U.S. 2020 milk production up 2.2%, but average number of dairies decline 7.5%

click to enlarge map

By Sherry Bunting, Farmshine, Friday, March 5, 2021

WASHINGTON, D.C. — The U.S. produced 2.2% more milk in 2020 compared with 2019 and did so with 51,000 more cows and 2550 fewer farms nationwide. The average number of milk cows for the year increased 0.6% over year ago and the average number of licensed dairies decreased 7.5% compared with 2019. 

While the number of dairy farms lost in 2018 and 2019 were larger, the percentage of decline in dairy farms for 2020 is the largest single year decline because the total number of farms from which to figure the percentage is smaller. 

The number of licensed dairies in the U.S. averaged barely above 30,000 in 2020 at 31,657. The rate of attrition has averaged 5% annually over the past decade with 2018 being 6.5%.

Some data of the data shown in last week’s USDA report raise questions about how milk production is counted and reliance on Federal Order pool information given all the massive depooling of milk we saw in 2020 (and continuing). When additional 2020 data come in, we’ll do some additional analysis.

To be clear, USDA’s annual milk production report, released last week, computes the average number of cows and the average number of licensed dairies for 2020 vs. 2019, so it is more like a rolling average for the year. These are not end-of-year numbers.

In looking over the data, it is interesting to see states in New England, like Massachusetts, Rhode Island and Connecticut, gain production while losing cows and farms even though the larger dairy producing New England state of Vermont saw production slip by 3.5% in 2020, cow numbers down 3.2% and farm numbers fell by 5.9% to 640. 

It is also intriguing to see production gains in the Mississippi data from USDA, despite cow and farm losses there, and despite being next to USDA-reported production declines throughout the rest of the Southeastern states, except for Georgia, where production was about steady, cow numbers were off by less than 1%, and dairy farm numbers were down 7.1% at 130. Florida’s production, cow numbers and dairy numbers all declined by 2.4, 2.6 and 5.6%, respectively.

Some of the states with the largest gains in milk production also had the highest percentage-loss of dairy farms.

Minnesota, for example, grew production by 2.3% despite the number of cows declining by 1000 head and the number of licensed dairies declining a whopping 14%. But the gain in milk production for Minnesota, at 10.15 billion pounds for 2020 has the state’s producers nipping at Pennsylvania’s heels for the 7th place ranking.

Pennsylvania’s 2020 milk production at 10.27 billion pounds was up 1.7% over year ago, although cow numbers were down 8,000 head (off 1.7%), and there were 300 fewer licensed dairies – a 5.3% decline from 2019. The average number of licensed dairies in the Keystone State during 2020 was 5430.

Just north, New York’s production grew 1.4% with roughly the same number of cows but 6.2% fewer dairy farms as the number of New York dairies fell by 240 (6.2%) to 3450 in 2020. Just south, production reportedly grew by 4.5% in Maryland (despite 2.4% fewer cows?). Production also grew 2.1% in Virginia with no change in cow numbers. The number of licensed dairies in Maryland fell by 2.9% to 340, while the number in Virginia fell by 6% to 475.

The Appalachian / Southeast states of Kentucky and Tennessee saw production ebb by 0.4 to 1.4% despite losing 4% and 6.3% of their cows, respectively. Tennessee had 10% fewer licensed dairies at 180, while Kentucky’s dairy numbers fell 6.2% to 450.

However, just north of those states, the Mideast states of Indiana, Ohio and Michigan added a lot more cows in 2020, especially in the third and fourth quarter ahead of the massive new cheese and ingredient plant getting into production at the end of 2020 in St. Johns, Michigan. Indiana grew production 6.2% with 2.8% more cows and 7% fewer dairy farms. Michigan had already been in growth phase for years, stabilized through 2018-19, and grew production 2.6% in 2020 with 1% more cows. However, Michigan lost almost 10% of its dairies in 2020. Ohio also lost 10% of its licensed dairies last year, but grew production 3.6% with 1.2% more cows.

Across to Iowa and Illinois, production grew 1.6 and 2.2%, respectively, but the number of dairy farms fell 5.0 and 8.7%, respectively.

Throughout the growth area of the Central Plains, South Dakota produced 11% more milk with 7% more cows but nearly 8% fewer dairies. Next door, Wyoming’s 10 dairy farms grew the state’s production by almost 29%. Colorado’s dairy numbers stayed the same, but with 5.6% more cows, they made 7.1% more milk. 

Rounding the bend in Kansas and Nebraska, the number of dairies fell 11.1 and 14.3%, while cow numbers grew 4.2 and 1.2% and production grew 5.5 and 3.6%, respectively.

Sandwiched between the rapid growth in the Plains and the Indiana-Ohio-Michigan triumvirate is Wisconsin – the Dairyland State – where 2020 production was just half of one percent (0.5%) above year ago. Cow numbers in Wisconsin fell by almost 1% and the number of dairy farms declined 8% to 7110, a loss of 610 dairies.

In the Southwest and West, Texas continued its multi-year rapid growth pattern as production increased 7.1% with 5% more cows, although the number of dairies fell 5.3%. In fact, Texas is nipping at New York’s heels for the 4th place ranking in milk output volume. In New Mexico, production was about steady, with 1% more cows, and the number of dairies was unchanged. Idaho grew production 3.9% with 1% more cows and 4.3% fewer dairies while Arizona grew production 2.2% with the same number of dairies and a few more cows.

California grew production 1.7% but lost over 3% of its dairies while the Pacific Northwest was generally steady on production and cow numbers but lost roughly 8% of the dairies.

The annual production report can be found here.

op 23 milk production rankings for 2020 milk production are as follows:

  1. California (41.3 bil lbs),
  2. Wisconsin (30.7 bil lbs),
  3. Idaho (16.2 bil lbs),
  4. New York (15.3 bil lbs),
  5. Texas (14.8 bil lbs),
  6. Michigan (11.7 bil lbs),
  7. Pennsylvania (10.3 bil lbs),
  8. Minnesota (10.1 bil lbs),
  9. New Mexico (8.2 bil lbs),
  10. Washington (6.8 bil lbs),
  11. Ohio (5.6 bil lbs),
  12. Iowa (5.4 bil lbs),
  13. Colorado (5.1 bil lbs),
  14. Arizona (4.9 bil lbs),
  15. Indiana (4.3 bil lbs),
  16. Kansas (4.0 bil lbs),
  17. South Dakota (3.1 bil lbs),
  18. Oregon (2.6 bil lbs),
  19. Vermont (2.6 bil lbs)
  20. Florida (2.3 bil lbs)
  21. Utah (2.2 bil lbs)
  22. Illinois (1.8 bil lbs)
  23. Georgia (1.8 bil lbs)

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Gates et. al. peddle fake food, climate propaganda; Guarding real food ID will be critical

Bill Gates is pictured here in a Jan. 27, 2021 screenshot talking about carbon markets during the World Economic Forum Davos Agenda 21 livestream. A massive land grab is underway at the same time as this push toward ‘synthetic animal protein’ and as the WEF and UN goals of 30 x 30 are implemented. Big tech billionaires, like Gates the single largest owner of  U.S. farmland, are heavily invested in ‘synthetic animal protein’ (otherwise known as ‘lab-garbage’). WEF screenshot by Sherry Bunting

By Sherry Bunting, Farmshine, Feb. 26, 2021

EAST EARL, Pa. — Bill Gates gave hair-raising interviews last week with the Feb. 16th release of his new book: How to Avoid a Climate Disaster. In it, Gates lays out what he says it will take to eliminate greenhouse gas (GHG) emissions to ‘save the planet’.

Grabbing headlines is the Microsoft founder and software developer’s proclamation that ‘rich’ nations should move to 100% synthetic animal protein, while ‘poor’ nations, like Africa, can keep consuming animal-sourced proteins — if they reduce animal GHGs and environmental footprint by “merging-in” the meat and milk genetics and other technologies that have made U.S. cattle herds so productive.

Specifically, in a published interview with MIT Technology Review, Gates was asked: “Do you believe plant-based and lab-grown meats could be the full solution to the protein problem globally?”

Gates replied: “No, I don’t think the poorest 80 countries will be eating synthetic meat. I do think all rich countries should move to 100% synthetic beef. You can get used to the taste difference, and the claim is they’re going to make it taste even better over time. Eventually, that ‘green premium’ is modest enough that you can sort of change the (behavior of) people or use regulation to totally shift demand.”

That’s a mouthful.

Gates laments the “politics” of animal-sourced foods being a challenge for his fake-food-based climate goals and investments. “There are all these bills that say it’s got to be called, basically, ‘lab garbage’ to be sold,” Gates said. “They don’t want us to use the beef label.”

He goes on in the interview to explain why poor countries will continue to animal-source protein.

“For Africa and other poor countries, we’ll have to use animal genetics to dramatically raise the amount of beef per emissions for them. Weirdly,” says Gates in the MIT interview, “the U.S. livestock, because they’re so productive, the emissions per pound of beef are dramatically less than emissions per pound in Africa. And as part of the (Bill and Melinda Gates) Foundation’s work, we’re taking the benefit of the African livestock, which means they can survive in heat, and crossing-in the monstrous productivity both on the meat side and the milk side of the elite U.S. lines.”

Here’s the thing. A month before his book release, Gates made headlines as “the man who is about to change the way America farms.” In January, the 2020 Land Report 100 featured Gates as “America’s leading farmland owner with 242,000 acres of productive farmland in more than a dozen states.”

According to the Land Report map, Gates’ swaths of farmland, amassed through front-company Cascade Investments, are located mainly near water and ports across 19 states.

Gates is also a founding member of an investor group (Leading Harvest), setting a sustainability standard for over 2 million farming acres in 22 states and another 2 million in 7 countries, according to the Land Report.

Furthermore, the Bill and Melinda Gates Foundation (separate from Cascade Investments and Breakthrough Ventures) has a farmland initiative called Gates Ag One, based in St. Louis. According to the St. Louis Business Journal, its focus is research to help farms in low- and middle-income countries adapt to climate change by becoming “more productive, resilient and sustainable.”

The Breakthrough Energy Ventures (BEV) investment fund recently changed its website, but the strategies for agriculture and food production are still clear when clicking through tabs. Here’s just the tip of the iceberg. BEV website screenshot by Sherry Bunting

Gates also chairs the investment fund called Breakthrough Energy Ventures (BEV), mentioned in various ‘fake-meat’ and ‘fake-dairy’ articles published in Farmshine over the past three years.

The BEV fund is mentioned throughout Gates’ new book as a ‘philanthropic’ fund with a climate strategy. Digging into the website, one sees the fund’s climate investments described as “patient, risk-tolerant capital” that will recoup return on investment years down the road once the global supply chains, government policies, and other strategies move consumers toward the various sector outcomes the BEV billionaires are investing in.

The BEV investor list includes significant interests based in China; Democratic party candidates and/or donors like George Soros, Tom Steyer, and Michael Bloomberg; big tech billionaires like Gates, along with Mark Zuckerburg, founder of Facebook, and Jeff Bezos, CEO of Amazon.

The two-pronged approach to animal protein in Gates’ book reflects the two-pronged investments of Gates, BEV, Leading Harvest and the Bill and Melinda Gates Foundation. On the personal and fund investment side, Gates and friends have put billions of dollars into ‘replacement ag systems’ featuring fake-animal-protein for ‘rich’ countries, while on the foundation side, the focus is on research for efficient animal ag systems in poor countries.

In fact, the Bill and Melinda Gates Foundation – which has endeared itself to Big Ag by supporting biotech research for developing countries — was among 11 top-level sponsors in the $100,000-plus donation category for the American Farm Bureau Federation’s virtual convention in January.

During the 2021 convention, Farm Bureau president Skippy Duvall and Land O’Lakes CEO Beth Ford — together — provided a joint keynote discussion under the ‘stronger together’ 2021. Ford spoke of Land O’Lakes’ 2020 partnership with Microsoft to build an “artificial intelligence” ag-tech platform to automatically gather data from farms and trade carbon credits. The discussion ended with a focus on climate-smart technology and a more “inclusive” advocacy platform less cluttered by production identity labels.

For his part, Duvall stated that, “There’s room in the marketplace for everyone, every type of production — organic, conventional, plant-based meat, whatever it might be — there’s enough room in the market for all of us,” he said. “We have to stop throwing ourselves under the bus and work together as one united family.”

This sentiment dovetails with the global food transformation agenda of companies and investors wanting to mix-match-and-blend in a way that melts-away protein identities in favor of planetary diet standards, labels and symbols. Walmart’s director of sustainability talked about this during a World Economic Forum virtual event reported in Farmshine in January, and it is showing up in Walmarts today with big name frozen entrées in lookalike packaging, featuring BE’F, CHICK’N and DAI’Y. How clever.

On the fake-animal-protein investments, Gates and friends are working with global mainline agriculture companies like Cargill, Tyson, ConAgra and ADM, as well as global food supply chains like PepsiCo, Nestle, Unilever, and Coca Cola, along with ‘replacement’ plant-based and cell-cultured fake-meat and fake-dairy manufacturers like Beyond Meat, Impossible Foods, Memphis Meats, BioPrint, and Perfect Day.

All of this ‘replacement’ or ‘alternative’ ag push is setting the stage for a massive land grab to meet the 30 by 30 executive order of President Biden that dovetails with United Nations goals to have 30% of U.S. and global lands in conservation protection by 2030. That would double the current 15%.

With billions in ‘patient capital’ invested, Gates and friends want to see U.S. consumers ‘herded’ toward the ‘herdless’ imposter-foods they’ve invested in.

The USDA-HHS Dietary Guidelines have the facilitating low-fat diets positioned and ready. The FDA Nutrition Innovation Strategy is a multi-year effort underway to modernize standards of identity and develop a universal ‘healthy’ symbol for ‘approved’ foods.

Meanwhile, Gates and friends are pushing for polices and pricing that shift diets more quickly from the ‘climate’ side. For example, wholesale boneless wing and tender prices, as well as beef, are rising rapidly (but not to producers). This effectively narrows the gap between real and fake to help with the transition. Even the dairy industry is moving to ‘dual purpose’ processing.

Digesting Gates’ book interviews, hearing him talk about carbon markets during a World Economic Forum Davos Agenda 21 livestream, and seeing the ‘who’s who’ board of the BEV investment fund – it is clear Gates and friends are politically well-positioned to push policies that can shift diets based on their investments.

They are also getting help from within the animal-sourced food industries to corral Gen Z as ‘agents of change’ that will embrace these China-sourced pea-protein concentrates and lab-created franken-foods as they scale up across household name brands. In its recent joint-venture announcement with Beyond Meat, PepsiCo admitted their alternative snack and beverage rollouts must be “effortless” so consumers don’t have to think about making the “right choices for the planet.”

Food transformation is unfolding rapidly as Big Ag, Big Food, Big Tech, Big Money players align with governments, non-governmental organizations (NGOs) and globalized supply chains.

To affirm the identity of real, local, U.S.-produced animal-sourced foods from farms will require a direct appeal to consumers and accountability for industry leaders and policymakers.

Overblown climate propaganda about dairy and livestock fuel policies that gradually undermine food production identity. Gates is not a food fortune-teller, but rather he is fixing to be a food fortune-maker believing he and his billionaire big tech cronies can ‘software program’ food and behavior to enrich their own outcomes.

We need to follow the money and wake up the public to see the garbage the elites are selling for what it really is. Some of us are ready to pick this food identity hill to die on.

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Dairy milk: The rest of the story on milk fat and fraud

Dairy milk consumption has two faces: nutrition and sustainability. Aside from a small percentage of healthy fat and more protein than the knock-offs, dairy milk is fresher than soy, almond, coconut, oat and other counterfeit ‘milks.’ In fact, it is so locally produced and bottled that it is also much better for the health of local economies and environment. Have you seen any almond, coconut or cashew trees on the East Coast and Midwest of the U.S.? As for oat beverage, most of the oats are harvested in Canada and processed in Asia. Here in the Northeast U.S., there are millions of acres of grasslands and croplands that provide habitat for wildlife, filter rainwater, hold soil in place, maintain open spaces, photosynthesize carbon from the air, keep something growing on the land year-round as cover crop and forage, and create jobs and economic stimulus that all begin with land being managed by dairy farmers. A dairy cow can eat grass, hay, whole corn plant silage, and other roughage grown on marginal lands. These forage crops are 50 to 70 percent of the dairy cow’s diet, and she will turn them into nutrients we can use in the form of nutrient-dense milk and dairy products we love. How cool is that?

By Sherry Bunting

We read about and see the growing number of choices in the dairy aisle that make a simple trip to the store for milk, one that can be quite confusing. There’s the thing about fat (all those different percentages) and the thing about fraud (all those plant, nut, and bean drink products calling themselves ‘milk.’)

First, the different “percentage milks” we know as skim, 1 percent, 2 percent and whole milk. The latter is confusing, is it 100 percent milk? Do some people think it is 100% fat?

Well, all dairy milk is 100 percent milk, no mater what the fat percentage… But, No: Whole milk is not 100 percent fat. It is not even 10 percent fat. It is standardized to 3.25 percent fat, and if you drank it straight from the cow it would be anywhere from 3 to 5 percent fat depending on breed of cow, time of year, and type of roughage fed.

And then there is protein. Did you know dairy milk provides a little over 8 grams of protein per 8 oz. serving? It packs quite a bit more protein-punch than almond ‘milk’ at a little over 1 gram of protein per 8 oz. serving.

Made like coffee, the crushed almonds are filtered with water. In fact, an 8 oz. serving of almond milk may be more like eating an almond and drinking a glass of water with sugar and thickeners added and a handful of other ingredients.

A common almondmilk brand label lists these ingredients the first being almondmilk defined as almond-filtered water: Almondmilk (Filtered Water, Almonds), Cane Sugar, Sea Salt, Natural Flavor, Locust Bean Gum, Sunflower Lecithin, Gellan Gum, Calcium Carbonate, Vitamine E Acetate, Zinc Gloconate, Vitamin A Palmitate, Riboflavin (B2), Vitamin B12, Vitamin D2.

A typical dairy milk label lists these ingredients: Milk, Vitamin D3. Pretty simple to see that the calcium and vitamins on the milk label are already in the milk and that zero sugar is added and zero thickeners.

The freshness of REAL dairy milk can’t be beat going from farm to table in 24 to 48 hours. It comes naturally from the cow providing the natural proteins and calcium and small amounts of healthy fat that our bodies readily absorb and utilize.

In fact, the carb-to-protein ratio of chocolate milk is now shown to be one of the best sports-recovery drinks on the market today. Yes, plain ‘ole chocolate milk. Maybe if farmers call it by another name, consumers will take notice to what has been in front of them all along.

Still, for many consumers, the perception persists that whole milk is a high-fat beverage, when in reality it is practically 97 percent fat free!

At the bottling plant, milk is pasteurized and standardized. Cream is skimmed to package whole milk at 3.25 precent fat. The skimmed cream—along with additional cream skimmed to bottle the 1% and 2% and non-fat milks—is then used to make other products like butter, ice cream, yogurt, cream cheese, sour cream and dips.

The “standard of identity” for yogurt states it also contain a minimum of 3.25% fat—just like whole milk.

Even ice cream is not 100 percent fat. The FDA standard of identity is that it contain a minimum of 10 percent fat. Some of the richer, higher-end ice creams contain up to 14 percent fat. But along with that fat, comes some nutritional benefits. These are not empty calories.

Butter is high in fat because it is, after all, a fat. Even it ranges 82 to 84 percent fat. A tablespoon of butter in the pan or on your veggies is a smaller quantity serving than an 8 oz. glass of milk; so even though the fat content is much more concentrated at a higher percentage, no one sits down and eats a cup of butter (2 sticks)!

Furthermore, we have learned that the saturated fat in milk and meat are not bad for us and that when part of a healthy integrated diet may actually provide heart healthy ‘good’ cholesterol.

The fears ingrained over 50 years of low-fat dogma are being abandoned as a nutritional experiment that has failed miserably, even though the federal government continues to hang on to the failed lowfat experiment in the recent 202-25 Dietary Guidelines.

What a growing number of scientists have found is that we need not have blamed whole milk, butter—or beef for that matter—all of these years. In fact, the recent rise in obesity and diabetes is linked more to overconsumption of carbohydrates that have filled the energy-void after we collectively sucked healthy fat out of our diets.

Saturated fats are not the enemy, the “new” science shows. However, the science is really not new. Long-time observers, investigative reporters, and scientists note that the very science supporting the health benefits of saturated fats found in milk and meat has been around for decades, but was ignored — even buried.

Meanwhile, U.S. consumer demand for butter has been expanding, and worldwide demand for U.S.-produced ice cream and yogurt has grown as well. Dairy foods and snacks that offer an energy boost with a healthy protein-to-energy ratio—such as yogurt, whole milk, and even ice cream—will be particularly in demand in nations where busy, on-the-go consumers look for reviving options.

Healthy, natural fat and protein from milk and meat keep food cravings at bay to prevent binge-eating on empty-carb snacks. Enjoyed as part of a healthy integrated diet, dairy products—even ice cream—are satisfying, nutrient-dense, carb-moderating foods that can even be the dieter’s best friend.

Go real, go natural. There’s no reason to fear real milk, dairy and beef products from cattle. Contrary to what the activists say and contrary to government ‘guidelines’ that refused again to consider all the science, nutrient-dense full-fat dairy foods and meat are good for us, and yes, good for the planet.

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Pandemic economics, concerns on the radar, and valuable business insights shared as Dr. Kohl kicks off PA Dairy Summit

Dr. Kohl covered the gamut of what’s on his dairy and agriculture radar at home and abroad. Then he encouraged producers to separate the controllables from the uncontrollables to focus on the business. One tool he highlighted evaluates business management IQ using 15 critical questions for crucial conversations because it gets people thinking.

China, fake meat and dairy, propaganda seeking to eliminate the dairy cow, and much more concern him. But Dr. Kohl encourages farmers to seek opportunities, be flexible, innovative and adaptive, and to follow a process for their business and sharpen their business focus. Be sure to check out the navigation points on Dr. Kohl’s compass at the end of this article.

By Sherry Bunting

HARRISBURG, Pa. – The disruptions and challenges of the past year also create opportunities, said Dr. David Kohl, Virginia Tech professor emeritus and co-owner of Homestead Creamery for the past 20 years.

He was the keynote speaker kicking off the 2021 Pennsylvania Dairy Summit held virtually this week through an online convention format that had much of the signature Summit feel.

In his characteristic style, Dr. Kohl stepped the virtual audience through a broad global and domestic view of events and evolution down to the impacts at the dairy farm level with motivational thoughts on how to navigate.

He urged farmers to navigate rocky roads of change by adopting two key management elements. First, be flexible, innovative and adaptable. Second, follow a process for the business with a business focus.

Kohl also encouraged producers to manage around the things they can’t control like election results, pandemics and the strategies of China’s Xi Jinping.

 “A good marketing and risk management plan is critical. In this environment, we have to separate the controllables and uncontrollables… and look for the opportunities,” he said.

As he has in past seminars since the pandemic, Kohl highlighted the ‘buy local’ movement is picking up steam post-Covid. “Many of you are in that footprint. One-third of the U.S. population is in your area, so this movement might be sustainable,” he said.

That’s good news. The bad news is the acceleration of economic divide, said Kohl. He sees this affecting agriculture, other businesses and households, which will add to the economic volatility and extremes in the big three: milk prices, feed costs and interest rates.

Market supercycle

“We are in another supercycle that is really impacting the grain sector,” said Kohl. He cited the stimulus checks as “dangerous one-off income” leading to printing more money, which devalues the dollar. This fuels more exports, especially when coupled with the ‘China-effect’ as they rebuild their protein sector and livestock industry.

This, along with weather concerns in South America and investor speculation have “shot those grain prices higher, especially on corn, beans, and we see it in cotton, all up.”

He sees this grain market supercycle abating through 2021 and 2022. The grain price rally is not sustainable, in his view, unless weather problems in South America persist and unless weather affects North American crops this coming season.

Globalization

Kohl noted that globalization started six decades ago, and he marked 1995 through 2015 as the period of “hyper-globalization, but in recent years, we’ve moved away from this. Dairy is right in the crosshairs of this shift because exports have become a much bigger share of milk production,” he said. “If de-globalization continues, this will impact agriculture in the U.S.”

He warned that the dairy industry would be well advised to not shape itself with China’s market in mind.

“Don’t bet your dairy expansion on trade with China,” said Kohl. He gave the example that 300 million people in China were without power a month ago because China would not allow Australian coal in to fuel plants.

Kohl observes that while the U.S. and Europe are bickering about everything, China has been pursuing world power. China has invested a trillion dollars in 68 countries – the agriculture ‘hot-spots’ around the world.

“Their initiatives will impact our competitiveness,” said Kohl, noting that China is also moving ahead on building a world supply chain for vaccines made at sites they have cultivated in developing countries.

“China could be the leading power by 2040, even 2027. They are going to move forward very fast if we don’t get our act together,” he said, explaining the recent “regional” trade pact China made that makes China the central focus in Asia.

Market Concentration

The flipside of globalization is the domestic U.S. food supply and marketing chain.

“That’s our Achilles heel,” said Kohl. “We have too much concentration with too few firms, and I’m being very blunt about this. We saw what happened when plants shut down. Now we see more nations saying they want to become more self-reliant. This is something to watch closely over the next five years.”

Kohl said the industries that are linked to dairy are in 50 to 75% recovery while at the same time Amazon, Walmart, Target are operating at 125%.

“They are getting too much power here in the U.S. and around the world,” he said, noting that on one hand the buy-local movement is accelerating, but on the other hand, the pandemic environment has moved even more market power to these large global entities.

Expressing agricultural ‘serfdom’ concerns, Kohl responded to a question about China purchasing agricultural land and assets in the U.S. This also hit upon the recent news in business journals that Microsoft founder Bill Gates has been buying up farmland and is now the single largest owner of U.S. farmland (not total land but good arable farmland).

“I am worried about this one,” said Kohl. “Some of this big investment money creates serfdom. We need to do some due diligence, and we don’t have enough political forces looking at this. Canada put the kabash on China buying their land.” He noted that his research shows the land purchased by Gates through Cascade Investments is fertile land next to rivers and near international ports, as well as land with mineral rights.

’They want to eliminate the dairy cow’

Kohl’s Summit keynote discussion came the morning after the Super Bowl. And yes, he noticed the Oatly (oat beverage) ad that ran before halftime.

“Did you see the guy last night singing in the field talking about eliminating the dairy cow?” he asked, quoting other CEOs of brands like Beyond Meat also stating their goals to replace cows entirely.

On fake dairy and meat alternatives, Kohl was emphatic about how closely this needs to be watched.

“They’ve got the money. They’ve got the power. And they think they are saving the environment,” he said, explaining that these products are going to become more competitive with real dairy and meat as large investors and large companies in the traditional dairy and meat supply chain ecosystem get involved to drive the alternative product prices down and change the packaging. He gave the example that Beyond Meat is already closing that gap at $6.79 to $6.99 per pound compared with ground beef at $5.49 per pound.

“They are coming after traditional agriculture. That much is loud and clear,” said Kohl. “Big Ag has to look themselves in the face — that they allowed this to happen — with too much market power. This is me speaking, and I’m being blunt.”

During the chat session that followed, Kohl noted that even their Homestead Creamery based in Blacksburg, Virginia is seeing competition from non-dairy alternatives where they sell their fresh local dairy products.

“It is interesting that we are getting more questions on the non-meat and non-dairy products out there. Our customers are asking our sales team,” said Kohl. “We try to go into it with more education, and we are going A2A2 as a differentiator for our milk and ice cream.”

Minimum wage impact

Current legislation being considered in Congress includes a four-year phase-in to raise the minimum wage to $15 per hour. That’s more than double the current federal minimum wage.

“This will be bad for small business. The big guys can handle it,” Kohl observes. “This creates more business consolidation. We’re seeing a little push back on this now, but there needs to be a lot of push back. America was built on small business and entrepreneurs. We don’t want to create a serfdom where we just work for big business.”

Stimulus, taxes, regulation

With $2 billion a day in stimulus checks being written by governments worldwide, Kohl said this ‘black swan (pandemic event) can turn into an angry bird.

When government writes check, what comes next is encroachment, said Kohl. He sees federal, state and local taxes increasing and “regulators are going to have more swagger. This makes it imperative, to surround the farm business with your best advisors and have a good tax accountant who understands agriculture.”

Regulations in the environmental, labor, banking and financial service sectors are likely to increase, said Kohl. “Regulators have a lot of pent up energy from the past four to five years, and they’ll likely be coming out with a full-court press.”

Energy independence

Noting that the U.S. had its longest economic expansion until February of last year (pandemic), Kohl said a key reason is that the U.S. became the number-one energy-supplier in the world.

The effort to become energy independent began after the tragic attack of 9-11 in 2001. Today, the U.S. is number one energy producer, Canada is number four and Mexico is number eight. This means three of the top 10 energy producers are in North America.

“Now we are seeing a rollback of this playing right into the hands of Opec,” said Kohl, noting that the advertising and policy points about moving to electric vehicles can all sound good. “But we’re not thinking of the unintended consequences, where 74% of the components (for EV vehicles) are produced in China.”

How energy plays out policy-wise is important for agriculture, according to Kohl, because “$8 out of every $10 we spend is linked to energy.”

Kohl sees a “fine balance” to be had on sustainability and climate action.

“Some things we are doing for water, air and soil health are important, but there are contributors other than fossil fuels. I see a need to think about unintended consequences. If components for new sources come all out of China, and we get locked down, that creates a problem. Also, a lot of people seem to forget: when gas goes to $5 to $7 per gallon, it shuts a consumer and a farm down very quickly.”

Navigation points on Dr. Kohl’s compass:

— Surround yourself with good advisors and a good tax accountant.

— Be careful with one-off income from government support. Are you using that money to build efficiencies or pay down debt? Don’t make long-term expansion decisions based on this one-off income.

— Watch the value of the U.S. dollar relative to other currencies, but land value should hold.

— Expect to see acceleration of ‘carbon payments’ replacing direct farm program payments.

— Keep the non-dairy and meat alternatives on the radar screen, especially if you are involved in dairy leadership.

— Healthy soil, water and air quality are important focuses as agriculture deals with weather extremes.

— See the positives that have come out of the pandemic: farms labeled essential, local food movement acceleration, time with family, time to re-evaluate priorities.

— Be flexible, innovative and adaptive.

— Have a risk management plan and realize you are going to leave money on the table when you follow a plan that works for you 8 out of 10 years.

— Keep working capital available as your shock absorber and so you will be ready for emergent circumstances and unexpected opportunities. The recommended ‘war chest’ is to have greater than 25% of the farm’s expenses (not including interest and depreciation) as working capital reserve.

— Have a written farm budget and compare periodically (monthly) to actual expenses.

— Have a separate family living budget and compare periodically to actual expenses.

— Use advisory teams. They are the fastest growing trend, and they work.

— Be proactive on a plan to transition the business and to merge older and younger views of the future.

— Evaluate your business management IQ with 15 questions to ask yourself about your business and have each member of the family in management fill it out separately. This is a great way to measure business management progress, “and it gets you to think,” said Kohl. (See chart.)

— Do your baseline cash flow projections for the farm business, but also do financial sensitivity analysis. Work through the numbers in a best-case scenario to the aspiring goals of the business, but also run worst case scenarios. Look at the analysis if interest rates go up 1 to 2% — or with changes in the input and output values — to see how those changes affect the bottom line. “This gives you the parameters to keep you out of the ditches as you move forward,” said Kohl. “If those values experience extreme change, you can fall back on that working capital reserve.”

— Monitor those cash flows monthly against projections.

— Work with ag lenders to lock in interest rates where you can.

— Re-examine your vision and your goals and make sure expansion or investments line up with these goals; keep your working capital cushion. 

— Look for your “three’s” – 3 things you want to continue, 3 things you want to improve. When isolating goals and actions, limit to three to intensify your focus.

Published in Farmshine, February 12, 2021

Net Zero Initiative will ‘shape future of dairy,’ say leaders

Editor’s Note: Part one provided some details on the “official” launch of the Net Zero Initiative, which according to DMI’s Innovation Center for U.S. Dairy, “signals bold climate action” as “an industry-wide effort that will help U.S. dairy farms of all sizes and geographies implement new technologies and adopt economically viable practices.”

By Sherry Bunting, Farmshine, October 27, 2021

CHICAGO, Ill. — The Innovation Center for U.S. Dairy — formed in 2008-09 by the national dairy checkoff via Dairy Management Inc (DMI) — unveiled the Net Zero Initiative earlier this month along with Nestlé’s announcement pledging up to $10 million over five years as the first ‘legacy partner’ to fund research, pilot farms and provide expertise to scale technologies and practices to achieve carbon neutrality, optimized water usage and improved water quality by 2050.

Innovation Center chairman Mike Haddad noted in a DMI media call Oct. 14 that the Environmental Sustainability Committee “has been in place a very long time – many, many years.

‘Mature effort’

“Mike McCloskey has always chaired this committee. This is quite a mature effort for us,” Haddad explained, adding that the committee decided a couple years ago that dairy can become carbon neutral, and many dairies can sequester carbon.

“We felt like there was enough evidence already with existing technology and practices, that by scaling them, we can achieve this over time, and we have been working for years to build out this framework,” he said.

As chairman of Schreiber Foods, Haddad said suppliers, companies like Schreiber, “already see this requirement from our customers who want to have our sustainability efforts feed into their sustainability efforts. They want to know that we are taking care of the earth in making our dairy products, and we have to prove it to them with our measurements along the way.”

Environmental ‘mapping’

In 2007-08, just as the Innovation Center for U.S. Dairy was being formed, the mapping of dairy’s environmental footprint began.

“We were the very first ag sector to establish life cycle measurement of greenhouse gas emissions, showing U.S. Dairy at 2%,” said Krysta Harden, DMI executive vice president of global environmental strategy and former USDA undersecretary of Tom Vilsack when he was ag secretary.

“Through modernization and innovation, the environmental impact of producing milk uses 30% less water, 21% less land and manure, and has a 19% smaller carbon footprint today than in 2007,” she said. “It’s amazing where we have come since 2007.”

Harden explained that Net Zero Initiative (NZI) was started as “a dairy organization that represents farmers, cooperatives, processors, and includes DMI and the Innovation Center for U.S. Dairy, NMPF, IDFA, U.S. Dairy Export Center and Newtrient.

“All of these groups came together to establish NZI,” she said. “This really is the pathway for how to get there, how to break down barriers and make it more accessible and affordable for dairy farms of all sizes and all places.”

‘Piloting’ underway

Pilot farms are already being identified throughout the country, and 2021 is set as the year to move them forward.

Next, the constant focus will be on “scaling up to accelerate progress over time to our 2050 goals,” Haddad said.

“Largely these technologies already exist but need operational improvement,” Harden added. “We can see how we can get there, but the barrier is the significant investment needed by farmers to get there. We want to knock this out by scaling, to lower the investment by farmers and generate new revenue streams for farmers. This will be critical to a self-sustaining future.”

Bottom line, said Harden: “Dairy is committed to being an environmental solution.” She said the key, at the heart of it, is the dairy farmers.

According to the Innovation Center’s official statement, the 27 dairy companies that make up its board, represent 70% of the nation’s milk production and have voluntarily adopted the U.S. Dairy Stewardship Commitment and contribute to the industry’s ability to track, aggregate and report on progress.

“We know dairy farmers are leaders, and they care about what they are producing and how they are producing it,” said Harden. “They are passionate first-adopters, embracing how the world is changing.”

Sustainable profit?

DMI vice president and California dairy producer Steve Maddox shared his thoughts from the producer perspective.

“When we first started talking about sustainability efforts by the Innovation Center, most dairy farmers viewed this with a jaded eye because it often means requiring more of them, and not of others,” said Maddox. “But this effort focuses on improving profitability and efficiency that is also environmentally sound.”

He said farmers know the importance of being as efficient as possible. Early-on, Maddox said the Innovation Center started down the road of environmental sustainability to fight claims by anti-animal-ag groups by doing the scientific measurements in 2008, to show how dairy has reduced its footprint since 1944.

“That is a significant date near the end of World War II when some of America’s greatest generation went to college, and extension — through our land grant universities — taught us to maximize production and take better care of the land,” said Maddox. “That led us to continue improving.”

As that generation retired, and with government budget cuts to research and extension, a dropoff in improvement was seen, according to Maddox. He said this signals the need for the industry to pick things up to “shape the continuous improvement of the industry at the farm level.”

During media questions, Harden stated that the $10 million from Nestlé is specifically geared toward on-farm improvement — not changes in processing or new dairy products.

However, the Innovation Center for U.S. Dairy is also looking at the processing and transportation aspects of achieving the NZI goals.

In fact, the climate impact of transportation and refrigeration of milk and dairy products is already a big part of the entire shaping process through innovations such as ultrafiltration, microfiltration, and aseptic packaging for shelf stable beverages and products. These are other pieces that come from precompetitive Innovation Center collaborations.

As for the farm-level impacts of NZI, Maddox stressed how the 2007-08 life cycle analysis on milk and cheese showed that the industry reduced its use of feed, land and water through collaboration on animal care, improved genetics and the FARM program.

Shaping dairy

In other words, through FARM and NZI, companies will shape dairy’s “continuous improvement” instead of relying on extension education for those gains — mainly because, they say, the industry is at a point where these future gains will cost money. Since farms will need to invest in those gains, NZI is banking on industry and government to step up and help pay for it.

Something that often gets lost in discussions about climate change and sustainability, said Maddox is: “Cows, being ruminants, are miracles onto themselves. They convert byproduct to nature’s most perfect food.”

At his California dairy, over 50% of the cow feed on a dry matter basis is byproduct that would have gone into landfills.

“This, too, is a major part of it. We can feed all sorts of things, bakery waste, Doritos, sunflower meal… There are 400 different commercial crops grown in California, and all of them can be fed to cattle,” said Maddox.

He painted a picture of farmers learning from each other within the NZI framework.

Maddox observed that cow care and breeding to have more efficient cows is a big part of reducing dairy’s environmental impact to meet the ambitious new industrywide goals. 

“All of these sustainability practices will have a bottom-line impact,” he said.

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DMI’s NZI fits globalist agenda; How are ‘life cycle assessments’ developed? What do they value?

As Stewardship Commitments and Net Zero Initiative flow through to the FARM program’s Environmental Stewardship module, a user guide developed by NMPF covers what has already begun in terms of data collection. A farm’s cattle inventory of various classes and milk production, component production, feed ingredients, crop inputs and other data will be used to figure the farm’s GHG emissions relative to a regional average and relative to a national average. The guide can be read here, and additional information is available here 

By Sherry Bunting, Farmshine, December 4, 2020

Where do the life cycle assessments come from that are being used to benchmark progress on U.S. dairy’s impact on climate and environment? How might this “collective” method of measurement affect dairy diversity and geography in the future?

When dairy leaders talk about the Net Zero Initiative goals, they are using analysis by well-known animal scientists comparing data over time to benchmark industrywide collective progress using a determined scope of collective measurement that fits the controlling globalist view.

The idea is to peg dairy’s progress at one value that the global supply chain can then plug into their own brand impact measurements. Yes, this is both simple and complicated.

DMI leaders are quick to point out that this pathway was decided upon by dairy farmers, dairy cooperatives, and dairy processors and that dairy checkoff is simply providing the science. But it is also clear that DMI provides the staff and structure for implementation. The national dairy farmer checkoff organizations provide the science, the staff and the structure so that the entire dairy industry can be described as one unit – not multiple units competing with each other on the aspect of ‘sustainability.’ That’s the point, they say.

Along with the Net Zero carbon neutrality goal by 2050, DMI’s Innovation Center for U.S. Dairy offers this report on a decade of progress:  “The effects of improved performance in the U.S. dairy cattle industry on environmental impacts between 2007 and 2017,” was published in the January 2020 edition of the Journal of Animal Science

This report showed dairy used 30% less water, 21% less land, produced 21% less manure nutrients and produced 19% less greenhouse gas (GHG) emissions — referred to in press statements as carbon footprint — per metric ton of energy-corrected milk over the decade of 2007 to 2017.

The research by Jude Capper and Roger Cady, along with other animal scientists, observed that, “As dairy systems become more productive, efficiency improves via the dilution of maintenance effect (Bauman, VandeHaar, St. Pierre) and both resource use and GHG emissions are reduced per unit of milk.”

The researchers indicated that monitoring changes in food production processes, yields, and environmental impacts is a time-consuming and expensive undertaking, which they took to a higher level in this study as compared to 2006 and 2009 studies that looked at how efficiency gains reduced the environmental footprint of dairy from 1944 to 2007 based completely on animal productivity gains.

In the 2007 to 2017 study, researchers only looked at dairy’s impact from the manufacture and transport of crop inputs to milk at the farm gate. Excluded from the scope of collective farm progress are the impacts of milk transportation, processing and retail.

Dairy systems were modeled using typical management practices, herd population dynamics and production data from U.S. dairy farms (USDA NASS and Dairy Records Management System-DRMS). Crop data were sourced from national databases, including NASS. Modeling and training ration formulation software was used as well as a host of data from public sources to determine water recycling, electricity and other energy usage, for example.

“The U.S. dairy industry has made remarkable productivity gains and environmental progress over time,” write Capper and Cady. “To maintain this culture of continuous improvement, dairy must build on gains and demonstrate commitment to reducing environmental impacts while improving both economic viability and social acceptability.”

At the same time, Dr. Frank Mitloehner of University of California-Davis CLEAR center has been instrumental, mainly in evaluating – and putting into perspective – accurate greenhouse gas (GHG) emissions for dairy and livestock as well as participating in research on how various technologies could further reduce U.S. dairy’s current contribution of just 2% of total GHG emissions.

Progress to reduce GHGs is measured per unit of milk production, but as Dr. Mitloehner frequently points out, a better way to pinpoint it would be to incorporate the nutrient density of milk and meat in calculating the impact of dairy and livestock industries per nutritive value.

For example, almond beverage might have a smaller footprint, the experts say, but what is the nutritive value of selling water with the equivalent of two almonds per serving? Much of the climate impact discussion around food is not an apples to apples comparison in terms of nutrition and calories delivered.

The FARM program’s Environmental Stewardship guide prepares dairy farmers for collection of energy use data to compare a farm to a regional and national average for energy use as a part of its carbon footprint per unit of milk production. The guide can be read here, and additional information is available here.

There are other positive aspects of “environmental impact” at local levels that fall outside of the collective global method of impact measurement. How far food travels within local or regional food systems versus national and global supply chains is not part of the farm-level Net Zero Initiative.

Meanwhile, the Innovation Center for U.S. Dairy is working on product innovations at the processing level from a centralized or global supply chain perspective to reduce environmental impacts on a global scale. How do these ‘global’ vs. ‘local’ pathways intersect in the future in terms of a farm’s real contribution to the surrounding community vs. its contribution to a global impact model?

Where do the 2007 to 2017 gains from this research come from? First off, milk production increased 16% over that decade, and the number of dairy cows increased 2.2%.

Researchers explain the environmental impact was assessed using “a deterministic model based on animal nutrition, metabolism, and herd population parameters founded on life cycle assessment (LCA) principles.”

Those principles first establish the scope (in this case the scope was from crop input to milk output and did not include processing and distribution to consumers). Then inventory is established (input and output). Then the impact is established (input versus unit of output). Then the relative change is figured (improvement or reduction).

The researchers attributed a large portion of the gains to the continued dilution of ‘maintenance’ requirements per head of cattle and milk volume via these measurements: 

1) A 22.3% increase in energy-corrected milk production per cow as the 12% increase in fat yield and 10% increase in protein yield were factored in, 

2) Lifetime milk yield was figured to have increased 18.7% as a combination of shorter calving interval, shorter dry periods, increased replacement of mature cows with heifers, shortened days of life, and earlier calving age, 

3) increased productive-animal-days across the cattle population, 

4) reduced SCC as a proxy for reduced milk waste, 

5) How animals are fed, how water is used, and how inputs factor into the land and carbon footprint equation, collectively.

The research showed that even though total cattle numbers have increased slightly from 2007 to 2017, the number of productive-animal-days and lifetime milk increased by more during that time due to the way all of these factors combine to show reductions in environmental impact by reducing the inputs for non-productive cattle that are counted against the productive cattle population at points in time.

Life cycle assessment of environmental impact is all about data modeling and allocation. The age at first calving is a prime example. Until a dairy animal calves, she is using resources without delivering a product. Growth rates can improve these impacts in the modeling by getting cattle to production, faster. Once the animal has a calf and begins producing milk, she is now contributing to reducing carbon footprint by supplying milk yield and component yield in the national figures against the resources she is consuming. Length of dry period, calving interval, and other reproductive efficiency also affect this. Longevity, oddly enough, has less of an effect because of how the data are assembled and used.

As for land use and manure production, researchers looked at dairy rations without full consideration of the wide range of commodity byproducts. They included some common byproduct feeds like distillers grain for both 2007 and 2017. More could be done to show the relative feed value vs. environmental impact of many byproduct commodity feedstuffs, particularly if credit could be given for keeping fiber and carbohydrate from the food processing sector out of landfills.

Double-cropping (cover crop forages) are common practice on dairy farms today, which reduce environmental impact of milk production, but are not really quantified in this life cycle assessment research at this point.

In pasture systems, the intensive rotational grazing methods used today reduce the land to milk ratio within the context of grazing-based production, but may have a smaller positive impact on the industrywide collective figure if production per cow is below benchmark. That will need to be considered because there are clear sustainability benefits to these grazing systems that fall outside of this collective model.

All of these factors being analyzed and allocated to one U.S. dairy figure are calculated to paint one picture of reduced environmental footprint. This includes water recycling. Water that is used to cool milk is also used to wash down parlors and milking equipment and in some cases, a third time in manure flush systems before being recaptured as nutrient-rich effluent to irrigate crops. In some regions and some management styles, water recycling is not measured, but natural. Take grazing operations in rainfed rolling hills. Their recycling isn’t measured, but it’s happening.

Unfortunately, when it comes to all of these measurables, including the impact of productive-animal-days vs. animal population vs. energy-corrected milk volume, it is the increased consolidation of milk production to fewer and larger farms from 2007 to 2017 that has had, perhaps, the most significant positive impact on the collective industrywide dairy environmental footprint calculations.

Why? Because as more milk production is brought into heavily controlled confinement environments, it becomes easier to measure to directly influence the model. On the other hand, pasture and drylot systems offer other sustainability and animal care positives that consumers care about but are not as easily measured by this global supply chain model of environmental footprint.

The elite globalist view seeks to control every aspect of food, agriculture, and energy. It’s important to keep sight of other sides of the ‘sustainability’ equation. Local and regional food systems provide benefits to local economies, local land use and local ecosystems that are not reflected when we measure a national or global model.

As the industry moves toward controlled environments where inputs and outputs can be precisely measured, smaller less concentrated dairy farms may not be fully appreciated for what they contribute to a community’s environmental footprint in terms of how far food travels or how local economies and ecosystems are affected. This divergence needs to be addressed.

Remember, Net Zero Initiative fits the globalist view and aligns with World Economic Forum’s Great Reset. It also aligns with language in the Green New Deal.

Viewing footprint progress on a national or global scale across all cattle and all milk volume brings positive messages but also the aforementioned concerns.

It’s important to see ‘industry’ progress, and most dairy farmers welcome the opportunity to talk to consumers about what their industry has done collectively to be good stewards. However, when the dairy leaders at DMI and all of its organized underlings tell us that food safety, sustainability and animal care are NOT areas in which brands should compete, what they are really telling us is that these are areas that will be controlled by one message using their one collective measurement method in scope and calculation.

Farm size and geography will be considered, and they say diversity is a strength, but the bottom line is measurement toward a national model seeking to meet a global goal.

By their own admission, the dairy checkoff has pursued globalization since 2008, implemented FARM to keep animal care from being a marketing factor, and they admit they are implementing Net Zero to be sure dairy comes completely into alignment with the globalist view having collective measurement that fits the United Nations Sustainable Development Goals, while discouraging other forms of ‘sustainability’ marketing between brands.

Case in point, cattle longevity has little if any positive bearing on the life cycle assessment for water use, land use, manure produced and greenhouse gas emissions in the context of total-industry-collective measurement of inventory input vs. output.

In fact, the research cited in this article that is the basis for the DMI Innovation Center life cycle assessment actually shows a benefit for continual throughput of cattle with faster growth rates for calves and earlier age at first calving being more significant on the front end than the age of the cattle on the back end when applied to a collective industrywide measurement.

That’s because the total inventory of cattle in the dairy industry at any given time includes non-productive animals. Research models focus on the collective data about productive animal days vs. total cow numbers vs. milk production for input and output at given points in time — not over the lifetime of animals in the herd. Logic doesn’t always apply in this scenario.

In short, the way the industry looks at collective industrywide progress on environmental impact may differ from how an individual dairy producer or community of producers view their contribution by other equally valid measurements.  

Both methods can be supported by sound scientific data, but the industrywide collective method fits the global supply chain perspective. Thus, it is the approach for the Net Zero Initiative embraced by DMI’s Innovation Center for U.S. Dairy and the 27 companies that represent its board and the over 320 companies that are part of its Sustainability Alliance. 

The companies at the forefront are the largest global dairy companies and food retailers. They are also positioned as leaders and drivers of the World Economic Forum’s Great Reset, seeking to have food, technology, finance and energy sectors of the global economy work together to transform food, farming, energy, and our lives.

It will be important for individual dairy producer ideas, regional food systems, and their positive impacts on a more local scale to have a voice in how they are measured and evaluated within this truly global agenda. Speak up and stay tuned.

This document composed by the DMI Innovation Center for U.S. Dairy in November 2019 shows the “Stewardship Commitment” at a glance for each sector of the dairy supply chain involved in the Sustainability Alliance. Interestingly, under processing, there is a line item to quantify gallons of water captured from milk for use within the facility per pound of production output. 

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DMI-led, DFA-made: ‘siips’ is new ‘teen milk’, but…

But… when given the opportunity, teens choose regular fresh whole milk

siips: Siimply Perfect. Real Milk. Real Good. You Be You. These are the descriptive taglines for SIIPS, a shelf-stable, aseptically-packaged, ultrapasteurized, lowfat milk packaged by DFA in an 8-oz. aluminum can as a new “teen milk” based on DMI’s research of what it takes to make milk relevant to teens again. And DMI says more ‘innovations’ or ‘reinventions’ or ‘relevant products’ are on the way from other partners. All of this money and time spent to answer a question teens and pre-teens and elementary-aged students could have told us quickly, cheaply and easily, given the opportunity to choose whole milk – without the fancy packaging and processing that puts it neatly into a global supply chain instead of a local or regional fresh food system.

By Sherry Bunting (Farmshine, Nov. 13, 2020)

HARRISBURG, Pa. – On one hand they say they are not involved in reinventing school milk and then, well, they say they are.

Siips is the new low-fat, shelf-stable grab-and-go “teen milk” from Dairy Farmers of America (DFA). According to Dairy Management Inc (DMI), checkoff led the way on the innovation and test launch in selected locations over summer.  

Siips is a result of DMI’s fluid milk revitalization efforts and is targeted to improving the youth milk experience with relevant packaging and flavors,” according to a recent edition of Your Checkoff News.

During last week’s Center for Dairy Excellence industry conference call, a portion of the hour was devoted to questions and answers with DMI leaders, and we learned more about revitalization, innovation, and reinvention.

According to Paul Ziemnisky, executive vice president for global innovation partnerships at Dairy Management Inc. (DMI), DMI has been working since last summer to “understand perceptions of milk in schools.”

He said products like siips represent what DMI has learned from students in a variety of demographics so that milk can compete again.

Siips is grab-and-go milk in an aluminum 8-oz. can in the flavors of caramel, mocha and chocolate,” he explained. “Products like this will make milk competitive in the school ala carte area, and we are working with other partners for other ala carte grab and go products.”

Ziemnisky noted that DMI is also working with processors and technology companies to develop dispensers like those used in foodservice where students can choose their milk ‘formula’ or ‘flavors’. He said Covid set the test launch back for those, but they are coming.

The bottom line is, he said: “We are looking at new packaging systems… aseptic sustainable packaging, all in the process of starting up. We are working with the industry to line up 6 to 7 tests in key systems to create a catalytic effect across the whole industry.”

A dairy producer submitted this question: “We are seeing grants from checkoff to develop a ‘kids milk’ at Cornell. We already have a ‘kids milk.’ It is called whole milk. We are frustrated. Why would our checkoff spend money on this rather than spending money to get whole milk back in schools?”

DMI president Barb O’Brien replied that she is “not familiar with the ‘kids milk’ project. We are not involved in specialized formulation for school milk,” she said. “But we can tell you about the research programs we have invested in.”

Ziemnisky picked up from there to explain that, “Everything we do has to start with consumers to make sure what we do is relevant.”

He said DMI’s partners, including MilkPEP, are the experts in marketing and advertising while DMI is the expert on consumer research and insights.

O’Brien and Ziemnisky explained that what DMI does is “back-end strategy with brands to advance U.S. Dairy’s priorities.”

They said the brand partners spend “10 to 20 times our investment in bringing to market these innovations.”

“Three years ago, the milk revitalization alliance was formed,” said Ziemnisky. “By partnering with brands, we unlock new platforms and then leverage that to access their customers.”

O’Brien said that’s how DMI has managed what is essentially a $300 million state and national budget to become the equivalent of $3 billion in consumer access and increased per capita dairy sales.

Ziemnisky reported that whole milk sales grew by $1.8 billion on a value basis over the past five years to 41% of net sales at retail. He owed this to what he said were DMI’s “57 whole milk studies.”

(We can’t find any whole milk studies on the list of 57 studies, just a few studies related to full-fat cheese.)

The problem with 40 years of declining overall fluid milk sales, said Ziemnisky is that “the sector has gone 40 years without innovation.”

(The sector has also gone 40 years under what have become increasingly fat-restrictive USDA enforcement of its Dietary Guidelines, but that wasn’t mentioned.)

Ziemnisky pointed out that the gains made in whole milk sales have come at the expense of fat-free milk sales.

“We have a fix for that too,” he said. “Our goal is to make milk relevant again with high protein, low carb, portability, as well as reinvention at schools, foodservice and e-commerce to fit changing consumer lifestyles.”

As for the simple choice of whole milk in schools? DMI leaders were asked if they would fund and support a research trial like the one done last year at one middle/high school in Pennsylvania showing 65% gains in milk sales and sustainable reductions in waste of 95%.

O’Brien was “thrilled” to hear about that study and said exceptions can be granted for research, but quickly turned the conversation over to Ziemnisky to talk about the research and innovation of school milk DMI is already investing in.

Look for more in the next edition on DMI’s partnership with DFA on plant-based blends – why and how and other topics.

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Grassroots dairy meet with Rep. Thompson, a champion for Ag; Dietary Guidelines, whole milk in schools top the agenda

Congressman G.T. Thompson (center) is flanked on left by Dale Hoffman of Potter County and Sherry Bunting of Lancaster County and on his right by Bernie Morrissey of Berks County, Krista Byler of Crawford County and Nelson Troutman of Berks County. The Grassroots PA Dairy Advisory Committee involved in the 97 Milk effort met with Rep. Thompson this week on dairy issues.

By Sherry Bunting, Farmshine, October 30, 2020

BELLEFONTE, Pa. — From the Dietary Guidelines and whole milk choice in schools to dairy checkoff and milk pricing formula concerns, five members of the Grassroots PA Dairy Advisory Committee involved in the 97 Milk effort from across northwestern, northern tier and southeast Pennsylvania met with U.S. Congressman Glenn “G.T.” Thompson (R-15th) in Bellefonte, Pa. this week to talk about dairy.

Rep. Thompson helped lead the writing of a letter signed by 53 members of the U.S. House, including Ag Committee Chairman Collin Peterson (D-Minn.) and Ranking Member Mike Conaway (R-Texas) to Secretary of Agriculture Sonny Perdue asking for a delay on the decision about final Dietary Guidelines for Americans (DGAs) for 2020-25 until all of the science on saturated fat is considered.

Despite the bipartisan letter, Thompson indicated that USDA and Health and Human Services (HHS) will move ahead to finalize the guidelines by the end of the year.

Thompson shared his thoughts about the disconnect between the legislative branch and a bureaucratically appointed DGA Committee in formulating the DGAs which have so much impact on children and Pennsylvania’s rural economy.

With the election next week in the balance, Thompson said he is looking at introducing language that would give the legislative branch some role in advise and consent with regard to the DGAs. He also praised his colleagues from Pennsylvania as many have cosponsored the Whole Milk for Healthy Kids Act and the Give Milk Act. These bills would allow whole milk as an option at school and in the WIC program.

Under the current House leadership, the bill on school milk is not moving as it has not been taken up by the chair of the Committee on Education and Labor.

“As you know, our office made recommendations for members of the DGA Committee, but that didn’t happen,” said Thompson. “It’s hard to believe that the modern-day science is being ignored on this issue of whole milk. We need checks and balances, not only to serve the needs of children in school, to give them this choice, but also because of the damage these rules do to our rural economy.”

It goes without saying that if the Republicans are able to gain a majority in the House, there would be a better pathway to moving on some of these issues surrounding the way whole milk (and even 2% milk for that matter) are banned from school choices while other less nutritional beverages are offered unchecked. With Democrats in the majority for the past three years, there has been no movement on the bills.

Grassroots PA Dairy Advisory Committee member Krista Byler of Spartansburg, Crawford County, reported to the Congressman that while the beverages offered ala carte at school are calorie controlled per serving, there are no limits on how many of these beverages a student can purchase. At the middle and high school level, sports drinks, diet tea coolers, diet soda, and energy drinks are all allowed.

“But students can’t purchase even one serving of whole milk,” she said. “They simply aren’t allowed.”

“We need to get back to where milk is not tied to the school meal calculation and let it stand alone, and give students the choice,” said Thompson.

Byler serves as head chef and foodservice director for Union City School District, and her husband Gabe operates a 125-cow dairy farm with his father and brother, along with beef cattle and grain crops.

She explained that schools are afraid to move outside of the USDA edicts based on the Dietary Guidelines because of financial repercussions, and it’s difficult to get others to see the issue because so many people are generally unaware that children are limited to only fat-free and 1% low-fat milk options at school.

Five members of the Grassroots PA Dairy Advisory Committee from around the state talked about dairy issues with Congressman Thomspon, especially the Dietary Guidelines and getting whole milk choice in schools.

The group discussed ideas for how to obtain waivers from USDA to do a statewide trial where schools could simply offer all fat levels of milk and collect the data. One such trial, done quietly in Pennsylvania during the 2019-20 school year, revealed that when students at the middle and high school level were given the choice, they chose whole milk 3 to 1 over low-fat. At the same time total milk consumption rose by 65%, and the volume of milk discarded daily by students declined by 95%.

“That’s huge,” said Byler, a constituent of the Congressman. “We don’t need to reinvent a new ‘kids milk,’ we already have one that students will choose if given the opportunity.”

Thompson agreed, stating that, “Now is the time to look at something like this because what have families been turning to in this pandemic? Whole milk,” he said.

This is supported by the most recent USDA data through June showing that both whole milk and 2% milk sales made big gains in June as supply chains worked through the early Covid issues – pushing total fluid milk sales up 2.2% over year ago year-to-date January through June with whole and 2% unflavored white milk together accounting for more than 70% of all fluid milk sales categories, and whole milk alone being the largest selling category.

“Whole milk is what families are seeking when the choice is up to them,” said Thompson, indicating that while consumers are seeing the science on whole milk, the DGA committee is not.

“All of the doctors interviewed on news programs during this pandemic are talking about Vitamin D as boosting the immune system,” said Bernie Morrissey of the Grassroots PA Dairy Advisory Committee.

Thompson observed that with Vitamin D and other nutrients being fat soluble, the DGAs are missing the boat.

Morrissey and Troutman are working with businesses and organizations buying and distributing “Vote Whole Milk School Lunch Choice, Citizens for Immune Boosting Nutrition – 97milk.com” yard signs that are proliferating across the countryside. A link at the 97 Milk website lets citizens know how to get involved, and a second link provides information to get involved in delaying the 2020-25 Dietary Guidelines until all the science is considered on saturated fat.

Concerns about the transparency and accountability of the dairy checkoff program were also discussed, and Thompson was receptive to looking at ways to turn this around.

The Grassroots PA Dairy Advisory Committee suggested ending the influence of importers by ending the import checkoff of 7.5 cents per hundredweight equivalent. This seemed like a good idea when it was implemented in 2007, but in retrospect has set the globalization direction of the national dairy checkoff’s unified marketing plan and ended the practice of promoting Real Seal, made in the U.S. products.

The committee was also looking at the promotion order asking the Secretary of Agriculture, who can amend the order at any time, or to work legislatively to clarify producer rights under the law in where their ‘local’ dime portion of the checkoff is assigned for education and promotion.

Nelson Troutman, a dairy farmer in Richland, Berks County, who started the Drink Whole Milk 97% Fat Free ‘baleboards’ noted that the corn and soybean growers have periodic review of their checkoff programs, and asked if there is a way for dairy farmers paying the mandatory checkoff to have more say on whether it should continue, or more transparency to see all of the expenditures and the plans submitted by DMI to USDA.

The Committee also suggested evaluating the way the boards are formed and even noted that the language of the order suggests the Secretary can call for a referendum even without a petition by 10% of the producers and importers. 

They noted that fresh fluid milk and other fresh dairy products are a critical market for Pennsylvania producers, but the emphasis of the industry appears to be moving in a different direction. Education, promotion and research are important, but the current direction of the national drivers is in question.  

Dale Hoffman of Hoffman Farms, Shinglehouse, Potter County and Troutman both shared the economic conditions in milk pricing and marketing of milk, especially the extreme difference between high protein value and CME cheese markets since June compared with what dairy farmers in the Northeast are actually seeing in their milk checks as negative PPDs subtract the value of their milk components.

In fact, the official Dairy Margin coverage margin for Pennsylvania is running $1 to $3 behind the U.S. average for June through September, when normally Pennsylvania runs with the U.S. average or 20 to 50 cents above it. The divergence makes it hard for producers to use risk management tools and have them function as intended.

Hoffman noted that producers have lost their ability to market their milk competitively in the region – especially in the north and west of the state — and their voice in how milk is priced is lacking. He observed that even Farm Bureau is recognizing this issue with some new recommendations.

Thompson welcomed the idea for a national hearing on milk pricing, especially as the next Farm Bill is not far off, and these issues need to be on the table early.

But first, there’s an election to get past. It is hoped that after November 3, these issues can be looked at. This has certainly been a difficult year on many fronts for all Americans, and the Grassroots PA Dairy Advisory Committee was grateful to speak with the Congressman about their concerns.

Dale and Carol Hoffman of Hoffman Farms took “Vote Whole Milk” yard signs home to Potter County.

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New Cl. I milk price formula puts $403 mil. in processor pockets since May 2019, $436 mil. ‘pulled’ from ‘pools’ in May-Oct 2020 period

By Sherry Bunting, Farmshine, October 9, 2020

BROWNSTOWN, Pa. — The bottom line is the Federal Milk Marketing Orders are not functioning as farm-level pricing can be easily manipulated.

Negative PPDs continue to persist, and all indications are this could be the case through yearend. Several stories in Farmshine since May have covered the Producer Price Differential (PPD) situation and what it means to producer milk checks.

Now, even the American Farm Bureau Federation (AFBF) is on record evaluating the fallout from the new way of calculating the Class I advance base price as implemented May 2019 after passage of the change was made part of the 2018 Farm Bill.

In terms of the money subtracted from Federal Milk Marketing Order (FMMO) pools, Farmshine first reported the $1.48 billion in FMMO revenue gap across 7 of the 11 FMMOs that are multiple component pricing orders. The article and above chart were published in the September 18 edition. September losses will be reflected in FMMO reports in mid-October, and so far PPDs for September milk are mixed, some positive and some negative, but all are well below what would be the case under the old Class I pricing method.

This week, AFBF dairy economist John Newton pegged the cumulative loss to Class I value, alone, at $2.00 per hundredweight or $403 million to-date, across all FMMOs just on Class I milk — money unpaid to farmers that stayed in processor pockets. That figure is about 28% of the $1.48 billion component loss figure shown in FMMO negative balance and it correlates to Class I utilization being roughly 28% of total U.S. milk volume.

The Farm Bureau summary also shows the concentrated loss of $436 million in Class I value for May through October 2020. (Interesting coincidence: DFA is today the largest Class I milk bottler with the May 2020 acquisition of 44 of Dean Foods’ 57 milk bottling plants at a bankruptcy auction price of $433 million.)

“Due to the rapid rise in Class III prices and a modest increase in Class IV prices, the spread between the two was $6.83 per hundredweight in July, $10.96 per hundredweight in August, $10.30 per hundredweight in September and (will be) $3.56 per hundredweight in October,” writes Newton this week in the Farm Bureau analysis.

“As a direct result of no longer including the higher-of in the milk price formula, the Class I milk price never fully captured the rally in Class III milk prices. Instead, the new Class I milk price was as much as $4.57 per hundredweight below the higher-of formula price in August and $4.26 lower in September,” he continues. 

“As identified in Figure 2 (above), had the higher-of formula still been in place, the Class I mover would have exceeded $24 per hundredweight in August,” states Newton.

Newton cites a Class I minimum example for the Southeast, stating that these losses are “before Class I location adjustments are added. In South Florida, for example, with the $6 per hundredweight location adjustment, the Class I milk price would have been more than $30 per hundredweight in August 2020.”

Newton notes that from May 2020 to October 2020, the average difference between the old and new Class I milk price formulas was $2.04 per hundredweight in favor of the beverage milk processor. This means that the regulated minimum prices fluid milk processors had to pay dairy farmers from May through October 2020 were an average of $2.04 lower than what they would have been if the higher-of was still in place.

Going back to May 2019 when the new Class I formula was implemented, Newton notes that the Class I milk price was 62 cents per hundredweight lower on average for the past 19 months compared with the pre-farm bill higher-of formula. (Fig. 3 above)

When looking just at the 12 months pre-Covid from May 2019 to May 2020, the new Class I calculation added 9 cents per hundredweight to Class I pooled volume.

Newton writes that the Class I volume, alone, saw a $32 million benefit in the new Class I pricing in the first 12 months May 2019 through April 2020. Post-Covid, the new Class I pricing method is reflected as a $436 million loss May to October 2020, so the cumulative loss is estimated at $403 million over 19 months of implementation.

This analysis, says Newton, was based on actual Class I pool volume as determined pre-Covid, and does not account for the impact on all milk in and out of the pool for which producers were paid at or near FMMO blend price, before deductions.

The bottom line in looking at the Farm Bureau analysis, along with our own past four months of analysis, the new way of calculating Class I – per the 2018 Farm Bill – would be a relatively benign factor in a ho-hum market if dairy product and component values were at least somewhat accurately reflected across multiple manufacturing classes.

On the other hand, it works poorly in a lopsided market where markets are disrupted, huge government purchases occur on some products and not others, and where huge imports of some products (butter) and not others (cheese) impact accumulating inventory differently for the different milk classes.

While magnified in a severe market disruption like Covid-19 has created, the dairy “market” complex has had lopsided markets in the past and will again in the future at some level. The fact that this pricing change was made without a national hearing and without a dairy producer vote and without an FMMO administrative hearing is concerning.

Some members of Congress have stated that National Milk Producers Federation (NMPF) and International Dairy Foods Association (IDFA) — together — agreed on and requested this Class I pricing change and that Farm Bureau took a non-position, making the change a “no-brainer” for Congress to include in the Farm Bill. 

Farm Bureau had done analysis before the change was implemented showing the average over time was neutral. But neutral over time does not reflect month to month cash flow impacts and messed up risk management tools when markets diverge.

What we see in this so-called “neutral” change is the capacity for processors to manipulate the transfer of market value by playing one class against others and essentially removing ‘market value’ from producer milk checks.

Congress needs to hear the story of how dairy farms are impacted in their cash flow and use of risk management tools when a minimum of $1.48 billion in component value is simply sucked out of milk checks over a 4-month period. 

Yes, CFAP payments help dairy farmers. But government payments lead dairy even farther away from establishing market value to become more reliant on government payments that, quite frankly, come with more and more strings attached.

Remember, USDA Dairy Programs responded in a Farmshine interview in August to explain that the value missing from pools is “still in the marketplace” even if it doesn’t show up in the FMMO blend prices.

Specifically, USDA stated in that August 3 email that, “The blend price (SUP) is a weighted average of the uses of milk that was pooled for the marketing period (month). If some ‘higher value’ use milk is not in the ‘pool’ then the weighted average price will be lower. It is important to note that the Class III money still exists in the marketplace. It is just that manufacturing handlers are not required to share that money through the regulated pool. 

From the looks of milk checks shared in Farmshine’s Market Moos survey in June and July — and looking at the All-Milk prices reported by USDA through August — this ‘money that still exists in the marketplace’ has been largely unshared with producers.

The Class I pricing change was made, according to NMPF / IDFA to so that Class I processors could manage their price risk with forward contracting.

However, CME market brokers and analysts who were questioned about the use of forward contracting by Class I milk bottlers say that few, if any, are doing it. Part of the NMPF / IDFA push for this change was their statements that Class I bottlers would use risk management to stabilize their milk costs if the higher-of method was abandoned in favor of “averaging”.

In fact, some analysts we spoke with report there’s no incentive – even with the new formula – for processors to forward contract a perishable, quick-turnaround product like gallon jug milk. It doesn’t sit in a warehouse like cheese or butter or powder.

… Unless it is shelf-stable ultrafiltered milk — like Coca Cola’s Fairlife products. Coca Cola purchased the remaining shares of Fairlife from the Select Milk Producers cooperative on Jan. 3, 2020 — just 9 months after the new Class I pricing method was implemented.

The industry said this Class I pricing change was needed so that fluid milk processors could stabilize prices and in turn be positioned to invest in fluid milk processing and innovation, which would help dairy producers in the end by providing more Class I markets.

But what happened? Just 6 months after the new Class I pricing method was implemented, the largest fluid milk bottler, Dean Foods, filed for bankruptcy protection and sale in November 2019 with DFA waiting in the wings to buy. Then, 3 months after that, Borden filed bankruptcy and ended up selling to a consortium headed by former Dean CEO Gregg Engles.

Farm Bureau’s analysis this week estimates the impact on dairy farmer revenue from a purely Class I perspective. It does not quantify the full extent of component value removed from FMMOs in the process. Thus, the $403 million cumulative loss impact declared by Farm Bureau represents about 28% of the total loss – which is equivalent to the current nationwide Class I utilization.

This is a Class I pricing calculation change, but its impact on FMMO blend prices and farm-level mailbox prices is pervasive.

In addition, it is important to be aware in this discussion of loss impacts that there is absolutely zero method of calculating the market value of fresh fluid milk. It is not possible to determine what fresh fluid milk is worth because it is:

1)      Regulated by federal and state milk marketing orders and boards,

2)      Used as a loss-leader by supermarkets selling it far below its cost – especially the largest milk bottling retailers like Walmart and Kroger, and

3)      Federal government restrictions on the fat level of milk children are “allowed” to consume at school or daycare.

In short, the federal government controls fluid milk through USDA in lockstep with NMPF / IDFA — and don’t forget, DMI. Dairy checkoff figures prominently in this equation with the same heavyweights at the same table — pushing fat-free, low-fat, ultrafiltered, shelf-stable products, even 50/50 plant-based blends. 

Even DMI CEO Tom Gallagher is on record stating that the white gallon isn’t the future because even if children can have whole milk “innovation” is needed and admitting that his job is to “get processors to do stuff with your milk”. 

For processors to “do stuff with your milk”, they have to be promised a bigger margin. This could explain why the forward-looking focus of farmer-funded checkoff efforts is on innovation (processing partner margin), not on promoting and educating consumers about fresh fluid milk. And, it might explain why this new Class I formula was needed to average the only so-called market value left in the so-called dairy market.

CFAP payments are salve on some wounds, but the larger issue is still clear: Dairy producers need a voice — apart from the organizations that claim to represent them.

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USDA announced $14 bil in CFAP 2 payments, Dairy estimate is $1.20/cwt for Apr-Dec milk

Second checks under CFAP 1 delayed by enrollment extensions

By Sherry Bunting, Farmshine, Sept. 25, 2020

WASHINGTON, D.C. — President Donald Trump and U.S. Secretary of Agriculture Sonny Perdue announced an expansion of the Coronavirus Food Assistance Program (CFAP) on Sept. 17, which means a second round of $14 billion in additional CFAP payments will be made to a new list of eligible commodities, including dairy cow’s milk as a price-trigger calculation and even goat’s milk as a sales-triggered calculation.

Sign up for this second round of assistance – CFAP 2 — runs from Sept. 21 through Dec. 11, 2020.

CFAP 2 payments for dairy calculate to a little over $2.00 per hundredweight on the equivalent of April through August milk marketings. However, the calculation boils down to $1.20/cwt on actual April through August milk marketings, plus another $1.20/cwt on the estimated September through December milk marketings – a 4-month period – using the average daily milk production from the prior 5-month’s actual marketings.

Specifically, the announcement describes the CFAP 2 dairy payments as follows:

Payments for cow milk under CFAP 2 will be equal to the sum of the following:

1) The producer’s total actual milk production from April 1, 2020, to August 31, 2020, multiplied by the payment of $1.20 per hundredweight, and

2)  The producer’s estimated milk production from September 1, 2020, to December 31, 2020, based on the daily average production from April 1, 2020, through August 31, 2020, multiplied by 122, multiplied by a payment rate of $1.20 per hundredweight.

This round of farm assistance, known as CFAP 2, follows in addition to CFAP 1.

The CFAP 1 payments were to be made in two stages, with enrolled producers having received most of their eligible payment in their first check. However, the second portion or balance of payments under CFAP 1 won’t be received until after all enrolled producers receive their first checks.

Producers have not yet received their second checks from CFAP 1 because the enrollment period for CFAP 1 was extended through Sept. 11. 

Further complicating payment of second checks under CFAP 1 is USDA’s extension of signups for certain counties in Louisiana, Oregon and Texas that were impacted by natural disasters (fires and hurricanes). Producers in those areas have until Oct. 9, 2020 to enroll in CFAP 1.

Once all enrollments in CFAP 1 are completed by Oct. 9, and once all enrolled farms receive their first checks for all eligible commodities under CFAP 1, then the remaining funds from CFAP 1 will be disbursed in the second checks to enrolled producers for eligible commodities, including milk.

CFAP 2, on the other hand, represents a totally separate second source of funding and assistance — and a second enrollment period — to cover market disruptions and additional marketing costs for the nine months period of April through December, whereas CFAP 1 covered mainly the disruptions for the first part of the year. There is some overlap in the time period, but these are two separate enrollments and calculations under CFAP.

To-date, according to USDA, nearly $1.75 billion has been paid to dairy farmers for milk under CFAP 1. The total paid or approved for payment to-date for all commodities under CFAP 1 is $10.2 billion.

Funds for CFAP 1 and 2 are from a combination of the CARES Act and the CCC. USDA used public feedback to make improvements under CFAP 2, according to Secretary Perdue.

CFAP 2 divides commodities into three categories for compensation as 1) Price Trigger Commodities, 2) Flat-rate Crops, and 3) Sales Commodities. Each category has a different method for calculating a payment.

Eligible livestock, including beef cattle and dairy cattle destined for beef, will be based on maximum owned inventory on a date selected by the producer between April 16 and August 31, 2020. USDA FSA personnel report that it’s okay if the date selected by a producer is within the same window as the date selected for CFAP 1 livestock payments as long as the animals in inventory on that date were destined for market as meat animals, not for dairy purposes.

USDA FSA personnel indicate that cull dairy cows are not eligible livestock under CFAP 2, but bull calves and any heifers identified as market animals for beef or veal can be claimed as inventory for market impact payments under CFAP 2.

Corn silage and other forages grown as feed for dairy cattle are also eligible under the corresponding flat rate acreage crops portion of CFAP 2

A complete list of farm commodities covered under CFAP 2 is available at farmers.gov/cfap

As with CFAP 1, there is a payment limitation of $250,000 per person or entity for all commodities combined. Applicants that are corporations, LLCs and partnerships may qualify for additional payment limits when members actively provide personal labor or management to the operation. 

In addition, USDA reports that this special payment limitation provision has been expanded to include trusts and estates for both CFAP 1 and 2.

Producers will also have to certify they meet the adjusted gross income limitation of $900,000 unless at least 75% or more of their income is derived from farming, ranching or forestry-related activities. Producers must also be in compliance with Highly Erodible Land and Wetland Conservation provisions to receive payments.

USDA reports that Farm Service Agency staff at local USDA Service Centers will work with producers to file CFAP 2 applications. Producers interested in one-on-one support with the CFAP 2 application can also call 877-508-8364 to speak directly with a USDA employee ready to offer assistance at the call center.

Farmers can also visit farmers.gov/cfap for additional information.

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