Positive insights on domestic milk promotion: ‘There’s hope. We have work to do.’

By the end of the 3-hour discussion on milk marketing and future viability of U.S. dairy farms, hosted by the American Dairy Coalition on Sept. 30, over 40 people — producers and others from east to west — had flowed into the Monona Room at World Dairy Expo and an estimated 30 people attended online.

By Sherry Bunting, Farmshine, October 8, 2021

MADISON, Wis. – A new and different – essentially vigorous — paradigm in milk marketing and promotion was the focus of an American Dairy Coalition discussion in Madison on Sept. 30th during the 54th World Dairy Expo in Madison, Wisconsin.

Bill Gutrich, senior director of food industry engagement-USA with Elanco Animal Health shared his insights and experience having spent his career in the consumer-packaged goods sector for global brands like Coca Cola, McDonalds and Samsung before coming into animal agriculture three years ago.

“We have a great product and producers do a great job, but we need to increase domestic dairy consumption, specifically,” said Gutrich to an in-person audience of over 50 people (flowing in and out of the Monona Room of the WDE Exhibition Hall). Another 30 people attending virtually online.

The ADC event attracted dairy producer thought leaders from east to west and generated follow up discussion and good questions. ADC CEO Laurie Fischer said the discussion is a starting point and hopes to see allied industries that are committed to animal agriculture join in on the bandwagon to shift the milk message, the animal protein message, in the face of the accelerated barrage of new plant-based and lab-grown lookalikes.

“We need a group such as yourselves to help us move forward,” said Fischer. “We are in this together.”

Using IRI data from DMI, Gutrich sees opportunity in targeting the largest group of most loyal customers — milk-only households — along with the next largest sector of households with both milk and alternatives to remind them why they love milk. ‘Own the why’ instead of getting caught up in the ‘hows’ and ‘whats’ and processes and blends that respond to criticisms from the smallest and least loyal subsets of consumers. 

One statistic Gutrich shared that was quite revealing is that 51% of total sales in the milk section are fluid milk, but only 33% of the retail milk space is devoted to milk. On the other hand, he said, 9% of total sales in the milk section are plant-based non-dairy alternatives, but almost twice the space — 17% of the milk space is devoted to non-dairy alternatives because there are so many varieties.

With so many different brands and variations of non-dairy alternative products coming onto the market and ramping up rapidly, this supply chain effort is essentially crowding out real milk in a manner that is not consistent with true consumer demand.

Likewise, the anti-animal activists are small in number but loud in advocacy. In effect, the gap between perception and reality on messaging as well as shelf-space vs. sales is that smaller sales, smaller numbers flood milk’s space and take positive attention away from milk, but this is not necessarily by consumer choice.

If Gutrich had a magic wand, he’d likely look to make milk competitive in the total beverage market, to reframe the competition and look at milk’s share of all drinks instead of share of the milk aisle. For example, consumers love cold whole milk, so if the message puts that first, then already it is connecting with the most loyal sets of consumers and connecting to their ‘why’ to build growth from that solid point.

When innovation focuses mostly on sustainability, then fewer resources are devoted to getting the message right in connecting with what consumers want.

Bill Gutrich, senior director of food industry engagement for Elanco Animal Health had a positive and hopeful message about focusing on domestic consumption and shifting the milk message to “inspire consumer loyalty to animal protein.”

Gutrich’s insights and discussion are consistent with his role with Elanco engaging the food industry and connecting the food chain. He talks to companies and purveyors, and from those conversations, it’s clear, he said, the people attacking animal agriculture are from the outside, pushing in. They don’t want animal ag to exist, but these are not the people we need to connect with to build loyalty to animal protein.

As the son of a police officer, Gutrich said his personal mission is to elevate the level of respect people have for farmers, much like the efforts elevating respect for our country’s veterans and law enforcement.

He said it comes down to “inspiring consumer loyalty to animal protein.”

Having worked around talented marketers outside of animal agriculture, Gutrich said he has come into the animal protein sector seeing “how we market our beautiful, incredible products to consumers.

“Every dollar starts in the hand of a consumer over the counter,” he said, describing how good marketing starts with the ‘why’, not the ‘what’ and the ‘how.’

“What are the emotional needs you need to connect with?” he wondered aloud. “They will buy the why.”

Using a borrowed analogy of the Craftsman drill, he said the ‘what’ is the buyer wants a hole. The ‘how’ is the drill. But the ‘why’ is they want to do it themselves.

The ‘why’ is what wins customer loyalty and offers the potential for a premium, Gutrich explained, noting that the key is to identify the ‘why’ and attribute it, and then “own it. That’s what great brands do.”

For Starbucks, the ‘why’ is the whole coffee-drinking experience. For Mountain Dew it is the ‘energy.’

In the dairy sector, Gutrich gave the example of Sargento Cheese, where the ‘why’ is ‘The Real Cheese People.’

“What did Kraft do?” he asked. “They labeled their cheese ‘made without hormones.’ What does that have to do with my ‘why’?”

These types of labels introduce something scary to consumers, and it has been proven in surveys and market research that these claims have little to do with their ‘why.’

“What this actually does is undermine their trust in the brand and the category,” said Gutrich, “and in the long run it’s bad for both. People want to think about serving a rich protein food, and we’re talking to them about hormones.”

Good marketing talks about consumers. Bad marketing talks about products and processes, according to Gutrich.

“Loyalty is a feeling,” he said, explaining a successful strategy communicates with consumers about the why, not so much about the process, the sustainability. Yes, sustainability and processes need to be handled, but that’s not connecting with consumers on an emotional level about their ‘why.’

“Own your consumer’s ‘why’, don’t let your critics determine your ‘why,’” he said. “All great brands have critics, but they handle the criticism separately, and keep marketing to why people love them.”

Gutrich gave some vivid emotional-connection examples: “Don’t you love how butter melts on your raisin toast or your cold milk on your cereal?”

In another non-ag example, he showed how Michelin tires own the safety-why, Goodyear owns performance. They keep their whole message consistently on their consumers’ ‘why.’

“Protein is hot,” said Gutrich. “Why aren’t we owning protein?”

The peanut butter brands own protein, and people believe peanut butter to be higher in protein than it is.

“We own protein,” said Gutrich about animal agriculture. “But instead of owning it, we create confusing talking points about the ‘whats’ and the ‘hows’ instead of owning the ‘whys.’”

Gutrich noted that supermarket scanner data show how consumers vote with their dollars, but when producers are told that they must ‘own’ sustainability because 85% of consumers want to see it and want to prioritize climate impact in their food choices, the question becomes, how were those questions asked?

When consumers are questioned with an ‘aided awareness’ style of questioning, of course they will say yes. But that percentage drops to 9% when the question does not include ‘aided awareness.’

Among consumers under 23, the Generation Z, Gutrich shared surveys showing this generation to have a higher overall level of brand loyalty (68%) compared with millennials (40%).

“There’s hope,” said Gutrich.

On fluid milk sales, specifically, he observed the well-known saga of sales decline over time, and the steep decline since 2000, but he has a different perspective on it.

“The dairy industry did this to themselves with over 10 years of ‘buy my milk with no hormones,’” he said. “Instead of focusing on your consumer’s ‘why’, the industry opened this chasm of 13% for milk alternatives to climb in.”

He analyzed domestic consumption figures from 1950 to the present, noting that domestic consumption is the issue, and it’s where the focus most likely should be. When domestic consumption growth is put beside U.S. population growth, the sales growth ultimately shows that dairy has “lost its share of stomach.” This is looking at domestic data only, excluding export sales.

“Ultimately, this means we have work to do,” said Gutrich. “How do we get back to the 1950s?”

Well, there’s no time-machine; however, he had a positive message about this, stressing that the non-dairy alternatives “are not going to take us down. Milk is in almost 95% of households. Let’s worry about our own sales growth and not worry about the alternatives.”

Breaking out the percentages, Gutrich showed that 94% of households include milk, 42% have both milk and alternatives, 3% are exclusively plant-based, and 52% are exclusively milk.

A successful brand would look at that breakdown and say: “We want to grow our loyal customers and go after the people that are closer to the ones that love milk. We want to remind them why they love milk so much.”

But instead, there are all of these triggers in the way and all of these other conversations that move the message away from the consumer’s ‘why,’ – away from the ‘why’ of the loyal or closest to loyal consumers fluid milk can build from.

“If we can continue to do better on these triggers like animal welfare, environment, carbon footprint, that’s fine, but we make it worse by talking a lot about it,” he said. “Get the marketing right. It’s about balance. The packaging dynamics are also amazingly important.”

To be continued



Ag Secretary says ‘Dairy will change’, economist digs into how, why

Using a graphic pulled from the September 10, 2021 edition of Farmshine in which a follow up story ran about Danone dropping 89 organic dairy farms from its Horizon brand — all of its Horizon farms in the Northeast — Bozic explained that the ‘social mission’ of cooperatives is to market all of their members’ milk. He said the “primary function of the future” for the Federal Milk Marketing Orders — as an extension of the cooperatives — is to ensure market access for dairy farms. “Market Orders are there to ensure orderly consolidation at a humane pace,” he declared.

By Sherry Bunting, Farmshine, Sept. 24, 2021

HARRISBURG, Pa. – ‘Turning the page’ was the theme for the annual Financial and Risk Management Conference where key takeaways about a changing dairy industry were presented.

The conference was hosted by the Center for Dairy Excellence Sept. 21 in Harrisburg.

Pennsylvania Secretary of Agriculture Russell Redding summarized his own thoughts: “I am still very positive about dairy, but dairy will change. It is changing,” he said.

The Center’s risk management educator Zach Myers set the stage for attending lenders, vendors, producers and industry talking about Dairy Margin Coverage and Dairy Revenue Protection and how these programs have worked (more on that in a separate article.)

Digging into the stress — the ‘change’ — was Marin Bozic, University of Minnesota associate professor of applied economics and dairy foods marketing, who also serves as facilitator for the Midwest Dairy Growth Alliance. He dug right into how and why, discussing some of the Federal Milk Marketing Order complexities, industry trends and pricing relationships. He made the case that more flexibility, competition and innovation are needed in the Federal Orders for a “level playing field” so winners and losers can “self-select.”

Bringing up the 89 organic producers Danone will drop from Horizon next year, Bozic said it is an example that, “One new farm in Indiana replaced 89 or 90 farms in the Northeast, and they can do that. There is nothing illegal about it. They could say they have a fiduciary responsibility to stakeholders and are minding their bottom line, but none of that helps you if 90 producers get dumped in a year.”

He pointed out the “social mission” of the cooperatives is to leave no member behind, so remaining an independent producer carries more risk today than in the past.

Bozic connected the dots to say the “primary function of the future for Federal Milk Marketing Orders — as an extension of the milk cooperatives — is to ensure market access for dairy producers.

“Market orders are there to ensure orderly consolidation at a humane pace,” he declared.

That’s a change from the central promise of the FMMOs today, which Bozic described earlier as “broken.”

“To navigate our businesses over the next year and longer,” said Bozic, “we have to count the passes and see the gorilla” — a nod to the visual exercise he had the audience participate in.

Bozic mentioned a few gorillas in milk. Gorillas in the FMMOs, in risk management, in dairy markets and in the macroeconomic situation – what else is going on in the world.

He showed graphs of what Producer Price Differentials (PPDs) looked like for the Northeast in 2020, the $4 and $5 negatives that represented cash flow bleeding, equity bleeding.

While the futures show the view out to the horizon over the next 6, 12, 15 months that would suggest there won’t be a repeat of that carnage, Bozic cited some of these risks, or gorillas, in the market and in world events that could represent shocks that can make the whole thing “go haywire again.”

Observing that the FMMOs are not the same today as when they were designed many decades ago, Bozic stepped conference attendees through the various long- and short-term impacts that reduce PPD, such as declining Class I utilization compared with increasing Class IV utilization and production.

“Orders were designed around the assumption that there would be plenty of fluid milk usage (as a percentage of total production), and we can just take it and designate it to be the highest and use those funds to make everyone whole,” said Bozic.

“The central promise of the FMMOs is that if your milk is as good as your neighbor’s, you get paid the same, so one farmer does not bid against another for market access and a good price,” he asserted. “That promise is now getting broken, not as much here, the East Coast FMMOs still have Class I.”

The next effect in the Northeast is the rise of protein tests. This impact comes through two channels where higher protein reduces PPD, the economist explained.

“Envision FMMOs as all processors paying into the pool and then taking from the pool. First they pay to the pool with classified pricing based on their respective milk solids. Class I pays on pounds of skim milk as volume, not on protein pounds,” he explained. “Even if sales are the same and the only thing that changes is protein, those (Class I) processors would pay the same amount (on skim) into the pool and take more money out (on protein) so there is less money remaining and a lower PPD.”

The second way higher protein production affects PPD is when the value of protein is lower in the powder than it is in the cheese. The butter/powder plant pays to the pool on nonfat solids price but takes money from the pool on protein price, “so that spread between the value of protein in cheese and powder also leaves less money for PPD,” said Bozic.

He explained the Class III price as an index of butterfat, protein and solids, in a straight formula that equals the class price. “When Class III price is higher than Class IV price, the predicted PPD for the Northeast Order declines,” said Bozic. “It’s almost linear.”

Conversely, when IV is above III, PPD goes up. “This has to do with paying the pool based on protein and nonfat solids, but when handlers take money out of the pool for components, everyone takes protein price leaving less money in the pool for PPD.

Bozic explained the demand shock to this system when the Food Box program “focused on smaller packages of cheese to put in every box. They didn’t take bulk powder and butter. So we went from a record low cheese price on the CME to a record high and no one expected this.”

The pull of 5% of the cheese supply for immediate delivery had everyone scrambling, said Bozic.

The amount of spare cheese available was not as high a volume as the government wanted to buy so cheese went from being long to short, and the price skyrocketed. This translated to an historically higher gap between Class III and IV prices as wide as $10 apart.

So why not just send more milk to make cheese? Bozic maintains that Class IV processing is accustomed to “balancing” fluid milk seasonality so there is extra capacity in that system.

Not so with Class III because those plants already run at capacity. “That’s the only way processors of commodity cheese make margin is to run at capacity, so when the demand shock came, and spare product was used up, there was no spare capacity and the price went higher. That was the main driver of negative PPD in 2020,” said Bozic.

Will it happen again? Bozic doesn’t foresee Food box programs with the same intensity in the future, but, “yes, it can happen, but I would say you need to have a pandemic in an election year. Don’t count on a program like this.”

The industry did ask USDA back in the 2008-09 recession to buy consumer packaged cheese instead of bulk commodities, so it could move instead of being stored to overhang the market later. That wasn’t working either.

“Now we understand that this other method disturbs PPDs so the dairy industry is united behind a more balanced approach,” said Bozic, describing the next iteration of purchases through the Dairy Donation Program will not be as aggressive in moving the markets by three orders of magnitude.”

Bozic said quick rallies and crashes impact PPDs also because of advance pricing on Class I based on the first two weeks of the prior month and announced pricing for the other classes at the end of the month.

Bozic explained why the change in Class I pricing was made: “The dairy industry wants to attract new distributors like Starbucks and McDonalds that are used to hedging their input costs. They don’t want to change prices every month. They want it to be what it is for a year, so the industry wants stable, predictable milk price costs to win favor with new distribution channels by making it easier for them to hedge.”

He said the new average plus 74 cents was designed to be revenue neutral. Looking forward, when Classes III and IV have less than $1.48/cwt spread, PPD under the new system is higher than under the old. But the most it can be higher is by 74 cents on Class I, which translates to 20 cents on the blend price.

The best case scenario is to add 20 cents to the blend price, but when Classes III and IV are far apart “the PPD can go haywire. Bottom line, the upside benefit of the averaging method with 74-cent adjuster is limited but the downside risk is big,” said Bozic.

Senate Ag subcommittee hearing on milk pricing: Agreement that Federal Orders need reform, but how? That’s the billion-dollar question

By Sherry Bunting

WASHINGTON, D.C. — Federal Milk Marketing Orders, their purpose, performance, problems and solutions — including a recent change in the Class I fluid milk pricing formula — were the focus of a Senate Ag subcommittee hearing on ‘Milk Pricing: Areas of Improvement and Reform” Wednesday, Sept. 15 in the Capitol.

“We are in the midst of a modern dairy crisis, magnified by a Class I pricing change in the 2018 Farm Bill. The pandemic and economic downturn are not the only causes of this problem, but they did exacerbate it. This system cannot adapt to market conditions and thus is not fairly compensating our dairy farmers. The formula change is a symptom of larger problems in a system that is confusing, convoluted and difficult to understand,” said Gillibrand Wednesday.

She recounted the more than $750 million in producer losses when looking at the previous Class I fluid milk ‘mover’ formula that used the higher of Class III or IV manufacturing milk prices and comparing it to the current formula that uses an averaging method plus 74 cents.

The hearing was a first step Sen. Gillibrand had previously indicated in a press conference last June, when the full extent of dairy farmer financial losses was becoming known.

As the hearing got underway, Gillibrand observed that from 2003 to 2020 there has been a 55% decrease in the number of dairy farms in the U.S.

“We are using an almost 100-year-old system with the last reform 20 years ago, where dairy farms are not operating as they were then. We need to put the power back in the farmers’ hands.” said Gillibrand.

The power to make the issues known was in the hands of three dairy farmers making up the first panel — Jim Davenport, Tollgate Farm, Ancramdale, New York; Christina Zuiderveen, Black Soil Dairy, Granville, Iowa, and Mike Ferguson of Ferguson Dairy Farm, Senatobia, Mississippi.

This was followed by a panel with Dr. Chris Wolf, ag economics professor at Cornell University, Dr. Robert Wills, president of Cedar Grove Cheese and Clock Shadow Creamery, Plain, Wisconsin, and Catherine de Ronde, vice president of economics and legislative affairs with Agri-Mark cooperative based in Massachusetts with members in New England and New York.

One thing everyone agreed on, in differing degrees, is that reforms are needed in the Federal Milk Marketing Order System.

Testifiers agreed that a key purpose of the FMMOs is to make blended payments more equitable between producers supplying different classes and uses of milk.

All three producers agreed the FMMO system should continue, although they shared differing ideas about how reforms could improve it.

There was also agreement that the new Class I ‘mover’ formula is not adequate for changing and uncertain markets. They agreed that using the USDA rulemaking process is the way to make such changes to be sure all parties are heard.

However, the current change in the Class I ‘mover’, implemented in May 2019, was made legislatively during the 2018 Farm Bill, not through the USDA hearing process.

Ferguson, a 150-cow dairy producer in Mississippi said he supported bringing back the previous ‘higher of’ method while a longer-term solution can be considered through the USDA hearing process. He noted periodic reviews of the adjuster could also be helpful, and that the situation should be addressed in the short term.

He explained that the Southeast producers across FMMOs 5, 6 and 7, produce about 45% of the annual fluid milk needs of their growing population, and when supplemental milk has to be brought in, those Southeast producers pay the price to get it there. That was very difficult and costly when class pricing inversions happened last year for a prolonged period of time.

Davenport, milking 64 cows in New York observed that the Class I price was aligning better in the past few months, but “we’re not out of the woods yet,” on Covid-19, he said.

“The FMMO system has served farmers well but needs adjusted to reflect current product mixes and market swings,” said Davenport, adding that the fluid market is very important for smaller sized dairies and regional supply systems. He proffered the hope that Class I, long-term, could be stabilized by basing it on something other than the volatility of cheese, butter and powder prices.

“The rulemaking process USDA uses will work, it just takes time,” he said, adding that the Class I price should reflect how hard it is to supply the fluid market.

Zuiderveen, whose family has dairies totaling 15,000 cows in Iowa and South Dakota, said FMMO pricing for milk of the same quality should align and foster innovation and competition instead of consolidation. It should also be transparent and promote a nimble industry that can respond to changes, she said.

“Distortions can cause the system to become unglued,” she said, noting that if producers can’t anticipate which classes will participate in the pool and don’t know how that will drive their milk price, then they can’t manage their price risk effectively, losses become compounded, and this discourages risk management.

Zuiderveen and others noted a variance as wide as $9 per hundredweight was experienced in mailbox milk prices from region to region and neighbor to neighbor at intervals last year.

“That creates a sense of helplessness among producers,” said Zuiderveen.

Dr. Wolf noted multiple reasons for the negative PPDs and milk check losses under the new formula, including declining Class I fluid milk sales and increased milk components, but said the two biggest reasons for milk check losses under the new formula compared with the old formula were the large volumes of de-pooled milk that reduced FMMO pool funds as well as the Class I change itself.

Wolf explained multiple factors in the wide divergence between Class III and IV. A primary one was government purchases being tilted to cheese during that time. “This large divergence in butter and cheese prices meant that the Class I milk prices were lower than they would have been under the former pricing rule,” he said.

Ferguson noted that the government cheese purchases were intended to support dairy producers as well as the public during the pandemic, but it ended up having a “devastating effect on our fluid market,” he said, noting that a more balanced approach may have helped.

Through difficult times in the past, price alignments were more stable in large part because of the ‘higher of’ method keeping the Class I price above the blended price so no matter what was purchased, all farmers, supplying all classes of products, benefited more equitably.

Under the current formula, the pandemic cheese purchases helped support dairy producers, but also led to distortions that contributed to large differences in milk prices at the farm level.

Dr. Wills was the only processor testifying. He said the survival of dairy depends on being able to evolve on these pricing issues. “Farmers are only better off if the premium (shared in the FMMO pools) exceeds the value of other classes, and that’s inefficient,” he said, adding his opinion that FMMOs have outlived their purpose.

“The redistribution makes it appear that all farmers are winners, when the evidence shows pricing equity is being lowered,” said Wills. “I fear for the future of the dairy industry. The federally administrated milk pricing now functions opposite of its intent, resulting in higher prices for consumers and lower prices for farmers. It responds slowly, encourages inefficient trucking and promotes consolidation.”

Wills also mentioned the wave of competition from an array of plant-based and blended products as well as cellular agriculture and bio-engineered analog proteins, none of which are included in the FMMO pricing structure.

Wills brought home the reality for rural communities when small and mid-sized farms are lost. Near the end of the hearing, he responded to a question from Senator Roger Marshall (R-Kansas) asking what are his farmers’ biggest concerns, what do they talk about when he sits down with them for coffee at a restaurant?

“My farmers tend to be smaller producers,” said Wills, president of two Wisconsin cheese companies supplied by 28 dairy farms. “They are concerned about having continued access to markets as the industry continues to consolidate. Even in Wisconsin, where we have more competition than most places, it is hard to find homes for those dairies that are cut loose from big plants.”

As consolidation accelerates, he said, there is a trend toward plants not wanting to make multiple stops. “The impact of losing all of those producers … that 10% per year loss (over time) just hollows out our communities. There’s not a restaurant in town anymore to have coffee at,” said Wills. “We lost our hardware store, our grocery store. A lot of it has to do with our rural communities being hollowed out. The ability to maintain those small farms is also important for our communities.”

On program safety nets and risk management tools, Dr. Wolf noted that the Dairy Margin Coverage program has a very positive impact on small producers vs. large producers, and that the Dairy Revenue Protection and Livestock Gross Margin are aimed at bigger farms. He said farms with those programs in place were “in a better place” last year.

However, elsewhere in his testimony and in that of others, the risk management difficulties during the unusual price inversions were also mentioned, when the Class I pricing change was exacerbated by pandemic disruptions creating those misaligned conditions.

As for simply nationalizing the FMMO pooling rules or making them more rigid, Zuiderveen said this would lead to more processors staying out of the pool, and Wills said de-pooling is the pressure relief valve processors need.

With a nod to pricing delays that affect the transparency in sending market signals through the FMMO system, Wills said he found out that week (Sept. 13) what he will be paying for the milk he bought on August 1, and his producers who sold that milk to him were also just finding out what they would be paid. That’s six weeks after shipping the milk.

Wills said this kind of inefficiency makes it difficult to plan and compete in business.

Another positive to come out of the hearing was when Davenport brought up legalizing whole milk in schools, to which Chairwoman Gillibrand, Senator Marshall, a doctor, and a few other members of the Senate Subcommittee gave hearty verbal support.  

Here is the link to the recorded Senate Ag subcommittee hearing https://www.agriculture.senate.gov/hearings/milk-pricing-areas-for-improvement-and-reform

Look for more in a future Farmshine.

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Danone’s Horizon confirms it will drop its 89 Northeast organic dairies (ME, VT, NH, part of NY)

By Sherry Bunting, Farmshine, August 27,2021

DEERFIELD, Mass. — Danone confirmed it will drop 89 Northeast Horizon Organic dairy farms by this time next year. The global corporation headquartered in France had purchased WhiteWave — including Silk plant-based and Horizon Organic milk — from the former Dean Foods five years ago.

Receiving the letters in late August are the Horizon Organic family dairy farms in Maine (14), Vermont (28), Washington County, New York (17) and the balance located in New Hampshire as well as Clinton, Franklin, and Saint Lawrence counties, New York.

Producers in the affected Northeast region say they saw this coming, but no one expected it to be this fast and this impactful in a region such as the Northeast where the organic milk market has had a long and growing following among consumers and some of the first organic transitions were with Horizon more than two decades ago.

Organic producers in the region also say the commoditization of their product faces the same consolidation trends as conventional dairy farms, in part due to the inconsistent interpretation of organic standards by certifiers and the delayed publishing and enforcement of certain rules by USDA.

Vermont’s Agency of Agriculture, Food and Markets, as well as Senator Patrick Leahy are looking into the situation. Maine’s Governor Janet Mills and Ag Commissioner Amanda Beal also announced state support for these farms and the state’s overall dairy industry through a stakeholders working group with short- and long-term strategies.

For its part, Danone is unequivocal in saying it is focusing on buying milk from new partners that ‘fit’ its ‘processing footprint.’

“Danone is offering a 180-day notice, or farms can sign onto a one-year contract with no contract option after that. Apparently, the farmers who contract for the year can leave with 30 days’ notice if they find another market,” writes Edward Maltby, executive director of NODPA in a bulletin as the news broke August 22.

That’s a big IF.

Other of the region’s organic processors are not known to have much extra capacity to pick up new organic milk shippers. Even conventional milk buyers are mostly not taking on new dairy shippers with several still enforcing base programs and penalties on existing shippers in the Northeast. (However, during the second half of August into September, overall milk supply in the Northeast and Midatlantic has been reported by USDA Dairy Market News as “extremely tight.”)

Maltby notes that this round of contract terminations are mainly in New England and do not extend past four counties in New York (extreme northern and eastern New York) and do not include Pennsylvania. He and other sources indicate Danone is setting an arbitrary line for milk to come from farms within a 300-mile radius of the plants that process it, so as they shift their manufacturing footprint, the farm footprint incrementally shifts as well.

Is this the future of unsustainable ‘sustainability’?

Month after month, the Northeast Federal Milk Marketing Order statistical bulletin shows handlers bringing in milk — including and especially organic milk — to FMMO 1 from the Midwest and Southwest United States. In fact, large quantities of conventional and especially organic milk come into the Northeast in tankers and packages every month from as far away as Texas and Colorado.

Danone issued an emailed statement to NODPA late Tuesday (Aug. 24) that confirmed the rumors and the numbers.

“We greatly value our relationships with our farming partners and did not make this decision lightly. Growing transportation and operational challenges in the dairy industry, particularly in the northeast, led to this difficult decision. Eighty-nine producers across the northeast received this non-renewal notice. To help facilitate a smooth transition, we are offering each producer the opportunity to enter into a new agreement for us to purchase their milk until August 31, 2022 to provide additional time and support,” Danone stated in an email response to NODPA.

“We will be supporting new partners that better align with our manufacturing footprint,” the company statement continued. “We are committed to continuing to support organic dairy in the east, and in the last 12 months alone, we have on boarded more than 50 producers new to Horizon Organic that better fit our manufacturing footprint. This decision will help us continue providing our consumers with the products they love.”

Danone’s statement indicates it is still committed to organic dairy in the East; however, on July 29th, during its earnings call with investors, Danone announced its plans to offer new versions of its FAKE-milk brands with what they say will be “improved taste and texture” later this year (2021).

Furthermore, Danone built the nation’s largest fake-dairy plant in Dubois, Pennsylvania, where it makes plant-based non-dairy substances marketed as “yogurt,” certain soft cheese lookalikes and, yes, fake-milk beverages will be produced there also.

When the fake-dairy plant opened in Pennsylvania in February 2019, Danone officials linked it to their global goal “to triple our plant-based business by 2025.”

Toward that end, during Danone’s July 2021 earnings call, Shane Grant, co-chief executive officer of Danone and CEO of the North America division, said: “The opportunity we see is really the challenge of that (plant-based) convention. We know that in key plant-based markets like the U.S., 60% of consumers are not in the (milk) category. We know the barrier is primarily product taste and texture. We will launch against this opportunity new dairy-like technology under Silk NextMilk, under So Delicious Wondermilk and under Alpro Not Milk.”

Danone also reported to investors its net income jumped 5% in the first half of 2021.

NODPA’s Maltby observed in a Farmshine interview this week that the discriminating higher-price-point consumer of organic milk is a prime target for imitation brands. He noted that organic milk has been “very price stable” on the retail shelf at $4 per half-gallon for the past decade.

“Even now, at a $27 to $29 pay price for (organic) producers versus a prior pay price of $35 or $36, the retail price has remained the same, indicating some room for growth,” said Maltby.

In fact, organic milk sales volume has been inching higher over the past few years, and during the Coronavirus pandemic, when all whole milk sales grew dramatically, organic whole milk sales volume grew by an even higher percentage in volume gains. Plant-based imitations grew on a dollar sales basis although volume is not tracked by USDA the way real fluid dairy milk sales are tracked by volume. Sales growth in plant-based imitations are also a function of the increasing price point, not so much reflective of volume.

Fake-dairy doesn’t offer the nutritional standing of real dairy products, but consumers are duped by advertising campaigns (especially Danone’s Silk commercials on television) into believing real and fake milk are interchangeable in their diets. 

Consumers are also being fed a steady diet of ‘save the planet’ rhetoric centered on plant-based and lab-cultured ‘alternatives’ thanks to regurgitated myths that do not tell the whole story about ruminant cows.

Danone has set a goal to be what it calls “the first carbon-positive dairy brand” by 2025. This includes its Horizon Organic brand. In a March 2020 Marketwatch report, Horizon was ranked as the world’s largest USDA certified organic dairy brand. A few months ago in April 2021, Danone released a report showing that its Horizon brand derived 18% of its carbon footprint from cow manure management, 14% from animal feed, and 9% from keeping milk cold in refrigerators. (That’s less than half, what is the rest?)

As dairy processing innovations continue to lengthen plant code to 30 to 40 days, and beyond, the processing trend in the fluid milk category – organic and conventional – is toward ultra high temperature (UHT) pasteurization and extended shelf life (ESL) aseptic packaging for extended warehousing, longer-distance transportation, and larger global circles of distribution where regional supply chains with fresher products will need to find ways to differentiate themselves.

Meanwhile, notes Maltby, it’s the total effect that consumers aren’t realizing because it’s not broadcast in advertising or on labels. The whole package, total effect of real dairy sales includes better nutrition, along with the components dairy farmers bring to their rural communities in terms of economic support and true environmental leadership.

“You don’t see this many organic farms dumped in a year. It’s unusual. This will have a dramatic effect on our rural communities and environment,” said Maltby.

In 2018-19 Danone began dropping organic dairies milking fewer than 500 cows in the western states, coming back to those farms offering conventional contracts using their proprietary “cost-plus” pricing method.

During a 2019 Western Organic Dairy Producers Alliance (WODPA) meeting in Nevada, some of those affected producers shared this news and blamed inconsistent enforcement of USDA organic rules on access to pasture, percentage of dry matter intake from grazing and other production standards. 

Maltby noted that NODPA and other organic dairy organizations are advocating with USDA and their members in Congress to ensure the Origin of Livestock rule for organic certification is strong “to not allow transitioned animals to retain their organic certification for milk when transferred or sold.”

Maltby observed that USDA and certifiers have “created an un-level playing field with their failure to publish this regulation over the past decade.”

He says NODPA and other organic groups also seek better enforcement of organic production standards, explaining that some certifiers “are still not interpreting or enforcing the access to pasture regulation in their definition of the grazing season.”

NODPA is urging anyone with influence within the CROPP Cooperative and Lactalis/ Stonyfield, to encourage them to enter into discussion with the Northeast organic dairy community about ways to move forward.

“A year is a very short time,” said Maltby.

A boycott of Danone products is also mentioned in the bulletin at the NODPA website.

“We hope to direct people away from thinking too narrowly about Horizon and consider boycotting the Danone (Dannon) products instead, to raise the issue with some leverage for these family farms,” he said. “Danone obviously believes it has adequate supply in other areas of the U.S., at a lower cost and from larger operations, that make their trucking logistics cheaper and easier.”

While dairy producers pay the cost to transport their milk from farm to processing, the milk produced in the Northeast is considered higher-priced at the farm level in part because of the FMMO structure but also because the Northeast lacks capacity for “balancing” the organic fluid milk market with processing assets to take milk for Class III and IV products when Class I sales and processing ebb and flow seasonally.

In addition, more organic feeds are produced in the western U.S. and Canada, and there is a transportation component to that scenario from a carbon footprint modeling aspect that becomes a wash when they just bring the milk to the Northeast from elsewhere instead of inputs for cattle on Northeast farms.

The costs of assembling milk from multiple small farms in a region, including field inspections and interactions, is also considered a cost the global Danone company would like to control by sourcing from fewer and larger “new partners”.

However, remembering the food disruptions, waste, and shortages during the pandemic, especially from the centralized models of the meat and poultry industries, Maltby notes that, “If this is the cost of maintaining farms in our region, in our economies and our communities, isn’t that (food security) something for companies like Danone to consider?”   

Bottom line, Danone appears to be looking to control the criteria of its environmental claims so that other companies can’t mimic them. The company is reportedly looking to build a “Regenerative Organic” certification to differentiate its products in the marketplace and capitalize on buzz terms in the climate discussion.

Meanwhile, current USDA-certified organic dairy producers, especially small and mid-sized family farms, feel abandoned in that conversation because they say they don’t see USDA defending what already are the organic standards and regulations, allowing two things to happen simultaneously – the dilution of standards commoditizing their product in the sourcing by companies like Danone, which then turn right around to reinvent real and fake dairy niche differentiation with new partners.

Stay tuned for updates in Farmshine and at the NODPA website

Consumers continued shift to higher-fat milk in 2020, used 1.3% more fat vs. 2019

By Sherry Bunting

Fluid milk sales in 2020 were essentially unchanged from 2019, although 2020 had an extra day as a leap year, according to USDA data released this week.

Whole milk sales were the largest category of fluid milk sales in 2020 for the third consecutive year since surpassing 2% milk sales volume for the first time in decades in 2018. Compared with 2019 volumes, whole milk sales in 2020 were up 3.2% at 16.6 billion pounds, according to the annual USDA ERS report released Tuesday, Aug. 31.

At 15.8 billion pounds, 2% milk was the second highest volume category, up 3.5% from 2019. This marked the first year over year increase in 2% milk sales since 2010.

Sales of 1% low-fat milk fell 4.3% in 2020 to 5.8 billion pounds while fat-free sales volume fell 13.4% to 3 billion pounds, less than half of what it was in 2010.

Over the past three years, sales of flavored whole milk had been increasing annually back to levels seen in 2005, but dipped 2% lower than 2019 during 2020 at 765 million pounds.

Some this could be attributed to consumer purchase patterns, but also is a function of what processors and retailers choose to make and offer.

In the flavored milk category other than whole, sales volume was 2.9 billion pounds, down a whopping 33.3% — a combination of virtual schooling, reduced institutional feeding, consumers mixing their own at home, and other potential pandemic-related reasons.
In general, the overall trends held in 2020 as consumers continued showing their preference for milk with more fat. Egg nog sales, incidentally, were up a whopping 8.5% on a volume basis.

Some in the industry have said to me that if schoolchildren are provided with the choice of whole milk, there won’t be enough cream for all of the other products the dairy industry makes.

That doesn’t make sense. Taken together, the USDA ERS annual milk sales breakdown showed the continued consumer shifts to higher-fat fluid milk products increased cream usage by 1.3% overall in 2020 vs. 2019.

Despite this shift to more fluid category use of cream, the availability of cream last year dragged down milk prices, pushed butter churns, and contributed to the price divergences.

Producers made more butterfat than the market used, and the industry also imported record levels of butterfat in the March through August 2020 time frame and near record levels for the 12-month year on the whole.

Reports this week (Sept. 1, 2021) indicate this butter inventory built up in 2020, and the current steady production, will control butter prices that have been rising the past few weeks.
Butter inventory keeps milk price in check… mate.

The breakdown of all dairy product usage for 2020 will be released by USDA ERS on September 30.

MilkPEP stays the course to uphold nutritional values

Doing so means walking away from DMI and NFL constraints

By Sherry Bunting, Farmshine, September 3, 2021

BROWNSTOWN, Pa. — Rather than dilute its rejuvenated milk performance messaging in NFL athletes’ own milk stories, the national Milk Processor Education Program (MilkPEP) walked away from its quest for a fall promotion partnership with Dairy Management Inc. (DMI) and the National Football League (NFL).

According to leaked emails dated August 27 and 28, the decision was made when NFL feedback required removal of references to fluid milk hydration, recovery and performance due to infringement on the territory of a prime NFL sponsor, PepsiCo.

Rather than dilute the campaign’s message to gain NFL approval, the email indicates MilkPEP will use its own creative content with NFL athletes, without the NFL branding. Separate Farmshine requests for official statements from both MilkPEP and DMI were not immediately answered.

‘You’re gonna need milk for that’ is a performance based MilkPEP campaign with athletes’ authentic milk stories and a wealth of milk facts and comparisons to other beverages. The ‘got milk?’ offshoot also links up with MilkPEP’s builtwithchocolatemilk.com website. Screen capture at gonnaneedmilk.com

Some history is in order.

MilkPEP is funded by the mandatory 20-cent per hundredweight assessment that is included in the Class I price and is paid by fluid milk processors on all fluid milk that is processed and marketed in consumer type packages in the U.S. DMI, on the other hand, is funded by a portion of the 15-cent checkoff paid on all milk hundredweights sold by all U.S. dairy producers and the 7.5-cent per hundredweight equivalent paid by dairy importers. 

MilkPEP, under the leadership of CEO Yin Woon Rani since October 2019, has brought back and revitalized milk education messages with an up-to-date modern focus on the nutritional and performance benefits of milk. 

For example, MilkPEP revived ‘got milk?’ in 2020, and even more recently started a related slogan ‘you’re gonna need milk for that.’

At the gonnaneedmilk.com website, Milk is positioned as “fueling athletes for centuries” and as “the original sports drink” with tabs for milk facts, why milk, and milk vs. other beverages. In fact, some state and regional checkoff programs, including the southern Dairy Alliance, are using some of MilkPEP’s fluid milk promotion pieces. MilkPEP also partners with DMI on some projects related to fluid milk promotion.

DMI leaders often point out that their role is research and instead of generic advertising, they focus on innovation via proprietary strategic partnerships that include DMI’s 5-year-old Fluid Milk Revitalization Initiative; while MilkPEP focuses on consumer-facing fluid milk education and promotion. DMI often claims to “further the reach” of MilkPEP promotions through partnering and social media.

A central theme in MilkPEP’s ‘gonna need milk’ campaign is how milk’s unique nutritional attributes fuel extraordinary accomplishments. Through science-based information and the stories of Team Milk athletes, this campaign comes right out to proclaim “Milk: The Original Sports Drink.”  So far this year, the milk stories of Team USA Olympians have been featured.

“I’m sorry we couldn’t get it done with the NFL, but we’ll find a way to get it done,” said Everett Williams, a MilkPEP board member at-large and Madison, Georgia dairy producer when called for his thoughts on the matter. “I have been impressed with what MilkPEP is doing, and it looks like we’ll still be working with the athletes, just not with the NFL branding. 

“But we will still get the message out that ‘you’re gonna need milk for that,’” he said.

The fall promotion work had reportedly been underway for months creating content. Given DMI’s partnership with MilkPEP and with the NFL in schools via the GENYOUth and Fuel Up to Play 60 since 2009, the thought was these MilkPEP promotions could associate the athletes’ stories with the NFL and FUTP60.

However, in the email leaked to many, including to Farmshine, over the weekend, MilkPEP apparently thanked DMI’s teams for working with them on this, but said the organization would follow a different pathway for the fall promotions already created. The email noted that MilkPEP worked with DMI “in an attempt to make compelling content for Gen Z to help us achieve our objective of positioning milk as a valuable performance drink that helps athletes do extraordinary things.”

This created conflict with the NFL.

According to the email, the feedback that was sent back was “very stringent prohibiting this type of content.” 

This feedback would have included editing every player’s authentic testimonials and removing all messaging from the gonnaneedmilk.com website that related to hydration, performance, recovery and sports drinks.

MilkPEP indicated in the email that it was unable to accommodate this level of feedback because the information is fact- and science-based.

In the email, MilkPEP’s continued support was emphasized for GENYOUth, the non-profit formed originally by DMI and the NFL. MilkPEP will pay for the distribution of nearly 4000 flag football kits to schools in October, which will feature the Team Milk NFL and nutritional posters along with the ‘got milk?’ branded pinnies, according to the email.

Outside of the schools, MilkPEP will essentially move forward on their own with their own content and will only use this content featuring attire without NFL or team brands and without any FUTP60 branding and no connection to the NFL.

“I am disappointed that we weren’t able to find a special place for milk in NFL promotion,” said Rob Barley, a MilkPEP board member at-large and dairy producer from Lancaster County, Pennsylvania when asked for his observations.

Barley noted that MilkPEP staff worked very hard on this promotion, and he indicated DMI worked with them, but in the end, the promotion was denied by the NFL as infringing on the areas of other sponsors.

He noted that this decision does not represent a break in the partnership between MilkPEP and DMI on fluid milk promotion, and it does not affect their school participation. Instead, it means MilkPEP is choosing to continue its fall promotion plan, using the unedited milk stories of football players. They just won’t have the approval of the NFL and therefore will not be able to associate with the NFL brand or FUTP60 logo.

“We lack the financial resources of other NFL partners,” Barley said. “It’s that simple.”

NFL sponsorship deals are huge. According to an NS Business report last year, the NFL brought in a combined $1 billion through sponsorship deals from 30 brands during the 2019-20 season. At $100 million, PepsiCo was the fourth largest, allowing it to use the NFL logo and branding on its advertising campaigns for soft drinks as well as its other beverage and snack brands including Aquafina (water), Frito-Lay, Gatorade, Tropicana and Quaker Oats.

By comparison, the entire annual budget of MilkPEP is less than that, estimated at $85 million.

Also in comparison, according to IRS 990 forms, DMI pays the NFL approximately $7 to $8 million annually and provides the staffing and infrastructure for the partnership with the NFL in GENYOUth, where state and regional checkoff organizations, collectively, outspend all other individual donors, including the purchase of breakfast carts and equipment and educational materials for schools. 

Over the past decade, GENYOUth’s in-school materials have evolved well beyond the original realm of nutrition and exercise as more multinational corporate donors from the technology, financial and consumer packaged goods sectors have boarded the school bus.

In 2020 and 2021, GENYOUth has focused its out-of-school messaging on raising funds for delivering school meals amid pandemic disruptions. 

Through GENYOUth and FUTP60, DMI targeted Generation Z over the past 12 to 13 years. In a press conference in May, Anne Warden, DMI’s executive vice president of Strategic Integration, said dairy checkoff “has been focusing on the youth audience ever since making its commitment to USDA on school nutrition (in 2008-09).” She stated that Gen Z is “not interested in facts like vitamins and minerals. They want to know how foods and beverages will make them feel.”

The FUTP60 partnership between the NFL and DMI began in 2009. By 2010, DMI had created the 501c3 non-profit Youth Improved Incorporated, operating as GENYOUth. Its formation includes USDA as an original partner. USDA blog posts and Flickr photos depicted the ceremony where the Memorandum of Understanding (MOU) was publicly signed by NFL Commissioner Roger Goodell, USDA Secretary Tom Vilsack, GENYOUth CEO Alexis Glick, and National Dairy Council President Jean Regalie during the 2011 Superbowl. 

Also in 2011, PepsiCo renewed its longtime partnership with the NFL in a 10-year deal that ESPN reported to be over $90 million per year with additional spending in marketing and promotion of its ties to the NFL.

In 2018, the GENYOUth Vanguard hero award was presented to PepsiCo during the New York City GENYOUth Gala, at a time when dairy farmer heroes were encountering one of their most difficult milk price margin years and whose checkoff had been contributing far more millions to the GENYOUth effort over the previous 10 years than the one-year, one-million PepsiCo had pitched in for Spanish translations and 100 breakfast carts. (PepsiCo has a school foodservice company and website touting USDA-compliant products.)

PepsiCo’s North American CEO accepted the award that evening and indicated the company had “admired the Play 60 program for years.” He then used the dairy-farmer-founded GENYOUth venue to tout Pepsi’s focus on healthy new beverages, including the Quaker brand oat ‘milk’ he announced had arrived in stores (a brand that was subsequently discontinued).

Looking ahead, PepsiCo announced in Feb. 2021, its joint venture with Beyond Meat called The PLANeT Partnership to make and sell plant-based alternative drinks and snacks. In July 2021, Beyond Meat filed to trademark “Beyond Milk.”

(Author’s note: NFL is big business, and its sponsorship deals understandably require rules for the road in which competing sponsors — especially those such as dairy producers with their smaller ‘altruistic’ investments as ‘partners’ in a youth program — are apparently expected to stay in their lane (getting meals to food insecure kids at school; not promoting milk’s nutritional profile in performance, hydration and sports recovery). On the other hand, pay attention…  if / when the PepsiCo / Beyond PLANeT Partnership brings forth a Beyond Milk beverage to go with the trademark application they just filed, dairy farmers will certainly expect the NFL to remember who the MILK lane belongs to.)

GENYOUth hosted the ‘Taste of NFL’ live-streamed event during the 2021 Superbowl and this week began promoting the event for 2022, aimed at using the ‘culinary experience’ to raise awareness and funds to support food insecurity. But traditional football fan-fave cheese never made it on the menu, unless PepsiCo’s Frito-Lay Chee-tos count. Even the GENYOUth cooler behind CEO Alexis Glick looks like convenience stores and school foodservice these days: a small corner for real milk at the top surrounded by plenty of PepsiCo beverages and consumer-packaged snacks. (PepsiCo does, after all, have its own school foodservice company and website.) Official tailgating recipes for the GENYOUth-hosted event contained no dairy: Chicken Doritos Meatballs (Doritos = PepsiCo), BBQ Ribs, Smores, and spicy wings. Alexis did say she’ll ‘have her glass of milk ready’ when ‘spicy’ was mentioned. GENYOUth twitter photo

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USDA moves forward with $350 mil. for dairy producers targeted to Jul-Dec 2020 FMMO Class I ‘mover’ losses

Eligible producers to be paid by agreements with milk handlers, co-ops

By Sherry Bunting, Farmshine, August 27, 2021

WASHINGTON, D.C. — According to USDA, milk handlers and cooperatives were contacted Aug. 23-27 about entering into signed agreements to distribute the approximately $350 million in Pandemic Dairy Market Volatility Assistance payments the agency announced on Aug. 19.

The agreements will be to disburse funds to their qualifying producers and provide them with education on a variety of dairy-related topics.

Handlers and cooperatives have until Sept. 10, 2021 to indicate to USDA their intention to participate. USDA will then distribute the payments to participating handlers within 60 days of entering into an agreement. Once payment is received, a handler will have 30 days to distribute monies to qualifying dairy farmers.

These funds will be disbursed to “eligible” dairy farmers through “eligible” Federal Milk Marketing Order (FMMO) independent milk handlers and cooperatives, not through FSA. There will be no signups for this program, and payment rates have not been published.

What is unique about the volatility payments is they will be producer-specific and targeted based on FMMO records and agreements with milk handlers to be the payment conduit.

USDA indicates this program is a “first step” and is aimed at compensating producers for volatility and federal pricing policy changes. The payments will cover 80% of the calculated lost value on Class I fluid milk pounds for July through December 2020.

This language suggests the payments will be limited to producers whose milk was pooled on FMMOs during those six months.

One point of contention with the “volatility assistance” is that the eligible producers will be limited to payments associated with up to 5 million pounds of annual production — even though farms of all sizes incurred these losses due to a combination of pandemic volatility and federal pricing policy changes. The Adjusted Gross Income verification will also be required, like for the prior administration’s CFAP payments.

A special webpage at the USDA AMS Dairy Programs website has been created where more details were provided this week. Officials responding to Farmshine questions said this webpage will be updated on an ongoing basis with more details as they become available. The webpage link is https://www.ams.usda.gov/services/pandemic-market-volatility-assistance-program

A brochure is also available at https://www.ams.usda.gov/sites/default/files/media/PandemicAssistanceMarketVolatilityBrochure.pdf

The actual cumulative net Class I value losses to dairy producers over a longer 27-month period (May 2019 through July 2021) were more than twice the amount of the program, pegged at over $750 million.

During the six months covered by the volatility assistance program – July through December 2020 – the difference between Class III and IV milk prices was $5 to $10 per hundredweight. Further amplifying the impact of this volatility on producer blend prices was the 2018 Farm Bill change (implemented May 2019) to use an averaging method instead of the previous ‘higher of’ Class III or IV skim prices to set the Class I ‘mover.’

This change also led to massive de-pooling and severely negative producer price differentials (PPDs) for most of the past 27 months. Even in some of the positive PPD months, the PPDs were smaller than normal, representing lost value to producers in excess of $3 billion.

In disbursing these volatility assistance payments, milk handlers and cooperatives will be reimbursed for limited administrative and educational costs, according to the USDA brochure.

The education piece stipulates that each participating handler or cooperative “will provide educational materials to all producers by March 1, 2022. The USDA brochure indicates that they may provide the education in the form of mailings, recorded online trainings, live virtual webinars, and/or in-person meetings.”

This education revolves around federal dairy programs, according to USDA. Example topics are Federal Milk Marketing Orders; Dairy Margin Coverage, Dairy Revenue Protection, Dairy Mandatory Price Reporting, Chicago Mercantile Exchange, and Forward Contracting.

USDA will make these education materials available, or the participating handlers and cooperatives may use their own educational materials or training.

Each participating handler will have to verify how many producers were provided with the information and the methods that were used for the education.

The Pandemic Dairy Market Volatility Assistance Program was announced during meetings with farmers and a tour of farms with Senator Patrick Leahy in Vermont last Thursday. Back in June, Agriculture Secretary Tom Vilsack had committed to provide additional pandemic assistance for dairy farmers in an exchange with Sen. Leahy during an Appropriations hearing.

“This (program) is another component of our ongoing effort to get aid to producers who have been left behind and build on our progress towards economic recovery,” said Vilsack. “This targeted assistance is the first step in USDA’s comprehensive approach that will total over $2 billion to help the dairy industry recover from the pandemic and be more resilient to future challenges for generations to come.”

In a press statement this week, NMPF president and CEO Jim Mulhern stated that the $350 million only compensates for some of the damage resulting from the pandemic.

“NMPF asked the department to reimburse dairy farmers for unanticipated losses created during the COVID-19 pandemic by a change to the Class I fluid milk price mover formula that was exacerbated by the government’s pandemic dairy purchases last year,” said Mulhern. “When Congress changed the previous Class I mover, it was never intended to hurt producers. In fact, the new mover was envisioned to be revenue-neutral when it was adopted in the 2018 Farm Bill. However, the government’s COVID-19 response created unprecedented price volatility in milk and dairy-product markets that produced disorderly fluid milk marketing conditions that so far have cost dairy farmers nationwide more than $750 million from what they would have been paid under the previous system.”

NMPF and IDFA suggested and agreed to the Class I pricing change during 2018 Farm Bill negotiations, and no hearings were held before the FMMO method for calculating the ‘mover’ was implemented in May 2019.

Mulhern went on to say that the arbitrary low limits on covered milk production volume mean many family dairy farms will only receive a portion of the losses they incurred on their production last year.

“Disaster aid should not include limits that prevent thousands of dairy farmers from being meaningfully compensated for unintended, extraordinary losses,” Mulhern said, adding that NMPF is “continuing discussions about the current Class I mover to prevent a repeat of this problem.”

For its part, the American Dairy Coalition has been facilitating nationwide discussions with other dairy groups on the dairy pricing, de-pooling, negative PPD losses and risk management impacts since last winter, including a letter signed by hundreds of dairy producers and organizations sent last spring to NMPF and IDFA seeking a seat at the table on solutions for the concerns about the Class I ‘mover’ change and supporting a temporary return to ‘the higher of’ until other methods can be appropriately vetted with a hearing process.

ADC’s nationwide discussions brought attention to this issue and contributed to Senator Kirsten Gillibrand and 20 other U.S. Senators sending a letter to Agriculture Secretary Tom Vilsack seeking financial assistance for dairy farmers for these milk price value losses. A dairy situation hearing is anticipated in the Senate Subcommittee on Dairy, Livestock and Poultry that is chaired by Sen. Gillibrand.

— The Aug. 19 Class I volatility program announcement also mentioned $400 million for the Dairy Donation Program. The DDP implementation process was announced Aug. 25.

— In addition, USDA announced on Aug. 19 an estimated $580 million in Supplemental Dairy Margin Coverage (DMC) to allow “modest increases” in the production history of enrolled dairy producers up to the 5 million pound annual production cap for Tier One coverage. Specific details for adjusting DMC production history have not yet been provided.

— Additionally, USDA announced the inclusion of premium alfalfa prices in the calculation of the feed cost portion of the DMC margin.

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Conard family will host NY Holstein picnic at Ridgedale

The Conard family of Ridgedale Farm, pictured from left, Isaac at the halter of his Ridgedale Raquel EX91, Cyrus and his wife Morgan, daughter Keaton and son Liam and parents Wayne and Jen.
 

By Sherry Bunting, Farmshine, August 20, 2021

SHARON SPRINGS, N.Y. — Like many things missed last year, Holstein enthusiasts will be glad to know the New York State Holstein Picnic is back on track for 2021 and will be held at Ridgedale Farm, Sharon Springs, Saturday, September 11 at Noon. 

The Conard family will host the event, just like in 1984, when the state picnic made its original comeback. It was Wayne Conard’s mother on the breed promotion committee back then, who was instrumental in getting the state picnic going again almost 40 years ago.

“They had picnics in the early 1900s, but then it went by the wayside until 1984,” Wayne explains about that first modern-era New York Holstein picnic bringing 600 people to Ridgedale Farm that year.

The state association has had a summer picnic every year since, except for 2020, the year the pandemic cancelled everything.

Three generations of Conards look forward to welcoming members, friends, and peers from across the state, and Holstein enthusiasts are welcome from Pennsylvania and other states too.

Wayne and Jen Conard and their sons Cyrus and Isaac, Cy’s wife Morgan and their young children Liam and Keaton are the welcoming committee planning a fun day of fellowship for an estimated 300 attendees, including a catered meal, cattle judging, yard games and other surprise touches.

“We have local chef and caterer Mark Tuller coming from New Berlin. Wayne wanted beef brisket, so we’ll have that, as well as pulled pork and barbecue chicken, plus salt potatoes, baked beans, salads, fruit and a brownie sundae bar,” Jen explains the menu.

“We like good food and want to serve a nice meal,” Wayne affirms.

Tickets are $18 for adults and $10 for children under 10. The extended deadline for meal reservations is Sept. 1 by 7:00 p.m. Call or text the Conards at 518-369-8358 about reservations.

“Everything will be cooked on site, so if you want to eat, please get your ticket ahead of time, so we can plan the food,” Jen reminds.

The picnic will also feature a silent-auction manned by the Otsego, Herkimer, Montgomery (OHM) Holsten Club selling semen from homebred bulls at Ridgedale, so “bring your tanks,” says Wayne.

Ridgedale Felix is one of the young bulls on collection at Ridgedale — a Diamondback by an EX-94 Fever by an EX-92 Shottle by EX-96 Folly. Also collected is Ridgedale Incredibull-Red with genomics and pedigree. He is an Unstoppabull by an EX-91 Luck-E Awesome 3-year-old by EX-94 Currvale Goldwyn Delicious. The OHM Holstein Club will man a silent-auction fundraiser of semen from both bulls during the state Holstein picnic in September.

Picnic-goers will get to see the bulls and their mothers hailing from the Roxys and Follys and an Apple grandson.

They’ll see daughters of 19th generation EX Golden Rose ABS Ginger, including a red daughter by Jordy. Ginger was the EX-94 grand champion of the 2016 New York State Fair.

“They’ll see milking daughters of Thunderstorm and Tattoo, and much more,” Wayne assures.

For decades, the Conards have raised their bull calves for the herd sire market. Deep pedigrees for type, components and long-lived cows – with special Red & Whites in the mix — have attracted buyers, even as the industry around them changes.

“Every calf here gets raised, and a little over a year ago we started collecting a few of the special ones,” Wayne explains. “Harry Zimmerman comes up from Pennsylvania to collect them for us. We keep units priced affordably, and it has really taken off.”

The Red ones are pretty special, he notes, explaining that their herd had Canadian breeding bringing the Reds in early-on. Wayne also notes that his father was big on butterfat, so that’s bred into the herd here.

Of the bulls being collected at Ridgedale, Wayne explains: “One is from the Apple we had, an EX Defiant out of a Goldwin from Apple herself. Another bull we’re collecting is an Unstoppabull out of a Diamondback from a 94-point Fever from a 92-point Shottle out of the 96-point Folly cow.”

Folly was a legacy cow for Ridgedale, cared for by four generations of the Conard family. The EX-96 5E Ridgedale Folly passed away in 2018, just a day shy of 16 years of age.

The Ridgedale prefix goes back to Wayne’s paternal grandmother’s side of the family. One of his father’s uncles ran the dairy farm in New Jersey before he was tragically killed by a bull. Then, during World War II, the U.S. Army took the farm because a railroad station was needed.

“Dad got started again on a rented farm and spent some time in New Hampshire too before coming to New York when I was 11,” Wayne recalls. His father purchased the original 212 acre-farm in Sharon Springs, and later built a 1980-style tie stall barn.

The Conards do some cover crops and no-till, but their most productive acreage is minimum-till. They entered a soybean contest for the first time last year and won with 83 bu/A. They grow mostly grass hay in the heavy soils and tough winters, placing a few times in the Forage Superbowl at World Dairy Expo.

Today, the Conards milk 102 cows. They farm 750 owned acres and rent additional ground, raising feed for their cows, and cash cropping corn, soybeans, grass hay and some small grains, with their own dryer on site.

Not only do dry cows graze rolling pastures here, the milk cows get out every morning on pasture.

Ridgedale milk goes to Midland Farms, a family-owned wholesaler of fluid milk and dairy products supplied by 20 dairy producers in the area.

In addition to the rebuilt heifer and bull facility up the hill, picnic-goers will see the elite cows of Ridgedale in their work clothes, all in one location.

The herd used to be split between Cy’s place and Wayne’s place less than a mile apart on the same road until a fire in early 2018 destroyed the barn where Wayne milked 30 head. The family expanded out the back of their main tie-stall barn to consolidate the milking at one location the next year, turning the other site into a pole barn for machinery.

The farm has evolved in its over 50 years.

“To cash flow today, as a family farm, we need to be diversified,” says Wayne. “We’ve bought five farms in my lifetime — all last generation dairies. We haven’t enlarged our herd, but we’ve definitely had to diversify the business.”

While the number of dairy farms has declined over the years, the region has maintained its dairy heritage as Amish families have also come in buying farms and milking cows. 

Ridgedale actually started selling bulls decades ago when Wayne’s late brother ran potloads to California every month.

“We’d put 6 to 8 bulls from this farm on a load,” Wayne recalls, noting they also sold bulls to Cow Town in Vermont in those days. “Then the Amish families came in locally, and we also sell bulls over to Lowville. We haven’t needed to advertise.”

The bulls offer deep pedigrees based on type and one set price gives the buyer choice of available bulls. They test for genomics, especially the ones they are collecting on the farm for semen sales.

“Genomics is a good tool, but we don’t play the genomics game,” says Wayne. “The bulls we use have got to be out of good cow families or it will come back to haunt you.”

Dick Witter has done the semen tanks at Ridgedale since he started Taurus in 1973. “He treats me like a brother and Cyrus like a son,” says Wayne.

Wayne reflects on 50 years of this friendship, and 50 years of breeding, which included early 1990 partnerships with Hanover Hill. Ridgedale has had some bulls with Taurus, and today they have a Goldchip out of Ridgedale Folly at Triple Hill Sires. His full sister went EX this spring as a three-year-old.

Wayne has lost count of the number of cows classifying Excellent over the years, estimating more than 300 homebred cows have gone EX. Of those, 20 have gone EX-95. 

In fact, Ridgedale is typically in the top 10 for BAA score among herds their size. They have a lot of two-year-olds milking right now, but even so, there are more than 60 EX cows milking, with the others VG. The entire herd is out of EX cows.

Ridgedale Raquel EX-91 pictured as a senior 2-year-old last year

A young cow Wayne is excited about is his younger son Isaac’s show cow — Ridgedale Raquel EX-91. She was All New York and nominated All American as a senior two-year-old last year with pregnancies this year by King Doc. Raquel is backed by nine generations EX. She is a Diamondback x EX-92 Windbrook x EX-94 Dundee x six more generations back to the Roxys.

She has been Isaac’s cow since she was a calf and was first-place senior 2-year-old at Louisville last year. Fresh with her second calf, Raquel was grand champion of the junior show at the OHM Holstein Club a few weeks ago and is headed to World Dairy Expo in Madison this fall.

A milestone for the family among the Reds was Ridgedale-T Raichu-Red EX-96. In 2016, Raichu and her full sister Ridgedale Runway Red-ET were the first homebred Red & White maternal sisters to be approved EX-95 and the first Holstein sisters to do this from the same herd on the same day. Then in 2017, Raichu went EX-96. Both were 7th generation EX back to Roxy with daughters in the herd today.

The Conards lost Raichu in 2020 at 16 years of age.  She had been nominated All-American six times in milking form, with sons in A.I. and a string of show wins with Cy at the halter.

In fact, Raichu inspired Cy’s passion for showing, fitting and genetics as they grew together into showing — earning grand champion three times in the Premier National Junior Show at the All-American in Harrisburg and twice reserve grand champion of the junior Red & White Show at World Dairy Expo in Madison.

2016 photo of Cy with Raichu and Morgan with Runway

It was through showing at Madison that Cy and Morgan (Behnke) met and married. Morgan’s grandfather and uncles have Burwall Holsteins near Madison. She and her sister grew up with their own small herd of show heifers, and she met Cy while serving as Holstein Princess handing out awards for the Expo’s International Red & White Show. Cy enrolled that fall in the University of Wisconsin dairy farm and industry short course.

Today, Cy and Morgan have two young children, with Liam, 5, successfully leading his own heifer calf for the first time at the recent OHM show.

Three generations (l-r) Wayne, Cy and Liam walk through the bull and heifer barn at Ridgedale. A feed mixing room was included for flexibility in feed ingredients, and this facility is a drive-through. Feed is mixed here and delivered by feed cart to the milk cows in the tie-stall barn down the hill.

As a family farm run by family members who enjoy the cows and the crops, the Conards are quick to appreciate Daren Moore and Cole Williams helping with chores and the aggressive 3x milking schedule – and helping them get ready for the state Holstein picnic Sept. 11 and the Sunday on the Farm community event the following weekend.

While Jen works off the farm in ag lending, and Morgan does graphic design for the area’s tourism industry, all-in-all, the Conards really enjoy everything about farming together.

“We just like working with good cows,” says Cy matter-of-factly no matter how many ways the question is asked, because it’s just that simple.

“We like the crops and tractors too,” Wayne adds. “We just like farming.”

In their spare time, they like to restore John Deere tractors and make them useful again. They also do custom combining and big square bales for other farms in the area.

In fact, calling them in from working on the rain-delayed second-cutting on the first dry day in a long while was no small feat for this interview.

However, as I waited with 5-year-old Liam, walking up and down the road and talking, it was easy to forget there’s a world beyond the hills and valleys of crops and hay, cows and pasture and a white fence he was proud to tell me he helped paint. Blue skies and puffy white clouds were framed by green fields of growing corn and soybeans. The sweet smell of fresh cut hay permeated the air from the hills above, and the lowing of cattle drifted out the barn, where the familiar rhythm and hum of milking was winding down.

Enjoy the New York Summer Holstein Picnic at Ridgedale!

Milk fuels these Olympic athletes, one is a dairy farmer

Katie Ledecky (Right) on Tuesday, July 27 when she won gold in the first ever women’s 1500-meter distance freestyle race. She drinks 12 ounces of chocolate milk after every race and workout.
Photo courtesy Team USA.
Elle Purrier St. Pierre (left) is a Vermont dairy farmer pictured here in June celebrating cows and cheese. Today, she’s in Tokyo getting ready to compete in Olympic track events next week.
Photo courtesy @ellie_runs_4_her_life

By Sherry Bunting, Farmshine, July 30, 2021

TOKYO — Commentators have likened Olympic gold medal swimmer Katie Ledecky to a Lamborghini, a powerful machine, gliding through the water in freestyle sprints and distance races. She won four gold medals for Team USA in Rio de Janeiro in 2016 and one in London in 2012.

Then, in Tokyo Tuesday, July 27, in the same 24-hour period — after winning silver in the 400-meter and missing medals altogether in the 200-meter — Ledecky came back with determination and poise to win Olympic gold by a healthy margin in the 1500-meter freestyle. Teammate Erica Sullivan secured the silver.

Ledecky was a machine Tuesday night in Tokyo. Her methodical straight line stretch of 30 laps in the 50-meter pool ended when she touched the wall at 15 minutes 37 seconds. That’s freestyle swimming of roughly one mile in just over 15 minutes – ranging 1.5 to 1.7 meters per second! She makes history as this is the first women’s 1500-meter freestyle Olympic event.

As she headed into the final four laps, NBC Sports commentators broadcast to a worldwide audience her training and nutrition regimen, how she fuels her body in the morning with oatmeal – made with milk, peanut butter and fruit — and always downs a 12-ounce bottle of chocolate milk after every race or workout.

Described as inspirational in her work ethic and a beast in her daily workout, Ledecky is one of Team USA’s Olympians who is proud to be powered by milk. Dairy farmers will be happy to know Ledecky teamed up a few years ago in the Built with Chocolate milk campaign, sponsored by the Milk Processors Education Program (MilkPEP). The campaign features athletes and the science behind low-fat chocolate milk as a recovery and refuel beverage. Low-fat chocolate milk is Ledecky’s choice, and milk and dairy are part of her dietary regimen in other ways too.

The swimmer told Fitness in 2018 that the bottle of chocolate milk 30 minutes after a workout or race has been part of her routine for more than a decade.

“This is my go-to post-workout recovery beverage since I was 13 years old,” said Ledecky in the Fitness interview. “I remember being a young swimmer when someone explained that drinking chocolate milk for recovery gives my body the nutrients it needs to refuel. Since then, I make sure to keep one in my lunchbox daily and drink it after a tough workout. Of course, it tastes great too.”

A year ago, Katie Ledecky helped MilkPEP bring back the ‘Got Milk campaign with this ‘Got Milk Challenge’ — swimming 50 meters freestyle in 35 seconds with a glass of chocolate milk balanced on her head, then managing to flip it at the end and drink it — never spilling a drop. The TikTok video went viral. Photo courtesy @katieledecky 

When the 2020 Olympics were postponed, Ledecky did the fun video of herself swimming 50 meters with a glass of chocolate milk on her head — without spilling a drop. That’s how steady, balanced and methodical her stroke is. Of course, at the end, she drank the milk — all smiles. The video went viral and inspired other swimmers to film themselves attempting the feat, and drinking the milk. Just a fun, feel-good moment for an accomplished Olympian who relies on and loves her chocolate milk.

As for Ledecky’s Tokyo Olympics this week, she has a few more events to go and we are rooting for her. Of her 1500-meter gold, Ledecky said in an NBC Sports interview just after the race that it “means a lot.”

With a nod to falling short of her goals in the 200- and 400-meter races just before the 1500, she said: “People may be feeling bad that I’m not winning everything, but I want people to be more concerned about other things in the world. People are truly suffering. I’m just proud to bring home a gold medal to Team USA.”

We are also rooting for the first-ever farm girl fueled to compete in the Olympics. Runner Elle Purrier St. Pierre arrived in Tokyo this week and will compete in the Olympic track events next week.

According to NBC Sports, Elle took first in the final 1500-meter race during Olympic trials, breaking a previous record and setting other track records as well, including breaking a 37-year-old record for the U.S. women’s indoor mile last year and breaking the two-mile record earlier this year.

Elle is a dairy farmer! She grew up on a 40-cow dairy farm near Montgomery, Vermont. Today she lives with her husband Jamie on his family’s Berkshire, Vermont dairy farm. 

During the Covid-19 pandemic, Elle trained from the farm with her own equipment and has reported in various mainstream media interviews how working on the dairy farm has helped her own fitness.

Whether at home on the farm in Vermont, or after a race or workout half the world away, Olympian Elle Purrier St. Pierre says the first thing she does after running is to chug a glass of milk. Facebook courtesy photo

She also explains every chance she gets how crucial dairy is to her diet. Elle’s husband studied dairy management at Cornell, and Elle studied nutrition at the University of New Hampshire. She says she could not have reached the heights of her running career without milk.

“The first thing I do when I get done running is, I chug a glass of milk, and I just know everything in there is going to help me do better,” says Elle in an interview with USA Today. “It’s got the perfect ratio of carbs and protein, when you add the chocolate, and just so many vitamins and minerals. It’s crazy what a great resource it is.”

There are also other Olympians proud to make milk and dairy part of their regimens, and to talk about it. We are rooting for Team USA and especially for Team Milk!

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Planning, partnerships, plus plant-alternative blends: DMI’s fluid milk innovations seek ‘relevant’ retail growth

The new line of Dairy Plus/Milk Blends by DFA’s Live Real Farms is described this way at the website: “Something wonderful happens when you blend 50% dairy milk with 50% almond or oat drink. New Dairy+ Milk Blends. Lighter, more refreshing than regular dairy milk. Richer, creamier than plant-based drinks. Together, it’s a whole new taste experience.” In fact, the newest tagline is “The beauty is in the blend. Nutritious, creamy milk meets the reduced sugar and calories of almond or oat drink. It’s the best of all milks. The milk for modern tastes.” This DMI / DFA innovation was launched over a year ago in Minnesota and is expected to roll out in the Northeast early 2021. The sales pitch is unreal, and dairy checkoff funds helped pay for it. We don’t see that kind of packaging and promotion effort in real milk. https://liverealfarms.com/

By Sherry Bunting, Farmshine, November 19, 2020

HARRISBURG, Pa. — In addition to the ‘DMI-led’ launch of DFA’s new ‘teen milk’ called siips, DMI is also working with processors, retailers, foodservice and technology companies to develop other ‘milk innovations’ for schools, foodservice and retail.

On a recent Center for Dairy Excellence industry call, Paul Ziemnisky, executive vice president of global innovation partnerships described DMI’s five-year-old fluid milk revitalization committee as a collaboration between the Innovation Center for U.S. Dairy, MilkPEP, NMPF and IDFA, using DMI’s insights to “make milk relevant.”

In the retail sector, Ziemniskhy talked about how plant-based beverage sales grew by a large percentage since the Coronavirus pandemic, but ‘value-added’ milk sales (such as fairlife, dairy-plus-plant-blends and other milk-based beverage innovations) grew by an even larger percentage than plant-based alternatives alone.

When asked whether dairy farmers’ are paying to fund checkoff research on non-dairy alternative products, DMI president Barb O’Brien said: “We are not doing any ‘dedicated’ research on alternatives. What we are doing has been done from a new product development standpoint,” she said.

“There has been exploration of blended products as consumers look at new flavors and options,” O’Brien defended. “Instead of letting that market walk away from dairy, we have looked at blended or ‘milk-based’ opportunities. We have looked at alternative milk-and-oats, milk-and-nuts to bring flavor and excitement to those new products.”

O’Brien stressed that all of this work has had “farmer oversight.”

“I want to assure you that 85 dairy farmers from across the country sit on the DMI board for approval of our plans,” said O’Brien.

On fluid milk, for example, she said the “dedicated fluid milk committee includes 10 farmers. They were asked to go deep and monitor the specifics of the work and the investments. They see the confidential, proprietary information from investors and make recommendations to the board.”

Ziemnisky did admit that whole milk sales — on a volume basis – topped the growth volume of other beverages in the dairy case, but he and O’Brien both focused on the value-added side of the equation. They revealed how DMI’s focus is to prove to retailers that they will reap sales growth by devoting more space to dairy innovations.

“Our partners have made capital investments of over $1 billion to help us win in retail, foodservice and school channels,” said Ziemnisky, explaining that the large and expanding dairy cases at retail are now confined to a 4 x 6 phone screen because more consumers today are choosing to shop for groceries online. “We are making sure milk is front and center in their media programs. As a result, online sales of fluid milk products are up $500 million year-to-date.”

O’Brien said DMI works “to ensure we keep dairy products moving into markets.”

“Our work covers the spectrum from consumer research to retail marketing and education of dairy case managers,” she said. “When the fluid milk revitalization alliance was formed, we learned brands do a better job of advertising. We built up the category with facts that prove to retailers how the value-added section in milk is growing more than the plant-based alternatives.

“We help them see that we’re the future, that they are getting more growth from us, and we show them: here’s how to grow the category,” O’Brien explained. “Retailers are now activating and using this knowledge to build-out additional space for new milk-based product launches.”

Case in point — the Dairy Plus/Milk Blends made by DFA’s Live Real Farms — is touted as ‘a new taste experience’ (in which the first listed ingredient is lowfat milk, second ingredient is water…)

The line of 50% lowfat, lactose-free milk and 50% almond or oat drink was launched over a year ago in Minnesota and is expected to hit the Northeast in January. Ziemnisky said the milk plus oat and milk plus almond beverages are examples of ‘relevant’ innovation, based on DMI insights.

“The urban and suburban consumer today is trying to get into shape. They are making smoothies. They are flavor explorers. They are putting habanero on cheese. They don’t want basics. We have to bring on the flavor and the innovation,” he said.

“Millennial moms are leaking out of dairy in the low-fat and nutrition space,” Ziemnisky explained. “We did a test of ‘real dairy’ with new flavor blends like oat. We thought, let’s add (oat beverage) to dairy and test it. This added to the retail basket, creating new usage occasions for dairy and grew the overall dairy sales compared to the stores that did not have the new (DFA Dairy Plus/Milk Blends) product.”

Retail sales growth on a dollar basis is very much the focus as Ziemnisky and O’Brien said they are showing retailers that adding these innovations to their offerings will drive category growth and sales revenue.

“We want consumers to experiment with new flavors that are occurring,” Ziemnisky said, using cheese as an example that applies to the fluid milk sector. “Think about cheese, of adding wine and nuts to cheese. You see that massive flavor blending. On a global landscape, we see this flavor thing as an international trend.”

Ziemnisky mentioned Kroger’s new cherry milk and the new ‘cereal milk’ launched recently by Nestle. He said there are “some other things that will launch that we can’t talk about, but think of what ice cream does (with flavor). That’s a hint.”

“To keep consumers from running to plants, we have to add some plants to dairy,” said Ziemnisky, citing this as an example of innovation he said is needed to compete.

“Our piece of that investment is very small,” he added. “Our partners are drawing on our expertise and investing ten times our investment, ultimately, in packaging and marketing at the end day.”

A dairy farmer submitted a question wondering, ‘What percentage of the total DMI budget comes from farmer funds and what portion comes from corporate partners?’

O’Brien replied that, “100% of DMI’s budget comes from America’s dairy farmers.”

(Technically, that’s not entirely accurate because importers pay a 7.5-cent checkoff per hundredweight equivalent. Importers are not dairy farmers, except when the importers are farmer-owned cooperatives.)

As regards DMI’s corporate partnerships, their funds are not mixed into one budget.


“What this plan has been designed to do is to bring partners of all types — foodservice, manufacturing, foundations, government grants — to align other people’s money with and execute against the shared values and shared priorities,” said O’Brien.

She noted earlier that the shift to a partnership planning model occurred in 2008-09, at the same time that the Innovation Center for U.S. Dairy was formed (and a year or so after the importers were required to start paying a 7.5 cent checkoff).

“We have calculated the value of corporate dollars — what I like to call ‘other people’s money’ — to combine with our dollars to become $3 billion for the execution of ‘in market’ plans,” said O’Brien. “This takes into account partners like Taco Bell, McDonald’s, and others. In marketing, they spend 10 to 20 times what we spend in the years we do that.”

O’Brien stated that this partnership plan is a “critical multiplier of farmers’ investments to make a greater impact on farmers’ behalf.”

When asked if DMI considers itself a top-down or bottom-up organization, O’Brien said the fundamental philosophy is “the most powerful partnership I have ever seen. It starts at the farmer level with national and local boards aligning behind shared values and priorities and a plan. That translates to staff sitting nationally and planning and driving strategies, building relationships and implementing the science.”

According to O’Brien, the annual planning process of DMI involves staff leadership and farmer leadership from national and local levels. It is a 9-month process that starts with the consumer insights DMI provides on how the marketplace is changing. Out of those insights, the strategies are brought forward. Then there is agreement on the strategies and tactics. Then the plans are ultimately implemented together.

“The marriage makes it a system that works for farmers,” O’Brien opined.

AUTHOR’S NOTE: Without checkoff-funded promotion, regular whole milk sales grew by 14% on a volume basis year-to-date, according to USDA. Paul Ziemnisky confirmed that whole milk sales are 41% of total dairy case sales on a volume basis, so the gains continue to make whole milk the volume growth leader in the dairy case. Meanwhile DMI fluid milk revitalization is aimed at ‘relevance’ and showing retailers and other partners the sales growth (in dollars) that dairy innovation can deliver.

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