with their dairy farmers and agriculture infrastructure for a meeting of the minds… it is now.

The future is very much at stake with Dean Foods – the nation’s largest milk bottler – in Chapter 11 bankruptcy and sale proceedings, as the industry is largely signaling the buyer should be DFA.

But not so fast.

This could be an opportunity to look at the strength of Dean’s holdings and consider a different path forward, one that returns some of the regional branding power to farmers and consumers in the regions served by Dean’s 60 milk processing plants.

Dean Foods accounts for one-third of the milk bottled in the U.S., and the roots of its holdings go back to family operations with brands that were once – and some still are – household names.

In focus groups and shopper surveys, consumers demonstrate they understand what it means to buy local. They understand that buying local – especially fresh staples like milk – means keeping their dollars working in their communities. Consumers also say they want to help local farms. And they want to see clear labeling to know where their milk comes from.

Meanwhile, surveys show the gallon and half-gallon jug are still the most popular packaging among real milk buyers. Even though the category as a whole is declining, it is still a huge category and one that has not been tended or nurtured or cared for in more than a decade. In fact, the category has seen the deck stacked against it by government rules and government speech.

Taste is also important to consumers, as is nutrition. Where fluid milk is concerned, these two areas have also been lacking because checkoff-funded promotion became government speech that pushed fat-free and low-fat milk to the point where consumers have no idea what real milk tastes like – until they switch to whole milk, and they are.

Folks, this is an opportunity to chart a new path for fresh fluid milk, to breathe some life into it. We see it in whole milk sales that are rising. Just think what could be accomplished if significant resources were devoted to truly revitalizing milk.

As the dairy industry streamlines behind innovation and checkoff-funded partnerships to disrupt the dairy case — to be more like the plant-based non-dairy disruptors — there is still a majority of consumers choosing real milk, and more of them are choosing real whole milk as whole milk today is the top seller in the category, and whole flavored milk is growing by double-digits.

Can we disrupt all the disruption with a disruptive back-to-the-future original? I think so. But now is the time to hit it hard. A few years from now will be too late.

Dean Foods has the network and the facilities and the history a savvy consortium of buyers could tap into for going back to local or regional emphasis with brands. The DairyPure national branding experiment started out strong, but in the past few years has been squeezed-out by large retailers – and notably Walmart — pushing their own store brands with loss-leading strategies while hoisting the price of Dean DairyPure much higher.

And that’s part of the problem. Stores think it’s okay to loss-lead with milk, but they are not willing to eat that loss themselves. We need them at the regional dairy future table as well.

In the bankruptcy proceedings at hand, some of Dean Foods’ unsecured bondholders are protesting a rapid sale of assets to DFA in what they say equates to a “fire sale” that doesn’t maximize value. Did Dean receive a proposal from them too before filing bankruptcy? Sources indicate bondholders offered restructuring terms before the bankruptcy filing that would have changed the current picture for Dean Foods.

Will these bondholders that are opposing sale to DFA make an offer now? Can Dean Foods’ assets be sold piece by piece to be broken up more regionally? These questions don’t have clear answers at this time.

What is clear is that payments for milk by Dean to DFA are being delayed five business days as bondholders want to be sure they are truly ‘critical vendor’ payments and that there are no shenanigans between the would-be buyer and seller.

What is also clear is that Dean and DFA have a history, and that history includes the good, the bad, and yes, the ugly.

DFA was there every step of the way as mergers and acquisitions led Dean Foods on its path to become the nation’s largest milk bottler. DFA is Dean’s largest supplier of milk, and DFA leaders are on record stating that Dean Foods is the largest buyer of DFA milk.

If DFA purchases “substantially all” of Dean’s assets, we know more rapid consolidation of the fluid milk market will occur. DFA’s leaders — as well as the leaders of all the prominent organizations in the dairy industry, including the dairy checkoff — have been clear if we’re paying attention. The future they see is in moving away from investing in fresh fluid milk and moving toward ultrafiltration and aseptic packaging and blending and innovating for beverages that can be supplied to anywhere from anywhere without transporting milk’s water-volume by tanker.

Those are more of the ingredients for a monopolization of milk that may not even be considered by the Department of Justice. Without another offer or series of regional offers on the table, DFA would stand as the only option — other than complete failure of the firm under bankruptcy. This, alone, could put the sale to DFA on the fast track as sources talk about bankruptcy clauses that allow purchases to occur — without DOJ approval — when failure is the only other option.

So while consumers are consciously being pursued by the industry and dairy checkoff to move them away from their habit of reaching for that jug of milk and toward new beverages that contain milk — or are innovated new varieties of milk, or are blended and diluted with plant-based alternatives — what happens to the dairy producers in communities whose relevance is tied closely with retaining fresh fluid milk as a nurtured market and being a producer of a ‘local’ and fresh product? These producers are also forced to pay into the dairy checkoff that is developing these alternatives, not promoting or educating about fresh whole milk, and in effect funding their own demise.

Who will tend this store, nurture these customers, satisfy consumer desires to buy-local and ‘help farmers’ and their new-found eagerness to learn more about real fresh whole milk nutrition?

If states and regions don’t work to keep fresh milk facilities in their midst, the global message on ‘sustainability’, ‘carbon footprint’, ‘flexitarian diets,’ and ‘planetary boundaries’ will overtake the public consciousness, and the choices disrupting and diluting the dairy case will overtake fresh fluid milk.

In business today, that’s all we hear: Innovate and disrupt. Maybe it’s time to disrupt the disruptors, to put together a fresh fluid milk branding and packaging campaign that makes milk new again.

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DEAN BANKRUPTCY: Court allows critical vendor payments; DFA’s Smith says ‘We are logical owner’

The level of transparency in the Dean Foods Chapter 11 bankruptcy is unprecedented.  Included in the Chapter 11 proceedings are Dean’s 60 dairy plants and numerous name brands, including: national brands DairyPure and TruMoo; along with regionally branded milks, as well as Friendly’s Ice Cream and other cream products. This graphic in the Dean Foods’ declaration to the bankruptcy court shows the implications for consumers, farmers, businesses throughout the nation, reinforcing the importance of Dean Foods continuing operations during the Chapter 11 bankruptcy proceedings and court-supervised sale of assets.

By Sherry Bunting, Farmshine, Friday, Nov. 22, 2019

BROWNSTOWN, Pa. – When a dairy firm files bankruptcy, the first concern is whether farmers will be paid for milk already shipped. That first hurdle was passed as independent shippers to Dean Foods plants in at least three states report receiving payment in full for October milk, though the settlement checks due Nov. 15 were deposited two to three days late, in many cases.

In Pennsylvania, because of its unique Milk Marketing Board that implements and oversees the state’s Milk Marketing Law, PMMB indicates they are following up to be sure payments are made every two weeks instead of waiting for normal periodic auditing. Pennsylvania’s mandatory over-order premium on fluid milk produced, processed and sold in Pennsylvania is part of the minimum price bottlers must pay, and there have been no actions by the board to adjust this in any way.

Other states’ producers also report receiving payments in full.

In fact, Dean Foods’ spokesperson Anne Divjak reported to Farmshine last week that it is “business as usual” for Dean Foods to keep the milk flowing from farms to schools and supermarkets during the Chapter 11 bankruptcy reorganization and sale. The first regulated payments for milk after filing bankruptcy encountered just a small delay as banks needed to be aware of honoring the payments after the bankruptcy court decision last Wednesday afternoon allowed “critical vendor” to be paid.

Multiple sources indicate that Dean focused on getting payments to independents first, then small cooperatives, then DFA. There is no confirmation on whether DFA’s milk shipments were paid in full or what portion of the $172.9 million attributed to DFA as a creditor in the bankruptcy filing represent milk shipments.

Orders signed by Judge David Jones of the Southern District of Texas bankruptcy court where Dean’s petition was filed, are what allowed Dean Foods to pay “critical vendors” for pre-petition purchases and to continue its operations by accessing cash on hand as well as having access to up to $475 million of the new $850 million in debtor-in-possession financing to keep the ship sailing for nine months as reorganization and sale are sorted out.

Included in the Chapter 11 proceedings are Dean’s 60 dairy plants and numerous name brands, including: national brands DairyPure and TruMoo; along with regionally branded names for example Swiss Premium and Lehigh Valley in Pennsylvania; Garelick in New York and New England; Mayfield and Purity in the Southeast; as well as the Land O’Lakes milk brand in the Central Plains, where Dean licenses the Land O’Lakes logo and name and the cooperative supplies those plants. It also includes Friendly’s Ice Cream and other cream products produced by Dean Foods.

As the nation’s largest milk bottler, Dean Foods accounts for roughly one-third of the U.S. fluid milk market but saw volume losses from various fronts in the past two years and stock shares had fallen below $1.00 with bonds also decreasing in value.

Overall fluid milk consumption is down. Private label store brands are a larger share of the down-trending market compared with brands. Walmart’s new plant in Fort Wayne last year affected their contracts to bottle Great Value and also changed the geography and position of Dean brands in several important Southeast and Mideast markets. 

Dean also suffered other contract losses last year, and as Walmart bottled its own store label brand in several states and worked with Midwestern cooperatives to accomplish and supplement that start up, Dean saw its DairyPure and TruMoo brands replaced by Prairie Farms in many of those stores, and other Walmart stores as well.

Divjak did confirm that Dean’s majority interest in Good Karma, a non-dairy alternative beverage made from flaxseed, is separate from their dairy holdings in the bankruptcy proceedings. Dean purchased the Good Karma majority share a year ago for $15 million.

Interestingly, on Tuesday, November 12, the day that Dean Foods announced its bankruptcy petition, DFA was holding its Northeast Dairy Leadership meeting in Syracuse. Part of Dean’s announcement indicated that the company is in “advanced” talks with DFA about purchase of “substantially all assets.”

Chicago-based food science writer Donna Berry, with ties to DMI, was in Syracuse that day as a guest speaker on dairy protein and how it can be used in innovative foods and beverages to make plant-based options better. According to her Berry on Dairy blog story two days later, entitled “Dairy protein completes plant-based foods,” the mood in Syracuse was “upbeat.”

“Let’s face it, too often dairy marketers take the conservative road when it comes to promoting their products. Dairy Pure was the best Dean Foods could do for fluid milk, and it was not enough, as we see in its bankruptcy filing this week.

Berry went on in her blog post to quote DFA CEO Rick Smith before “a room packed with about 500 Northeast members of DFA and suppliers of services to DFA” at Tuesday’s Syracuse meeting.

The news of Dean Foods’ bankruptcy filing had just broken that morning, and Smith was already stating that, “Everybody’s been telling me for years that we are the logical owner of Dean’s. And I’ve already gotten phone calls about people who want to partner with us. We will be interested in some assets, undoubtedly. And not interested in some, undoubtedly. Some (assets) should be closed. Some will require partners.”

The week before, DFA chairman Randy Mooney’s comments at the NMPF / DMI meeting in New Orleans were loaded with concern about dairy farmers going out of business and loss of rural towns and infrastructure and that NMPF’s priorities were trade and immigration.

But something else Mooney said at that convention the week before Dean’s bankruptcy filing was foreshadowing. He talked about looking at a map and seeing “milk plants on top of milk plants” and how the industry needs to “collectively consolidate” toward plants “capable of making the new and innovative products consumers want.”

Dairy checkoff has made it clear that the emphasis of the future is on innovative new beverages and other products. While we are told that consumers are ditching the gallon jug (although it is still the largest sector of sales in 94% of households) and we are told consumers are looking for these new products; at the same time, we are also told that it is dairy checkoff’s innovation strategy to work with industry partners to “move consumers away from the habit of reaching for the jug and toward looking for these new and innovative products” that checkoff dollars are launching.

Meanwhile, Mooney’s comments about consolidating plants gives us a window into how DFA might treat those Dean assets if the “advanced talks” with Dean about purchasing them come to fruition. DFA will be a prime mover in the further consolidation of fluid milk assets markets if history is a guide.

Other industry analysts are also indicating that potential sale of “substantially all” Dean assets to DFA would likely consolidate these regional fluid milk bottling plants and create major shifts in how fluid milk is supplied to consumers in the future.

Dairy checkoff weighed in just hours after Dean’s bankruptcy announcement, Scott Wallin, vice president of industry media relations and issues management for Dairy Management Inc. (DMI), sent a media statement that, “Dairy Farmers of America (DFA) is in discussions to purchase the assets,” and went on to point out that, “In a decade shaped by a constantly changing marketplace, U.S. dairy has and will continue to successfully navigate the current economic environment… well positioned to expand its growth through innovation to meet the changing tastes and needs of today’s consumers.”

Others make the point that the Dean bankruptcy signals a milk information problem, not a milk demand problem. Noted agriculture radio personality Trent Loos stated in a broadcast drawing on his history with dairy farmers over the past 20 years, stating: “progressive producers were on the cutting edge of consumer education,” but that “their associations and most of the processors” have pushed in the opposite direction, insisting that consumers want low-fat and skim milk and skim water. He talked about how this is affecting the health of our children and teenagers not consuming enough milk, especially whole milk.

“Now that the producers are filing bankruptcy, the milk processors are filing bankruptcy too. Where does the milk industry go from here? The consumer’s not always right when they don’t have all of the information,” Loos said.

Meanwhile, in the “first-day” hearing on the Dean Foods Chapter 11 bankruptcy in Houston, Texas last Wednesday, at least one attorney — representing one-third of Dean’s bondholders — equated the filing and potential sale to DFA as a “fire-sale” of the company’s assets to DFA and they opposed this move.

Whether other serious buyers emerge – or strategies to regionalize sales of assets – remains to be seen.

For now, farms who ship milk to Dean Foods as independents or cooperatives are operating under levels of transparency and “business as usual” that were not seen in dairy bankruptcies of the past. Stay tuned.

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Dean Foods files bankruptcy, talks advance with DFA about assets

The map of Dean Foods’ plants around the U.S show regional brands of years gone by that are part of the Dean Foods national milk business. Some analysts observe that the refrigerated distribution network of the company make it an optionality for whole milk and full-fat dairy products as those sales are rising while overall fluid milk sales have continued declining and the company is further challenged by contract volume losses and margin losses to below-cost private-label milk wars. Alternative beverages, reduced cereal (and with it milk) consumption, and other factors are being blamed. But at least some in the industry are recognizing that as the industry’s associations and some processors, along with the government, have pushed fat-free and low-fat as what consumers want or should have, fluid milk sales suffer from an information  and education problem that has led to a consumption problem, and questions about where milk goes from here. More analysis on that next week.

By Sherry Bunting, Farmshine, Friday, Nov. 15, 2019

HOUSTON, Tex. — The dairy industry shake-up reached new levels Tuesday, Nov. 12 when Dean Foods, the nation’s largest milk bottler, filed voluntary Chapter 11 bankruptcy restructuring “for orderly and efficient sale.”

The announcement indicated that the sale of “substantially all” assets could most likely be to DFA as talks between the two parties have “advanced.”

The bankruptcy filing includes all Dean entities and holdings under one name — Southern Foods Group LLC d/b/a Dean Foods — in the bankruptcy court of the Southern District of Texas, where case judge David R. Jones signed an order the same day granting “complex Chapter 11 bankruptcy case treatment.”

The early morning announcement came just ahead of Dean’s scheduled third quarter earnings call, which was canceled, although Q3 SEC reports were filed. Dean Foods’ shares on the Stock Exchange have been halted.

A hearing of 17 motions — including provisions to pay for milk delivered in the 30 days prior to the bankruptcy filing — was slated for Wednesday afternoon, Nov. 13, where the judge granted Dean Foods’ request to pay “critical vendors” in order to continue operating during the Chapter 11 proceedings and sale.

In its pleadings, Dean specified the need to retain access to cash flow in order to pay suppliers and employees and other routine costs of doing business.

As for milk shipped after the Nov. 12 bankruptcy filing, new financing from existing lenders has been secured so that payments can be made going forward.

This is a court-supervised process, to which Dean Foods has filed a number of these customary motions seeking court authorization to continue to support its business operations, which includes paying for the milk. Dean states in the announcement that it expects to receive court approval for all of these requests and that it is officially filing bidding procedures with the court to conduct a sale.

“Our expectation, based on the motions Dean has filed and the hearing in Houston this afternoon (Nov. 13), that they will be allowed to pay for pre-petition milk shipments,” said PMMB chief counsel Doug Eberly in a Farmshine phone call Wednesday. He indicated that while any bankruptcy proceeding is unpredictable, the Board expects that the four Dean plants in Pennsylvania and the plants in other states, will continue operating and paying producers.

“This is a priority for the Board and our auditors to be out there first thing every two weeks when advance and final payments are due to make sure payments are made,” said Eberly. Pennsylvania’s Milk Securities Act administrated through the Pa. Milk Marketing Board ensures such auditing and bonding of milk dealers and handlers.

Not all states have this bonding protection; however, the motions before the bankruptcy court Nov. 13, if granted, would allow Dean to pay for the milk already shipped. Dean estimates having $100 million in commercial surety bonds, not enough to cover all of the payments to suppliers and employees and other required payments to continue operating, which is why there is an expectation that the motions that would allow the company to use cash on hand to do so would be uncontested and granted. Without this ability, the company would not be able to continue, the proceedings would become disorderly, and then no one’s interests would be ultimately served.

New financing to keep Dean operating

In order to keep the milk flowing, and to keep suppliers, vendors and employees paid in the future during the bankruptcy process, Dean has secured $850 million in new “debtor in possession” financial support on Nov. 11 from existing lenders, led by Rabobank.

Approximately half of the $850 million in new financing will be used to restructure current debt with those existing lenders and the other half, combined with cash on hand, would finance continued operations for nine months, including paying suppliers, vendors and employees “without interruption” as restructure and sale take place under Chapter 11 bankruptcy protection.

“Right now, it is business as usual for us,” notes Anne Divjak, vice president of government relations and external communications for Dean Foods in an email response to Farmshine Tuesday. “This means we are continuing to work with our raw milk suppliers so we can continue providing our customers an uninterrupted supply of dairy products.”

She notes that information about the restructuring is found at DeanFoodsRestructuring.com and additional information will be available from pleadings and motions as they are filed.

Will Dean assets be sold to DFA?

In announcing the bankruptcy filing, Dean Foods also announced it is engaged in “advanced discussions with Dairy Farmers of America, Inc. (DFA) regarding a potential sale of substantially all assets of the company.”

If the two parties reach agreement on terms of a sale, it would be subject to regulatory approval by the Department of Justice and the bankruptcy court and would be subject to higher or otherwise better offers in the bankruptcy, according to Dean announcements and statements made by DFA CEO Rick Smith in a letter to members, obtained by Farmshine Tuesday.

DFA’s largest customer

Dean Foods is DFA’s largest customer, according to Smith in his letter to DFA members, where he also indicated that DFA produces and delivers the vast majority of milk to Dean Foods.

According to the Chapter 11 bankruptcy docket, DFA is the third largest “non-insider” creditor owed $172.9 million.

In his letter to DFA members, Smith referenced this substantial amount owed to DFA as being for milk shipped prior to the bankruptcy filing, “You will receive milk checks without interruption, and milk will continue to be picked up as normal throughout this bankruptcy process,” Smith wrote.

In addition to pension funds and DFA as the top three creditors, others on the list of the top 30 “non-insider” creditors include USDA $16.8 million, Land O’Lakes $8.9 million, Saputo $8.9 million, California Dairies $7.4 million, Southeast Milk $6.5 million, and Select Milk Producers $6.2 million. Former Dean Foods CEO Ralph Scozzafava is also listed as a creditor for his unpaid employee severance of $5.4 million.

Smith explained that DFA has monitored Dean Foods’ financials closely and have “prepared for various scenarios to minimize the impact to DFA.” He also confirmed that DFA “decided to enter into discussions” about purchase of Dean’s assets.

Questions about how long DFA and Dean Foods have discussed potential sale of assets were unanswered, although previous reports indicate some level of discussion occurred prior to the bankruptcy filing and are now, according to Dean Foods, “advancing.”

Questions about how Dean Dairy Direct shippers would be handled in the event of a sale of assets to DFA, along with other questions, were not answered. Instead, a request for an interview was declined by DFA chief of staff Monica Massey, who responded to this reporter to say: “We will not be participating in an interview with you as, in the past, you have not been fair and balanced — or accurate — in your reporting.”

Dean Foods responded to questions to indicate their website will be updated frequently and their are frequently asked questions and answers there for producers and others, including a separate website devoted to the Dean restructure and sale.

As of mid-November, no Dean Direct shippers have reported any communication on any changes to their status as a result of these actions, and Dean’s spokesperson confirmed they are conducting “business as usual.”

At the root

Dean Foods had appointed a new CEO, Eric Beringause, on July 26, and then concluded a strategic review process announcing in September that a sale of the company would not be pursued, but instead work on other strategies as the company dealt with volume losses, contract losses and in the face of “rising commodity costs.”

Beringause, on the job less than four months, said in a public statement Tuesday that these actions “are designed to enable us to continue serving our customers and operating as normal as we work toward the sale of our business.”

He talked about Dean’s “strong operational footprint and distribution network, robust portfolio of leading national brands, extensive private label capabilities and 15,000 “dedicated employees.”

“Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment, marked by continuing declines in consumer milk consumption,” Beringause said.

With a new management team in place, he noted that this bankruptcy for an orderly sale is the best path forward after taking a look at the challenges.

Look for more analysis in Milk Market Moos and stay tuned. Additional information is available at www.DeanFoodsRestructuring.com

In addition, court filings and other information related to the proceedings are available on a separate website administered by Dean Food’s claims agent, Epiq Corporate Restructuring, LLC, at https://dm.epiq11.com/SouthernFoods, or by calling Epiq representatives toll-free at 1-833-935-1362.

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But who’s lifting? And who’s rising?

The theme for the 2019 GENYOUth Gala in Manhattan Dec. 4 will be “Rise, by lifting others.” It’s clear that dairy farmers are doing GENYOUth’s heavy lifting, but for whose priorities? And who is rising? Are our schoolchildren really better off? Are our farmers?

By Sherry Bunting for Farmshine, November 1, 2019

Tom Gallagher is “setting the record straight about the value of the annual GENYOUth Gala, which has garnered millions of dollars for our youth wellness efforts without spending any checkoff dollars,” according to the Oct. 24 weekly checkoff update emailed by American Dairy Association Northeast.

Gallagher is CEO of Dairy Management Inc. (DMI) and chairman of Youth Improved Inc., doing business as GENYOUth, and he writes about the Gala set for Dec. 4 in Manhattan. 

Let’s take a look.

Gallagher says the Gala “will resemble a Hollywood red carpet event” and tells us it’s understandable to see it as being “a bit on the extravagant side.” He states that the “formal-attire affair is held each year in New York City, drawing famous athletes and CEOs from some of the nation’s most recognized companies.”

Gallagher reminds us that this ‘formula’ mixes dairy farmers with corporate influencers!

“It’s a very different look and a very different strategy from the traditional efforts done to support dairy farmers’ priorities,” he writes, asking dairy farmers to “not get blinded by the glitz and glamour of the evening and instead look deeper into the strategic aspect.”

Okay, let’s look deeper.

By now, more dairy farmers are seeing the effects of the ‘strategic aspect’ in DMI’s ‘formula’ put into play over the past 10 years, beginning with deals (MOUs) struck between dairy checkoff and USDA under then Ag Secretary Tom Vilsack in 2008-10. Today, Vilsack collects $800,000 a year working for dairy checkoff.

As reported in the September 20th edition of Farmshine, the ‘formula’ since 2008 has led to the creation of a growing number of tax-exempt organizations with aliases under the DMI umbrella, most of them through the Innovation Center, known to the IRS as Dairy Center for Strategic Innovation and Collaboration doing business as Innovation Center for U.S. Dairy.

The ‘formula’ brings certain multi-national corporations, dairy innovators and dairy production integrators into these tax-exempt organization boards that then influence how dairy farmer promotion dollars are spent via partnerships.

They’ve all got their eyes on our kids, you know. They want to shape those future consumers. But how? With ‘government speech.’

The ‘formula’ also brought in World Wildlife Fund (WWF) to be the stamp-of-approval partner for “sustainability” platforms, including the FARM program. And yet, WWF promotes vegan diets to solve climate change, and USDA, under Vilsack, was instrumental in pushing whole milk out of schools. Some partners, right?

In effect, the ‘formula’ is bringing these ‘foxes’ – a whole den to be precise – into the henhouse and using the hens’ own mandatory funds to do it.

It is disconcerting, to say the least, to hear DMI staff, who are paid with mandatory farmer-funds, speak at a September seminar in Pennsylvania stating that, “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.”

They are talking about the products developed with industry partners using checkoff funds. Most believe that these products are aimed at consumers who are NOT in the habit of reaching for the milk jug, not the consumers who are!

You see, DMI is helping to shape future consumers toward the diluted diets the ‘thought leaders’ promote for our futures. These are touted by USDA through Dietary Guidelines and enforcement of ‘government speech’ in dairy promotion. Diet dilution is embraced by the Edelman company, via their sponsorship and social marketing assistance with the EAT FreSH Initiative that promotes “eating according to planetary boundaries,” meaning less dairy and animal products.

As a key link, Edelman, the purpose-driven social marketing company was instrumental in DMI’s formation of GENYOUth. (Edelman is paid $15 to $17 million a year in dairy checkoff funds as a contractor for DMI according to 2016-17 IRS 990s.)

The ‘strategic aspect’ is clear: Throw a Gala, bedazzle a few dairy producer board members to rub elbows with the elite corporate CEOs and ‘thought leaders’, and everyone goes home feeling good because they think they are working on shared ‘health’ and ‘sustainability’ goals.

Gallagher states in the checkoff update that dairy farmers have the number one health and wellness program in the schools. DMI chairwoman Marilyn Hershey has stated that “other companies would kill to have our what we have in the schools.”

One fox in the henhouse is PepsiCo. Did you know PepsiCo assisted USDA with the development of a Smart Snacks website where school foodservice directors go for lists of products and beverages that are designed to meet the USDA requirements for calories, fat, salt, etc.? Most of them courtesy of PepsiCo?

Guess what is not on the Smart Snacks list? Whole Milk. 

Guess what is on the list? Mountain Dew Kickstart energy drink, Gatorade, Doritos, Breakfast bars, Breakfast cookies, and on and on – courtesy of PepsiCo.

Gallagher states that the Gala “supports a goal that is near and dear to every dairy farmer I have ever met – childhood health and wellness.”

Meanwhile, how is the health and wellness of our kids at school with these diets?

Gallagher also tells us: “Not a single farmer checkoff dollar is used to put on the event. The Gala is underwritten through third-party sponsorships, table sales and on-site auction purchases.”

Well, that’s a relief, right? But think again.

According to IRS 990 forms, the supposed partner of dairy farmers in this effort – the NFL — has donated anywhere from less than $500,000 to a little over $1 million annually to GENYOUth, but at the same time, DMI paid the NFL $5 to $7 million annually for promotion !(according to 2016-17 IRS 990s)

In addition, over 50% of GENYOUth’s total annual expenditures as an organization comes from dairy farmers via their mandatory nickel and the dime. Yes, one can say those regional funds are linked to breakfast carts in schools, but the checkoff nickel portion funds the operating budget, and more.

Meanwhile, the kids. Who has been looking at their breakfast carts lately?

The carton of milk with every breakfast is the same fat-free and 1% milk that USDA’s own studies show is often discarded. The soupy sweet hot pink yogurt doesn’t come close to the real thing; many children turn away from it. The cheese, well they’ll eat that, but it too is fat-free.

What populates the breakfast cart heavily, according to children, is Quaker (PepsiCo) oatmeal bars with chocolate, breakfast cookies, a foil wrapped item similar to a pop-tart, and if you get there early – you’ll find apples or bananas.

Meanwhile, when corporates boarding the GENYOUth schoolbus for this “access” donate to buy ‘grab n go’ breakfast cars or sponsor a table at the Gala, and earmark funds for pet programs. When SAP donates, their funds go specifically for GENYOUth’s recent addition of the AdVenture Capital program, where students can learn about marketing and being entrepreneurs and leaders.

The USDA (MyPlate) is now concerned about students getting enough sleep, so the sleep industry, like Sleep Number, board the GENYOUth schoolbus with donations, and a new sleep program is added to GENYOUth messaging.

GENYOUth has become a marketing vehicle for the ‘foxes’ — cleverly disguised as a school health and wellness program — founded and primarily funded by the ‘hens.’

In fact, dairy farmers are the only ones involved in GENYOUth that are producing a truly healthful product but are not free to truly provide or promote it to the kids.

“One of the great responsibilities we have as your dairy checkoff is to use your investment as wisely and strategically as we can,” writes Gallagher. “This is why we seek globally recognized partnerships that can extend your commitment on goals that matter to you.”

At the Dec. 4, 2019 Gala in Manhattan, the theme will be “Rise, by lifting others.” It’s clear that dairy farmers are doing GENYOUth’s heavy lifting, but for whose priorities? And who is rising? Are our schoolchildren really better off? Are our farmers?

A decade of this ‘formula’ – and the millions spent by dairy farmers annually — have resulted in ‘partners’ profiting while dairy farmer freedom and competitive position diminishes. Meanwhile, new generations of children and adults do not know what real milk and dairy products taste like, and they know absolutely zero about the nutrition in them.

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Addendum after publication:

The latest to board the GENYOUth schoolbus, complete with name and logo-swoosh for its program, is Nike with the “Nike Game Growers”. The program seeks to increase school sports participation — especially among middle-school-aged girls — by having a competition among student teams presenting their ideas for how to grow sports participation at their schools. The Womens National Basketball Association (WNBA) and National Basketball Association (NBA) are also involved in the Nike Game Growers platform. The swoosh has come under fire for its competitive dealings in high school team apparel contracts and recently by female athletes who’ve been sponsored by Nike in ‘elite’ camp teams telling of health impacts from dietary restrictions aimed at keeping them super thin.

The Dec. 4, 2019 GENYOUth Gala (Galabration) Host Committee is made up of: Tom Gallagher, DMI CEO; Alexis Glick, GENYOUth CEO; Roger Goodell, NFL Commissioner; Audrey Donahoe, National Dairy Council Chair; Richard Edelman, Edelman CEO; Carla Hall, former co-host, The Chew famed chef, author and TV personality; Howie Long, commentator, FOX Sports, NFL Hall of Fame; Jeff Miller, NFL EVP Health and Safety; Steve H. Nelson, former United Healthcare CEO; Donald “DJ” Paoni, SAP North America President; Claressa Shields, two-time Olympic Gold Medalist Boxer; DeMaurice Smith, NFL Players Association Executive Director; Selwyn Vickers, M.D., Dean, University of Alabama School of Medicine; Tom Vilsack, President and CEO U.S. Dairy Export Council and former Secretary of Agriculture; Russell Weiner, Domino’s COO and President; and Dr. David Satcher, 16th U.S. Surgeon General emeritus.

Milk education ‘heroes’: How 97 Milk came to be

AUTHOR’S NOTE: With proof of concept in place, the support of farmers and community running strong (see graphic), and the public response rewarding these efforts, there is something powerful here with the 97 Milk effort, and it is just the beginning. 

By Sherry Bunting from Farmshine, October 23, 2019

RICHLAND, Pa. — One farmer. One roundbale. And six painted words — Drink Whole Milk 97% Fat Free.

The excitement of the 97 Milk effort is contagious. What started with Nelson Troutman’s first painted roundbale in Richland, Pa., has rapidly multiplied into community-wide and nation-wide milk education efforts aimed at consumers on one hand and policymakers on the other.

Nelson Troutman placed his first “Milk Baleboard” in a pasture by an intersection.

By February, retired agribusinessman Bernie Morrissey of Robesonia found five businesses to pay for the first 1000 magnetic 12” x 12” vehicle signs with the same message. Since then, more companies have joined in and some of the original businesses have printed more.

As legislators began to take notice, Morrissey and Troutman assembled a grassroots Pa. Dairy Advisory Committee of 10 farmers that meet monthly in person or by teleconference and interact with lawmakers, including the petition effort to bring whole milk back to schools. More agribusinesses joined in to help fund their expenses.

Then, 4’ x 6’ banners were created for places of high visibility and an effort to place them at stores is underway. A September Farmshine cover story helped spread the word. Morrissey reports the banners “are going like hotcakes” with additional businesses joining in to print more.

Another effort was underway simultaneously, when Rick Stehr invited a diverse group of farmers to a February meeting in Lancaster County to talk about milk education beyond the bale. Today, the joint efforts work together like two well-oiled machines comprised solely of volunteers.

Stehr recalls getting questions back in January. He invited Morrissey to talk about the milk baleboards at R&J Dairy Consulting’s winter dairy meeting. Noted expert Calvin Covington was the keynote speaker that day, and he told the 300 dairy farmers that promotion needs to focus on domestic demand, and that “we in the dairy industry need to talk about milkfat and not hide behind it not wanting things to change. Consumers want that taste, and we’re not talking about it,” he said.

Morrissey then told the crowd about Troutman’s “Drink Whole Milk 97% Fat Free” roundbales that were just starting to multiply at farms and businesses after a cover story appeared in Farmshine.

“As I talked with non-ag people, I realized many of them didn’t know quite what it meant,” says Stehr. “I thought the missing link is education. We needed to educate the public.”

Nelson Troutman and Jackie Behr prepare for a television interview about 97 Milk.

Stehr’s daughter Jackie Behr has long believed milk sales suffer because milk education is missing. She has a marketing degree from Penn State and experience in non-ag positions before becoming R&J’s marketing manager.

Even Behr was surprised by her February focus group interviews with non-ag friends. “I was blown away by the obvious gap between dairy farms, milk nutrition and consumer perception,” she reports.

Behr shared the focus group responses at a February meeting of farmers that included Troutman. “It was an obvious eye-opener for everyone. These were educated women responding to my questions. How did we miss so much milk education all of these years?” Behr wondered.

They not only had zero knowledge of milk’s nutrition — other than calcium — their minds were full of information that was just plain false.

They said they drank organic milk because they ‘didn’t want to drink all those hormones.’ Or they chose almond beverage ‘because there are no antibiotics in it.’

“The biggest misconception is how much fat they thought was in whole milk. Just like Nelson’s been saying. And when you tell them whole milk is standardized to 3.25% fat, their response is ‘Oh, wow!’ That alone is big,” says Behr.

Her marketing savvy kicked in. Ideas for a website were kicked around with obvious choices already taken.

Then one attendee said: “How about 97 Milk?”

It fit. And it captured attention. By the second meeting, they were ready to establish 97 Milk LLC and chose a volunteer board of Lancaster County farmers Mahlon Stoltzfus, Lois Beyer, Jordan Zimmerman and Behr, with GN Hursh serving as chairman.

The website was up and running by the end of February with a Facebook page (@97Milk) that has gained more than 8,500 followers in less than eight months and a weekly average reach of over 150,000. Individual posts have reached up to 1.2 million through thousands of shares and hundreds of interactions. Twitter (@97Milk1) and Instagram (@97Milk) are also active.

Behr says it all stems from what Troutman started, and he was happy to add 97milk.com to the bales with Morrissey making sure the website appears on signs and banners.

“To get someone to change their mind, you have to get the facts in front of them,” Behr observes. “We’ve got three seconds in front of their eyes to leave information that plants a seed.”

With some content help from others, Behr comes up with ideas, designs and coordinates Facebook posts six days a week.

The result? “People are shocked and come back and say, ‘I had no idea,’” Behr explains. “I am in the industry, and even I have learned so much about milk that I didn’t know before.”

“Now that 97 Milk has become a tool used by dairy farmers to educate the public about our product, the conversations that are happening are only the beginning,” Stehr observes. “We could have 97 Milk boards across the nation.”

As interest builds, 97 Milk LLC is looking into how different geographies could have their own chapters, with the website and materials providing some continuity.

“That’s where the power is, with the producers in each community or state,” says Stehr.

He credits Troutman and Morrissey for getting everyone’s attention and believes what they are doing creates the opportunity for the ‘beyond-the-bale’ education piece carried by 97 Milk LLC.

“The word milk has been used liberally, and the understanding of what it is has been diluted,” says Stehr. “We let that happen over the past 30 years and did nothing about it. We let them bash our product. Now we are educating people that the fat in milk is not bad, that there’s not 10% or 50% fat in whole milk, but 3.25%, that there is complete protein in milk and all of these other good things.”

From the baleboards, vehicle signs, banners and communications of the grassroots Pa. Dairy Advisory Committee, to the website, social media and educational events of 97 Milk LLC, a common bond unites these efforts — Troutman’s practical courage when he painted the first roundbale because he was frustrated and had had enough.

“We have lost market share, why? Because people don’t know what milk is and they don’t know what it tastes like,” says Troutman. “By promoting whole milk, we are opening their eyes and their tastebuds.”

While national co-ops think it’s “innovative” to develop a low-fat milk and nut juice blend, those involved in 97 Milk believe the response they see from diverse consumers tells a different story.

“People want to feel good about the products they are buying. The goal of 97 Milk is to share education, to share the dairy farmers’ stories,” says Behr. “You don’t pick up health magazines and see the benefits of milk. People need to see that positive information because they don’t know what milk provides.”

The Dairy Question Desk at the website fields a steady stream of five questions per week and when social media is included, 97 Milk fields 5 to 20 questions a day.

Every one of Behr’s original focus group have switched to whole dairy milk. The experience so far shows her consumers know very little about milk and have a real willingness to learn.

“All of our messages are simple. One fact. An infographic that’s simple to understand and that people can relate to,” says Behr. “Even if we have their eyes for just three seconds scrolling through, that little seed is huge.”

The posts fill other gaps. Behr believes people want to see that dairy farmers love their cows, that they care. The baleboard sightings and “cow kisses” have poured in for posting from several states.

The posts also help consumers fulfill a desire to be connected to their food, to buy local, and to support family-owned small businesses. “The simple fact that 97% of dairy farms are family-owned is a post that generated a lot of activity,” says Behr.

While she sees the environmental discussion as being big right now, she attributes this to the vegan activists driving it. By contrast, the 97 Milk facebook data and demographics reveal that 90% of consumers really want to hear about the health benefits, according to Behr.

She gives the example of the popular “yummy yogurt” infographic posted last week. It was visually attractive and simply listed a few health benefits.

“We get a few facts out on an infographic, and if you’re kind of hungry — or a mother like me trying to find healthy snacks for my kids — it hits,” says Behr. “It’s the simple things that get milk back in and help people feel good about buying milk products.”

The support from the agriculture community, and others, has been overwhelming.

“When someone calls, who you’re not even working with, to complement the work Jackie is doing, that’s rewarding,” says Stehr.

“When you see the response of a person in your community finding out they can drink whole milk and they really like it, that’s rewarding,” says Troutman.

“When legislators hold up a sign, or want their picture taken with a baleboard and say ‘this is the best thing going in dairy right now’, that’s rewarding,” says Morrissey.

“When people write into the Dairy Desk and we can answer their questions, that’s rewarding,” says Behr. “But most rewarding is hearing the excitement, seeing dairy farmers wanting to be involved, understanding the importance of marketing and seeing the results of getting involved. Receiving a simple note thanking us for positive messages, that’s rewarding.”

97 Milk LLC raised funds from more than 20 local and national businesses (see graphic) to cover expenses for the website and printed materials, and they’ve worked with Allied Milk Producers to have milk and dairy products available for parades, corn mazes, and other venues.

Meanwhile, individuals and communities take it upon themselves to paint bales, print bumper stickers, make signs, incorporate the message into corn maze designs, hometown parades, create farm tour handouts, initiate milk tents at athletic events, and more.

Young people are enthusiastic: FFA chapters, 4-H clubs and county dairy maids are printing their own banners and carrying the message at diverse public events. They love participating because it is real milk education, sharing the truth about milk and the life and work of America’s dairy farming families.

Morrissey and Troutman get calls from other states for banners and car magnets, and they’ve sent to these states at cost. Locally, the businesses paying for printing these items are giving them away (see graphic).

Behr has also designed items with the 97 Milk website logo, cows and farm scenes. These files are on the download area at 97milk.com and can be used to make banners, yard signs, license plates, bumper stickers, educational handouts, and more.

Troutman has added new baleboards for community events, including one that reads: Ask for Whole Milk in School. He and Behr recently did a television interview with a local PBS station.

Both the grassroots Pa. Dairy Advisory Committee and the 97 Milk LLC are running on shoestring budgets from donations (see graphic) with all volunteer effort, and the grassroots are blooming where planted to multiply the impact in ways too numerous to mention.

As a glimmer of hope, fluid milk sales nationally were up 0.2% in July, the first year-over-year increase in decades, with whole milk up 3.6% and flavored whole up 10.4%. Stores surveyed in southeastern Pennsylvania, where 97 Milk began, say whole milk sales are up significantly since January. It is also notable that many stores don’t seem to be able to keep enough whole milk on the shelves — a nationally obvious phenomenon.

Also being promoted is the petition to bring whole milk back to schools. This week, the online petition ( https://www.change.org/p/bring-whole-milk-back-to-schools ) topped 8000 signatures, plus 4000 were mailed in envelopes for a first-batch delivery in Washington Oct. 24, with a second batch goal to double that by January.

Reflecting on the past 10 months, Troutman says, “I thought if they’re not going to do it, someone has to, and here I am.”

And he’s happy. “Really, I’m thankful, thankful for so many who are helping make this work.” 

To contact the grassroots Pa. Dairy Advisory Committee about banners, magnetic vehicle signs and baleboards, call Bernie Morrissey at 610.693.6471 or Nelson Troutman at 717.821.1484.

To contact 97 Milk LLC about spreading the milk education to other communities, email 97wholemilk@gmail.com or call Jackie Behr at 717.203.6777 or write to 97 Milk LLC, PO Box 87, Bird in Hand, PA 17505, and visit www.97milk.com, of course.

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Hoffman Farms: ‘We do what we can to promote milk education’

By Sherry Bunting for Farmshine Nov. 8, 2019

Tricia (Hoffman) Adams planned her educational exhibit for months ahead of a multi-county cross country meet at the farm on October 15.

SHINGLEHOUSE, Pa. — Educating the public has long been a passion of the Hoffman family at Hoffman Farms in Potter County, Pennsylvania. The school and home communities of the two generations (five families) involved in the 1000-cow dairy are on both sides of the Pennsylvania / New York boundary.

In fact, Tricia (Hoffman) Adams gave a presentation back in 2006 on how they set up the learning components of their school tours at a Women in Dairy Conference that year. Attendees were inspired to find ways to invite the community in, and the family was later recognized with a Pa. Pacesetter Award in part because of progressive operations on the farm and in part because of their commitment to educating the community about milk and dairy farms.

Today, with tours, community events, a facebook page and the next generation so involved in school clubs and sports activities — in addition to showing dairy animals and market steers and pigs — the family has become a recognized source for their community to ask questions about dairy, livestock and agriculture, in general.

Earlier this year, the Hoffmans were among the many farms painting round bales and placing them in visible areas with the Drink Whole Milk 97% Fat Free message. They have always served whole milk, along with other dairy treats, when schools and community groups tour the farm. The Baleboards drew attention and gave Tricia an opening to answer questions people didn’t even know they had!

She reports that the schoolchildren on tours last spring loved the ‘milk baleboards’ and wanted their pictures taken with the “cool” roundbales.

In fact, the 97 Milk effort has revitalized Tricia’s educational resources, she says. She and her father Dale Hoffman are also both serving on the grassroots Pennsylvania Dairy Advisory Committee.

In September, Tricia worked with two vendors — Dan Rosicka of Progressive Dairy Solutions and Country Crossroads Feed and Seed to help share the good news about whole milk. Each vendor purchased 50 of the 12-inch x 12-inch magnetic vehicle signs with the 97 Milk message and website to make available in the community.

Tricia also acquired a 4-foot x 6-foot banner as well as other materials with the 97 Milk message and milk education information.

And then she added her own flare. She had been thinking about it and working on it on-and-off since summer. The farm was hosting a multi-school championship cross-country meet in October, and she was providing the “recovery” beverages – whole milk and whole chocolate milk — and other goodies.

“I’m not one to sit around and wait for help,” says Tricia. Like other dairy producers she is frustrated with the negativity surrounding milk and meat. “I am upset that our children have to suffer in their school diets, with the lack of milk choice and the meatless days. I decided our farm will do what we can to promote the ag industry through ag education, ag awareness and ag positivity!”  

Each time Hoffman Farms is asked to donate money to a school club or a team sport, they donate dairy products instead — “with a side of education,” says Tricia.

For the North Tier League Championship Cross-Country Meet on October 15 at Hoffman Farms, Tricia set up two tents and tables. In addition to the 97 Milk banner, she had a Chocolate Milk Refuel and Recovery banner. For the “side of education,” she created a large cutout cow and numerous ‘spots’ with questions and answers.

As a farm that buys their own materials for these events and tours, Tricia feels strongly that whole milk products should be served and serves them when the events are after school or at the farm so that the schools are not jeopardized in any way due to the flawed diet rules they have to live by during school hours.

She reports that the young people (and adults) say they look forward to having “the good milk.”

“Whole chocolate milk as a recovery drink after a race, whole milk cheese sticks or toasted cheese sandwich supplies to add to a sports concession stand — whatever helps our industry and our future generation of students is what we are going to focus on,” Tricia explains.

She’ll admit that some days, “It feels like an uphill battle, but we have had many clubs, organizations and businesses wanting to help as well,” says Trica.

“At the end of the day, I’m not sure how many people will benefit or even how much I can change, but I would rather try by doing something constructive.”

Three generations are involved in the award-winning 1000-cow dairy at Hoffman Farms in Potter County, Pa. The farm was founded by Dale and Carol Hoffman with 30 cows. Today their daughter Tricia and sons Keith, Brad, and Josh have transitioned into leadership and a third generation is also involved.

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They have a knack for niches, and the #4 GJPI herd in the nation — Profiles in comfort and quality

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

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, 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.

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