Start your engines… the milk’s a’chillin’

By Sherry Bunting, May 25, 2018

kim-minich-684x1024x

Photo credit ADAI

INDIANAPOLIS, Ind. — Just as those Indy Cars are fueled to perfection for 500 miles at blistering speeds of 215 to 225 mph, that famed Bottle of Milk fuels the checkered-flag dreams of winners at the finish line of the Indy 500.

It’s the honor of the Milk People (aka dairy farmers) to get it there.

While I didn’t meet this year’s Indy 500 Milk Woman — I did meet her husband and children during a visit to the farm last March while passing through Northern Indiana.

Kim Minich, Triple M Dairy, LaPorte, was the rookie last year when Milk Man Joe Kelsay, Kelsay Farms, Whiteland, had the honor of delivering the “coolest trophy in sports.” This year, Kim is the veteran, and her rookie understudy is Andrew Kuehnert, Fort Wayne. They all hail from six and seven generation Indiana dairy farms.

kim-minich-684x1024.jpg

Photo credit ADAI

Last year, as the ‘rookie,’ Kim learned the ropes for this year’s 102nd big race at the Indianapolis Motor Speedway, where legends are born, speed and tradition rule, and milk always wins!

During my brief March visit to Triple M Dairy where Kim and her husband Luke are part of the dairy farm that has been in his family since 1909, their children Anna, Kate, Mary, Will and Calvin were looking forward to May. They talked of how exciting it was to see Mom’s rookie year as Milk Woman in 2017 … How it felt like the dairy farmers were celebrities like the Indy car drivers — two long and storied traditions brought together when three-time Indy 500 winner Louis Meyer requested buttermilk to quench his thirst after his second win in 1933.

Indy500-4137According to American Dairy Association Indiana (ADAI), Meyer was then photographed in Victory Lane drinking milk after his third win in 1936. Milk was presented off and on during the next several years until, in 1956, the Bottle of Milk was made a permanent part of the post-race celebration by Indianapolis Motor Speedway owner Anton “Tony” Hulman.

Today, the milk choices of the drivers are kept cold in a secure “Winners Drink Milk” cooler.

The drivers are polled ahead of time on their milk preferences — whole milk (3.5%), 2%, 1% or fat-free, and the cooler is stocked with these choices, so the ‘milk people’ are ready.

For this year’s race, 17 drivers chose the whole milk option, 10 chose 2%, 4 chose fat-free and 2 said any milk was fine with them!

Hoosier driver Ed Carpenter chose to up the ante with a request for the throw-back choice of Louis Meyers: Buttermilk. That could be a lucky move as he is considered a strong contender going into the race scoring a pole position.

Tomorrow, as always, the milk will be kept under lock and key in a secret location with one of the Milk People keeping a watchful eye at all times. This year, in fact, the Milk People will be the first to enter the Indianapolis Motor Speedway grounds at 5 a.m., Winners Drink Milk cooler in tow.

Minich5414wRecalling her mom’s rookie year in 2017, Anna says “they looked like the secret service in sunglasses guarding the milk cooler!”

In 2016, the 100th running ended with a milk toast by spectators. The children wonder what milk drama will unfold this year.

“The bottle of milk is the star,” says Kim’s husband Luke. “When they start making their way toward the winner’s circle with that cooler, and you hear the crowd chanting ‘It’s the milk,’ as a dairy farmer, that’s pretty cool.”

Each year the ADAI selects a dairy producer to represent Indiana’s 1100 dairy farms as the Milk Man or Milk Woman.

People flocking through the gates want to talk to the Milk People (aka dairy farmers), and for weeks ahead of the big day, they have opportunities to tell the story of milk and dairy farming. They even co-host the Fastest Rookie Luncheon earlier in the week.

Kim married into dairy farming, and in one pre-race-day interview, she explained how she grew up in the Indianapolis suburbs and would watch the Indy time trials with her father.

Minich5418wToday in her career as a nurse-practitioner, Kim says she has a big appreciation for the milk-side of the big race and appreciates the opportunity to tell others about the nutritional goodness of milk and dairy products as well as the life their family lives — like other dairy farm families across the country — caring for the animals and the land.

The children are passionate about the farm too. They have a growing array of 4-H projects that make your head spin: Cattle, chickens, rabbits, goats, horses. In fact, while the dairy farm is home to 1000 mainly Holstein milk cows, Luke and Kim’s older children each have a few of their own breed — Anna with Jerseys, Kate with Brown Swiss, Mary with Shorthorns, and Will with Ayrshires. They love their chores and are happy to show visitors, like me, around.

“This is a great way to raise a family and produce a quality product for other families to enjoy,” says Luke on a brisk March day at the farm.

His wife Kim could not agree more, saying in pre-race interviews that being part of the dairy farm “has been absolutely wonderful, and as a nurse practitioner, I’m able to talk to my patients about the importance of dairy.”

As for her job tomorrow as the provider of the Indy 500 Bottle of Milk, “It’s a great honor to do this,” says Kim. “It’s exciting to meet the drivers and to represent our dairy farmers and what we do.”

web2016WinnersDrinkMilk-46As the sun rises tomorrow, drivers and crews will be getting ready, spectators will be pumped, our nation’s service men and and women will be honored, anthems will be sung and tributes given… and after 500 miles of exhilarating speed, the winner drinks milk!

So chill your milk, and get ready. The thrill of the 102nd Indy 500 is hours away.

Here’s a video teaser from the 100th Indy 500! Wait for it… The powerful and patriotic blend of freedom and speed that ensues after the recognition of our military, the moment of silence for fallen heroes, the singing of America the Beautiful, the National Anthem followed by the Blue Angels flyover, the singing of Back Home in Indiana, the anticipated “Gentlemen Start Your Engines”, the breaking free of the pace cars as the field of Indy cars passes the paddock with Old Glory in tow!

 

-30-

School milk: Time to be bold for our kids

By Sherry Bunting, from Farmshine, May 11, 2018  

EAST EARL, Pa. — One would think there would be overwhelming support in the official dairy community for the Whole Milk Act, H.R. 5640, introduced by Rep. Tom Marino, representing Pennsylvania’s 10th legislative district.

Since the bill was introduced on the floor of the United States House of Representatives April 26, it has been given a name and assigned to Education and Workforce Committee that oversees the National School Lunch Program. While the Ag Committee is not the committee for this bill, the USDA’s part is the implementation of the rules and reimbursements of the National School Lunch Program — and its approval of five-year cycles of U.S. Dietary Guidelines for Americans that drive these rules.

cosponsorsMarino’s Whole Milk Act has just one cosponsor as of May 9. That would be longtime whole milk advocate Glenn (G.T.) Thompson — representing Pennsylvania’s 5th legislative district. Thompson is now noted at the bill-tracking website as an original cosponsor.

That’s a good thing, because Thompson serves on the Education and Workforce Committee that oversees the National School Lunch Program, Marino does not. Thompson also is vice chair of the House Ag Committee.

Two more cosponsors include Rep. Claudia Tenney of New York and Rep. James Comer of Kentucky. But more cosponsors are needed!

Where are the farm and dairy associations on the school milk issue? Where, indeed, is the “dairy lobby”? The folks who collect, assemble, process, market and distribute the milk produced on dairy farms? Where is National Milk Producers Federation? Where is the International Dairy Foods Association?

Back at square-one: 1%. Taking baby steps in the face of a brick wall.

Chris Galen, senior vice president of communications for National Milk Producers Federation (NMPF) explains it this way: “While (NMPF is) supportive of efforts to increase milk consumption at school and having more options to help achieve that goal and we  are talking with Rep. Marino about his intentions to move the bill forward, and how he can build support for the measure…”

Wait for it, there is a ‘but’…

“At the same time, we also have to secure the progress made so far to upgrade milk options in school. That’s why we’re also working with Rep. Thompson to help pass his H.R. 4101, which codifies the decision made by Sec. Perdue to allow flavored 1% milk in the schools,” Galen stated in an email response to questions from Farmshine this week. We are still waiting on a response from IDFA.

Last fall, Ag Secretary Sonny Perdue made an administrative change to the National School Lunch Program allowing schools to serve 1% flavored milk. They were already permitted to sell 1% unflavored milk.

States then implement this change by filling out waivers to show that children were drinking less milk because of the fat-free option being the only option for flavored milk in order to then switch to allowing 1% flavored milk.

Kids on a school break

While both 1% milk and whole milk have the same essential nutrients, the children don’t benefit if the nutrients are not consumed and the evidence shows the fat is actually good for adults and especially children. Let’s stand up for our children. There was never any evidence they would benefit from the old heart patient’s diet at school in the first place, and mounting evidence shows what the lowfat craze has done and is doing to them. Istock photo andresr imaging

In Pennsylvania, alone, the Pa. Department of Agriculture reported in March that over 300 schools filled out waivers to serve the choice of 1% flavored milk. Many did not implement the change due to having school milk contracts already set for the current school year. Some have recently added the 1% flavored milk.

For the next school year, the waivers are not necessary. Schools may simply make the choice to include the choice of 1% flavored milk in their contract bids for next school year.

Without a change in the law, however, Sec. Perdue’s administrative change could revert to fat-free in the future, says Galen.

He indicated that the USDA action to allow 1% flavored milk “as welcome as it is, is merely an administrative decision, and could be rolled back in the future by a different administration, which is why it needs a law to fully implement.”

NMPF and IDFA have been on-record publicly as supportive of Thompson’s H.R. 4101 but have not come out with any public statement on Marino’s H.R. 5640.

When asked about NMPF’s support for Marino’s H.R. 5640, Galen stated: “It’s worth noting that this will be an incremental process, given the gradual evolution of dietary science along with the snail’s pace of Congress.”

Thompson’s bill, H.R. 4101, with 38 cosponsors to-date, was introduced in the House on October 24, 2017 and referred to the Education and Workforce Committee, on which Thompson serves.

Marino’s bill, H.R. 5640, with just one cosponsor, Thompson, was introduced in the House on April 26, 2018 and referred to the Education and Workforce Committee, on which Marino does not serve, but cosponsor Thompson does.

Neither bill has been taken up by the Committee.

“Making progress toward allowing higher fat content milks in schools is a function of both whether there is bipartisan support on the committees in the House and Senate that oversee the issue, and also whether there is support in the nutrition community, without whose positive engagement we will not be able make any headway on the issue,” notes Galen for NMPF.

He adds that the composition of the Education and Workforce committee is not the same as the Agriculture committee.

“So, we are pushing to make progress on the issue, but it’s a bigger chore than just asking the dairy sector to pitch in — consumer and health groups have to be part of the coalition. We are sharing with them the emerging science on dairy fat, but that’s an evolutionary process,” notes Galen. “You can’t just send them Nina Teicholz’s book and expect two generations of conventional wisdom about food, wellness and obesity to suddenly change.”

Teicholz spoke during the Pennsylvania Dairy Summit last February about the nutrition aristocracy and her 10 years of investigation as a science journalist and former vegetarian.

Her International and New York Times Best Seller “The Big Fat Surprise” has been around since before the last Dietary Guidelines cycle was begun and later approved by then Secretary of Agriculture Tom Vilsack. Her book exposed the tactics and lack of evidence that brought dietary guidelines to the current fat caps that are still in place today — despite proof and trends both showing the flawed nature of these guidelines and the harm to children for which there was never any evidence in the first place suggesting caps on saturated fat would be beneficial in any way.

Rise+in+US+Overwight+Obsetity+Coincides+with+DGA

Nutrition Coalition image

To the contrary, the evidence is overwhelming that these guidelines actually harm children, which is the reason the long title for Rep. Marino’s Whole Milk Act (H.R. 5640) spells it out like this: The Wholesome Healthy Original Lactic Excellence Making Intelligent Literate Kids Act.

Looking at the science and the trends, this title for the bill on whole milk, says it all.

Marino’s H.R. 5640 specifically targets the unflavored milk options allowed in school. Thompson’s H.R. 4101 “codifies” the step taken by Sec. Perdue last fall on 1% flavored milk.

Both bills can be vigorously supported. They are not mutually exclusive. Perhaps the Education and Workforce Committee can combine them?

The Nutrition Coalition, founded by Teicholz, — with support from many nutrition, health and medical advocates — brings together the evidence and seeks to challenge the “conventional wisdom” foisted upon the public by the national and international nutrition aristocracy that controls the food supply today.

Leading cardiologists are up to date on their recommendations for middle-aged men even though the American Heart Association is dragging its feet. (I know this from personal experience as well).

PERSONAL-PHOTO-FOR-SCHOOL-MILK (1).jpg

If a cardiac patient in his mid-50s — such as my husband just 14 months ago — can be offered, not just served, a carton of whole milk right out of the cath lab at the esteemed Lancaster General Heart and Vascular Institute, then why can’t our children be served the best nutritional option of whole milk in our schools? I am grateful for my in-shape-and-stress-test-passing husband’s recovery from five stents that had the medical staff in disbelief last year. The point here is that leading cardiologists, like his, recognize the role of sugar in heart disease and the fact that as we remove saturated fats from our diets, our bodies replace this with additional calories from carbohydrates. The science shows no harmful impact — and in fact positive effects on hearth health and other health concerns — in consuming even 18% of calories from saturated fat. That’s nearly double the “conventional wisdom” that controls our food supply today. Photo selfie by Sherry Bunting February 2017.

If leading cardiologists are focusing on dietary sugars and the abundance of carbs in the diet — letting go of flawed guidelines on saturated fat — why is there so much dragging of feet where our children are concerned? Why, indeed, given the fact that as Teicholz points out, there was never any evidence — in the first place — that children would benefit from caps on saturated fats.

Still the U.S. government pushed the lowfat agenda and the dairy industry, in effect, acquiesced, only in the past two years supporting “incremental” change.

“Right now, we don’t yet even have a permanent law permitting 1% flavored milk in schools, so we need to start with that and then move from there,” Galen insists.

Meanwhile, the World Health Organization (WHO), dubbed as the supreme agency in terms of being a nutrition aristocracy for status quo – no matter what the science says – weighed in with a statement this week upholding the over 30 years of flawed dietary guidelines.

WHO persists in its recommendation that adults – and children — should consume a maximum of 10% of their daily calories in the form of saturated fat such as meat and butter and 1% from trans fats, to maintain a healthy heart.

Dr Francesco Branca, director of WHO’s Department of Nutrition for Health and Development said in a statement this week: “Dietary saturated fatty acids and trans-fatty acids are of particular concern because high levels of intake are correlated with increased risk of cardiovascular diseases.”

This regurgitation of proven flawed “conventional wisdom” disregards randomized controlled studies to the contrary at double these levels of dietary fat.

And even though it disregards the evidence, even the WHO’s weigh-in this week does not preclude whole milk, real butter, real cheese, real beef from the school diet. The problem is that not all calories have the same metabolic effect and the calorie threshold of the school lunch program was lowered by the Obama administration, along with the current requirements that less than 9% of those calories can come from saturated fats. This is a further level to the problem.

Last month after USDA closed its unprecedented 30-day public comment period on specific topics for the 2020-25 U.S. Dietary Guidelines, nearly 6000 comments were posted by concerned citizens.

The Nutrition Coalition reports that the USDA sought this input on topics where the science has evolved, particularly on saturated fats and low-carbohydrate diets.

“The results demonstrate a widespread belief that the Guidelines need to be changed in order to reflect the best and most current science,” the Nutrition Coalition reports. “Of the 5944 comments, 1145 mention ‘saturated’ as in ‘saturated fats’, 1288 mention ‘low-carb.’”

This was an unprecedented opportunity to stand up for good science, and the public responded.

The Whole Milk Act is another opportunity to stand up for good science. Let’s respond.

Will the U.S. food and agricultural system continue to dance to the agendas of the World Health Organization? World Trade Organization? One World Order philosophy?

Will we sit back and allow two generations of flawed advice — based on absolutely zero studies on children and even refuted by actual trials when they were finally shown the light of day on adults?

Will we continue to face the brick wall of control over what is best for our children with timid and child-like baby steps? If so, it will it take two generations to right this wrong.

Meanwhile, it is our children and our farmers who will pay the price for our complacency.

There are several ways we can all help support Rep. Marino’s Whole Milk Act.

Contact your representative in the U.S. House and ask them to cosponsor and support H.R. 5640 The Whole Milk Act. If you don’t know who to call, enter your zipcode here to find out who represents you

Also, call the U.S. House of Representatives at 202-225-3121 and let them know that H.R. 5640 is important for the health and well-being of our schoolchildren.

In addition, contact members of the House Education and Workforce Committee and the Committee chairwoman. Ask them to put this bill on the committee’s agenda. Its passage must begin in this committee.

Also, write to Agriculture Secretary Sonny Perdue or contact the USDA with your support for the letter Rep. Marino has sent in conjunction with introducing H.R. 5640 The Whole Milk Act. USDA is key to making school milk great again by making it whole again.

Finally, contact Rep. Tom Marino’s office and thank him 202-225-3731.

Follow H.R. 5640, The Whole Milk Act, at this link.

(Author’s note: Since this report was published, the Pennsylvania Association of Milk Dealers announced their official support for The Whole Milk Act)

Global dairy thoughts Part II: Who’s being creative?

Part Two of Six-part “Global Dairy Thoughts” Series in Farmshine

wGDC18-Day1-56By Sherry Bunting, from Farmshine May 4, 2018

BROWNSTOWN, Pa. — Everywhere we turn, we receive the message that fresh fluid milk is a market of the past and exports of less perishable dairy products are the wave of the future. As discussed in Part One of this ‘global dairy thoughts’ series, that seems to be the trend if you look at the markets.

Yet, could a portion of the reason we are in this fluid milk decline, be the effect of USDA-regulated pricing, USDA-imposed restraints on the ability to promote competitively in the beverage space, and the resulting industry neglect of this regulated commodity category — fresh fluid milk?

The government — USDA — and the checkoff and cooperative leadership have no appetite for significant change to any of these factors. USDA gets to pay less than it otherwise might for milk in its nutrition assistance programs, while both the proprietary and cooperative processors get to pay less than they might otherwise for components in a range of products.

Meanwhile, dairy farms see the first product to come from their herds — milk — declining, and their futures along with it.

Yes. We all know it. Fresh fluid milk — the most nutritious and natural option — is in the fight of its life. In meeting after meeting, presentation after presentation, we hear the messages from the industry and university economists — both subtly and outright.

Like this: “The fluid milk market is the dead horse we need to stop beating.”

Or this: “Do we want to hitch our wagon to a falling rock?”

And so forth, and so on.

It is difficult to question the industry and its economists on anything to do with the Eastern U.S. or the fluid milk market. Some have gone so far as to say that if the East is relying on fluid milk, they are out of luck.

Meanwhile, dairy farmers in eastern regions suggest that if fluid milk does not stabilize its losses or restore its market share — at least partially — they see their value as producers vanishing.

And in fact, this has an impact on our global advantage — that being the U.S. having a large consumer base at home to anchor the base production while growth is said to be the reason why we need exports.

As mentioned briefly in Part One, the Federal Orders are designed to move the milk from surplus regions to deficit regions, and that is what the proposed USDA change in Orders 5 and 7 will do further, the experts say.

Meanwhile, who is being creative to figure out how the deficit regions of the East can use or regain their primary competitive advantage — having a base of consumers within a day’s drive. This line of thinking is analogous to how the U.S. fits as an exporting nation with quite a large consumer base at home.

What really requires our creativity is the U.S. product mix and how milk resources are priced and sourced.

Here are some numbers. U.S. dairy protein disappearance has had average annual growth of 6.3% over the past five years, though it has been a bumpy ride, with U.S. production of milk protein concentrate (less exports) at its lowest levels over that five-year period in 2014.

Meanwhile, demand for fat is increasing as consumers heed the dietary revelations and switch from lowfat and fat-free milk to whole milk and have their butter without guilt.

Mentioned last week in part one is that global milk production increases are beyond the stable rate of 1.5% per year. According to the U.S. Dairy Export Council (USDEC), the combined growth rate from the EU-28, U.S., New Zealand, Australia and Argentina was double that collective 1.5% threshold. Looking at 2018, however, reports are surfacing to show spring flush is delayed in Europe just as it appears to be in the U.S.

Or is global production reining in? The markets are trying to figure that out with quite a rally going in powder right now.

One thing rarely mentioned in these reports is that Canada’s production has also grown with increased quota to account for the greater demand they see in their domestic market for dairy fat.

In fact, despite its supply management system, government figures show Canada’s milk production had year-over-year growth between 3 and 6% for each of the past three years, and 2018 production is off to a 5% start.

In Canada, as in the U.S., fat fortunes have changed over the past four years, so the belt has been loosened to serve that market, leaving more skim swimming around.

Canada’s new export class (Class 7) mainly pertains to this excess skim, which has reduced the amount of ultrafiltered milk they now buy from U.S. processors.

In addition, as pointed out by Calvin Covington in his presentation at the Georgia Dairy Conference in January, milk can be purchased at lower prices for this Canadian export Class 7 because the excess skim is used in products that are then exported.

This means the resulting products in the Canadian export class can be sold at globally competitive prices. While not in huge volumes, some of this product is going to Mexico.

This brings us to Mexico — currently the largest buyer of U.S.-produced nonfat dry milk, making the outcome of NAFTA negotiations a sticky issue for industry leaders, especially as Mexico recently signed a trade deal with the EU to include dairy.

The two forks come together in regions like the Northeast, where Class IV utilization has become an increasing part of the blend price and a more important balancer of the shrinking Class I.

While March showed a surprising jump in Class III utilization to a 15-year high in the Northeast, the overall trend over the past four years has been a blend price with increasing Class IV utilization and decreases in Classes I, II and III.

Dairy economists indicate the U.S. is making more world-standard skim milk powder for export, but in reality, the U.S. still makes a high percentage of nonfat dry milk (NFDM), which is still the largest domestically-produced milk powder category and it is the only milk powder that is used in the Federal Order pricing formulas.

NFDM is primarily made in conjunction with butter. As butter demand has grown and prompted greater butter production in the U.S. over the past four years, more NFDM has been made and stored (or the skim is dumped) as a result.

The market issue in the U.S. has been compounded by the EU having a mountain of intervention powder stocks in storage, some of it aging.

After the European Commission sold over 24 metric tons two weeks ago, global and domestic powder markets moved higher. It was the largest chunk to come out of that mountain to-date and was offered at reduced prices to attract buyers. But by the time the bidding was done, it sold at or above the GDT price for SMP powder.

It’s really true. Inventory depresses prices. Having a big chunk of a huge inventory gone, is, well, big.

The flip side of the coin is that European processors have shifted from powder production with their excess to making more cheese and butter.

Next in Part Three, we will look specifically at some differences between the products made in the U.S. vs. what is traded globally, and at the differences between the U.S. and global trading platforms.

-30-

PHOTO CAPTION

GDC18-Day1-56

While attending the 2018 Georgia Dairy Conference in January, a large global cargo ship on the Savannah River, passed by the glass windows at lunchtime on its way out to sea. Several dairy producers walked outside for a closer look, we all hoped there was plenty of powder on board. Photo by Sherry Bunting

Global dairy thoughts Part I: Whirlpool of change. Who’s minding the store?

Part One of Six-part “Global Dairy Thoughts” Series in Farmshine

By Sherry Bunting, from Farmshine, April 27, 2018

BROWNSTOWN, Pa. — Even though U.S. per-capita milk consumption is in decline, consumption of other dairy products is strong. As the industry devotes resources to new milk markets abroad and puts the fluid milk market here at home on commodity autopilot: Who’s minding the store?

While it is true that the U.S. dairy market is ‘mature’ — not offering the growth-curve found in emerging export markets — the U.S. consumer market is still considered the largest, most well-established and coveted destination for dairy products and ingredients in the world.

As U.S. milk production continues to increase despite entering a fourth straight year of low prices and market losses, industry leaders look to exports for new demand that can match the trajectory of new milk.

The U.S. has already joined the ranks of major dairy exporting nations, and the U.S. Dairy Export Council (USDEC) has set a goal to increase exports from the current 15% (milk equiv) to 20%. Keep in mind that as our percentage of exports increases while our milk production also increases, the volume of export markets required to meet this goal is compounded.

On one path at this fork in the road is the mature domestic market with its sagging fluid milk sector that is increasingly filled in deficit regions by transportation of milk from rapidly growing surplus regions.

This dilemma of getting milk that is increasingly produced away from consumers packaged and moved toward consumers was cited as a “tricky challenge” by Dr. Mark Stephenson, Director of Dairy Markets and Policy at the University of Wisconsin-Madison, in his presentation on Changing Dairy Landscapes: Regional Perspectives at the Heartland Dairy Expo in Springfield, Missouri earlier this year. In this presentation, Stephenson pegged the Northeast milk deficit at 8 bil lbs and the Southeast deficit at 41 bil lbs. (More on this in a future part of this series).

On the other path at this fork in the road is the industry’s desire to expand exports within a global market that needs a 1.5% year-over-year global production increase. But, as the USDEC reported in its February global dairy outlook, global milk output is growing by twice that rate, mainly from gains in Europe.

Meanwhile, U.S. regulatory pricing structures are based on milk utilization. As the total dairy processing pie grows larger, the neglected fluid milk sector becomes a shrinking piece of the expanding pie, and income is further diminished for dairy farms.

The emerging export markets are rooted in the demographic of rising middle-class populations improving diets with dairy. And yet, just because these new markets offer new growth curves for new milk production, the anchor for this ship is still the U.S. market, still No. 1 as the largest dairy consumer sector globally, and still moving milk via Federal Order pricing that hinges on that shrinking piece of the expanding pie: Class I.

What are the obstacles to improving this sagging fluid milk sector? How are regulated promotion and pricing constraining restoration of declining fluid milk sales?

Over the past three years, two prominent and longstanding milk bottlers in the New York / New Jersey metropolis have either closed their plants (Elmhurst in New York City), or sold their dairy assets (Cumberland Dairy in New Jersey sold to DFA). Amazingly, the former owners of both plants are expanding into the alternative beverage space — adding new plant-based beverages to the proliferation of fraudulent ‘milks’ that already litter the supermarket dairy case.

GlobalThoughts(Chart1).jpg

While dairy milk sales decline, plant-based beverages are a growth market, though the pace of growth has slowed.

At the Georgia Dairy Conference in January, Rob Fox, Dairy Sector Manager of Wells Fargo’s Food and Agribusiness Industry Advisors, talked about big picturedairy trends, and he showed graphically the way these alternatives are eating into the U.S. dairy milk market. While dairy milk sales decline, the plant-based beverages are a growth market, though the pace of growth has slowed. (See Chart 1)

Fox also showed a pie chart of combined supermarket sales of dairy and plant beverages at $17 bil., with dairy accounting for $15.6 bil. and plant-based at $1.4 bil. (Chart 2).

GlobalThoughts(Chart2)

Rob Fox showed a pie chart of combined supermarket sales of dairy and plant beverages at $17 bil with dairy accounting for $15.6 bil. and plant-based at $1.4 bil.

Doing the math, Fox remarked that the plant-based alternatives now represent 8.9% of the combined dairy and plant-based ‘milk’ market. He said that in other countries with mature dairy markets, these alternative beverages tended to level off in growth when reaching 10% of total dairy market share. But at the same time, the combined dairy and plant beverage sector has also declined from 6.4 billion units in 2013 to 6.1 in 2017, according to Fox.

He noted the alternatives are also infiltrating other dairy product categories and that these ‘next generation’ products are offering much better nutrition than earlier versions. “But they will never compete with dairy milk, nutritionally,” Fox said.

What these alternative beverages have going for them, said Fox, is very high margins for processors and investors.

He explained that plant-based dairy products have low ingredient costs, are easier to manufacture, package, market and distribute and are seen as ‘greener’ and animal friendly. They are better positioned for e-commerce and kiosk-type retail outlets and are made by innovative marketing companies and startups with a market and margin profile that attracts investors.

Meanwhile, dairy milk is a highly regulated market with a prevailing commodity mindset worn down even more-so by supermarket price wars at the retail level, making it difficult for the dairy milk sector to adapt to U.S. consumer market trends.

U.S. consumer trends gravitate toward innovation and specialization so everyone can be a ‘snowflake,’” Fox explained, adding that areas of growth for the dairy milk sector will be full-fat in smaller containers, dairy protein in sports nutrition, and non-GMO branding. (No joke: Look for more later on genetically-modified, aka GMO, lab-manufactured products like Perfect Day that are actively defending what they see as their right to use the term ‘animal-free dairy’ because their product is said to be compositionally the same as milk, derived from genetically modified laboratory yeast exuding a white substance they say IS milk.)

That said, where is the true and simply original dairy in its re-branding process? What efforts are being made to compete to reverse this fluid milk market decline? Wouldn’t revitalization of the fluid milk sector also provide a demand pull for U.S. production growth?

Fresh fluid milk is not interchangeable on the global stage as are milk powders, fat powders, protein powders, cheeses, butter and aseptically packaged shelf-stable fluid products.

Meanwhile, the fastest growing surplus regions of the U.S. are busy aligning with retailer/processors and utilizing the Federal Order pricing schemes to pull their production growth into milk-deficit regions, leaving the milk-deficit region’s producers sending their milk to manufacturing homes in other Orders, or even looking for ways to export from eastern ports.

The U.S. has the water, the feed, the space, the transportation, logistics and support infrastructure, as well as a large existing domestic market to anchor the base production level of our nation’s farmers. The U.S. also has a legacy of dairy producers that are respected for their progress, animal care and food safety.

The ingredients for global success are here, but other factors need evaluation because the success is eluding dairy farm families as they face their fourth year of low prices and lost markets forcing increased numbers to exit the business.

In future installments of this multi-part series “Global Thoughts,” we’ll look more closely at the export side of this fork in the road, including the product trends, product and trading platform differences, imports, transportation and logistics, the role of regulatory pricing and cooperative base programs at a time when the dairy landscape is being forever changed.

As this series proceeds, thoughts and questions are welcome: agrite2011@gmail.com

 

-30-

 

Rep. Marino introduces Whole Milk Act

Seeks to make school milk great again by making it whole again

By Sherry Bunting, reprinted from Farmshine May 4, 2018

d3938-1 (1).jpg

Peggy Greb, USDA ARS

WASHINGTON, D.C. — It has been talked about for years, and the evidence has been put before USDA and the Dietary Guidelines Advisory Committee even before the 2015 cycle began, but while the caps on cholesterol were removed, freeing the egg industry to promote the healthiness of eggs, the caps on saturated fat were left where they are, despite the same body of research and investigation showing just how flawed the 30-plus years of deteriorating dietary advice were from the beginning.

Meanwhile, schoolchildren continue to be served only fat-free and lowfat milk, and this means a huge lost opportunity to serve children the best tasting best nutrition available while improving the loss of milk markets and value affecting dairy farmers across the nation.

Tom-Marino.jpg

Congressman Tom Marino (PA-10th)

In fact, by at least one estimate, the move by the Obama administration to reduce flavored milk from lowfat (1%) to fat-free, alone, resulted in lost sales of 288 million cartons of milk since 2014 — not to mention milk on the school lunch tray ending up in the trash.

Congressman Tom Marino, representing Pennsylvania’s 10th legislative district seeks to put an end to this loss of dairy nutrition and markets. Last Thursday, April 26, he introduced The Whole Milk Act, H.R. 5640, which was referred to the Committee on Education and Workforce. Rep. Virginia Foxx of North Carolina chairs this committee, and G.T. Thompson of Pennsylvania, who serves as vice chair of the Ag Committee, also is a member of the Education and Workforce Committee.

In fact, Rep. Thompson later signed on to become an original cosponsor of Marino’s Whole Milk Act.

Rep. Thompson has a separate bill as well, which was introduced last year to codify the small administrative step taken by Secretary Sonny Perdue last fall, allowing 1% lowfat flavored milk to be served in schools instead of the previous rule of fat-free-only. Choices for white milk were already at 1%. Not much forward movement has been seen in the School Milk bill introduced by Thompson.

Marino’s H.R. 5640 affects the unflavored milk offered by schools. It seeks to amend the Richard B. Russell National School Lunch Act to allow schools that participate in the National School Lunch Program to serve unflavored whole milk.

Rep. Marino also sent a letter to Secretary Perdue last week, asking USDA to update guidelines to the National School Lunch Program to allow schools to sell unflavored whole milk during lunch.

“Under the Obama Administration, schools participating in the National School Lunch Program were barred from selling unflavored whole milk and could only sell 1% unflavored milk,” said Rep. Marino in a statement.

“When the Obama Administration changed the National School Lunch Program to allow only 1% unflavored milk to be sold during school lunches, they claimed to be doing a service for our school children,” Marino’s statement indicated. “We saw the complete opposite, children stopped drinking milk in school, and food waste went up.”

Marino referenced the “Numerous studies that have shown consuming unflavored whole milk to be a good way to prevent childhood obesity and help your body absorb more vitamins. This bill will not only help our children get the proper nutrition they need to lead a healthy lifestyle, but will also help America’s dairy farmers who have been struggling with stagnant milk prices.  I strongly urge my colleagues in the House to support this bill.”

While this bill will not, by itself, correct the issues with milk and dairy in the National School Lunch Program, with its questionable rules on the percentage of lunch calories that are allowed to come from fat, the truth is that if this bill is taken up by the committee and is voted on, passed and signed by the President, it does send a strong message that the needle must move on this issue sooner, rather than later.

Early this week, Nina Teicholz, author of The Big Fat Surprise and founder of the Nutrition Coalition, tweeted her support for H.R. 5640.

“This bill is supported by the science!” writes Teicholz. “Never was there any science (to begin with) to show that kids should restrict their consumption of saturated fats; fats, nutrients are needed for growth.”

The Nutrition Coalition echoed, stating that H.R. 5640, The Whole Milk Act, “is supported by peer-reviewed science showing whole-fat milk is equal to or better for kids than skim.”

In fact, at issue is that while both skim and whole milk contain the 9 essential vitamins found in milk, those 9 essential vitamins do no child any good in their school lunch or breakfast if they don’t make their way from the carton to the belly and end up instead in the trash.

One thing is for sure. Whole milk tastes better. Giving schools this choice allows whole milk, at just 3.25 to 3.5% fat, or even 2% to be the more nourishing choice because it is more likely to be consumed. With better tasting milk at school and the satiety of these healthy fats, children can think better, and this would be a positive step toward turning around the epidemic of childhood obesity and diabetes.

Nina Teicholz-27

With this graph showing the rise in obesity as the Dietary Guidelines worsened from the McGovern food pyramid through today, Big Fat Surprise author Nina Teicholz told PA Dairy Summit attendees in February that this graph, itself, does not show causation, but she revealed the growing number of studies that have proved it as well.

A growing number of cardiologists are already making this recommendation to patients as the veil has been lifted to reveal that consuming fats is not what is making us fat. (See Chart 1).

Chart 2Meanwhile, Teicholz shows that, “The introduction of skim milk is arguably what turned kids away from milk altogether (because it tastes bad); then kids turn to sugar-filled options instead,” she writes on Twitter. “The drop in milk consumption is driven by the decline in whole milk.” (See Chart 2).

In a separate letter to Agriculture Secretary Sonny Perdue, Rep. Marino notes that “The Healthy, Hunger-Free Kids Act of 2010 required USDA to update federal nutrition standards for school meals. This update included schools only being able to offer one cup of fat-free or I% milk. These changes have led to a decrease in milk consumption and a significant increase in food waste in schools. Additionally, these guidelines have negatively impacted America’s dairy farmers who have been suffering from low milk prices and a significant decrease in the purchase of fluid milk.”

He notes that not only is milk the number one source of 9 essential nutrients, “it also provides  significant health benefits. For instance, Conjugated Linoleic Acid (CLA), a fatty acid found in milk, has been shown to reduce the risk of cancer and is a great source of protein,” writes Marino. “Furthemore, if children do not drink milk, it is very difficult for them to get sufficient amounts of three of the four major nutrients lacking in most children’s diets: calcium, potassium, and Vitamin D.”

Marino notes that the bonus is that “increased milk sales would help America’s dairy farmers who have been impacted by stagnant milk prices.

There are several ways we can all help support Rep. Marino’s Whole Milk Act.

First, contact your cooperative board members and ask them to let National Milk Producers Federation know that the dairy producers they represent want this bill supported. Contact organizations you are a member of, including your state Farm Bureau and the American Farm Bureau Federation and state and national breed associations, for example.

Most importantly, contact your representative in the U.S. House and ask them to cosponsor and support H.R. 5640 The Whole Milk Act. If you don’t know who to call, enter your zipcode here to find out who represents you

Also, call the U.S. House of Representatives at 202-225-3121 and let them know that H.R. 5640 is important for the health and well-being of our schoolchildren.

In addition, check this link to the Education and Workforce Committee and look for members who may be from your state, contact them, and the Committee chairwoman as well. Ask them to put this bill on the committee’s agenda. Its passage must begin in this committee.

Also, write to Agriculture Secretary Sonny Perdue or contact the USDA with your support for the letter Rep. Marino has sent in conjunction with introducing H.R. 5640 The Whole Milk Act. USDA is key to making school milk great again by making it whole again.

Finally, contact Rep. Marino’s office and thank him 202-225-3731.

Follow H.R. 5640, The Whole Milk Act, at this link.

 

-30-

Caption

TomMarino

At the Farm Bill hearing during the Pa. Farm Show in Harrisburg in January, Rep. Tom Marino was part of the panel. While he does not serve on the Ag Committee, he has attended this hearing the past two years it was held. He spoke from the heart and admitted he is not the most well-versed in agriculture and since he does not sit on the ag committee, has less influence on these things, but he said he comes home late at night from Washington and sees the lights on at the dairy farms in his district, sees the activity going on on the farms, sees what people put into producing a quality product and hears from constituents on these issues of school milk — brought up at Farm Show hearings also. He said at the 2018 hearing that he is tired of seeing things that don’t make sense and he said if the government is involved in these things, they better be getting it right or they should not be involved. Last week, Rep. Marino introduced The Whole Milk Act, H.R. 5640, to bring whole milk back to the National School Lunch Program. Photo by Sherry Bunting

 

Flashback: two NY/NJ dairy plant owners shift assets from regulated ‘commodity’ dairy milk to freedom of branded non-dairy ‘milk’

nondairymilk.jpgAuthor’s note: Below are two articles from two interviews August 2016 and November 2017 with two separate owners of two separate plants in the New York / New Jersey metropolis that were closed or sold in the past two years. Today, the Schwartz family (Elmhurst Dairy, Queens, NY) and Catalana family (Cumberland Dairy, Bridgeton, NJ) are involved in developing and launching new non-dairy plant, nut and grain based beverages in the supermarket dairy case. This trend toward making plant-based versions of animal protein products is also becoming a problem for the meat industry.

For dairy milk, the root of the issue is the alliance between USDA and the anti-trust-protected national-footprint milk cooperatives. First, USDA designates dairy milk as a “commodity” with an FDA standard of identity that is only enforced on dairy milk, not on plant-based ‘milks.’ USDA also runs the federal order milk pricing system on fresh fluid milk. USDA also dictates what schoolchildren are permitted to drink, currently allowing only fat free or 1% milk, despite scientific proof to the contrary that whole milk (3.25% fat) is the most healthy value. USDA also dictates what the dairy promotion boards may and may not do to promote fresh fluid milk using money the USDA mandates every farmer must have deducted off their milk checks for said promotion. USDA and the promotion boards push the lowfat agenda despite it being proven to be less healthy than full-fat dairy.

In their separate situations, Henry Schwartz and the Catalana brothers got out of commodity dairy milk and are developing and launching plant-based beverages with free rein in the supermarket “dairy” case.

BELOW ARE THEIR STORIES…

Story #1 – By Sherry Bunting, reprinted from Farmshine August 2016

New York City’s last milk plant, Elmhurst Dairy, closes doors

JAMAICA QUEENS, N.Y. —  He says the commodity milk category is ‘unsustainable’ and that the future lies in new brands.

At 82, Henry Schwartz has witnessed the evolution of dairy. Food and farming look very different today compared to when he was six years old, spending his youth on the family’s former dairy farm and in their milk plant.

His family’s Elmhurst Dairy was the combination of two dairy farms and milk plants in Queens County, New York — one owned by his paternal grandparents, the other by his maternal grandmother.

The farms have been gone since 1948, and in October (2016), the Elmhurst Dairy plant in Jamaica, Queens, New York, will close its doors too.

With this closure of New York City’s last fluid milk plant, a long and storied series of chapters in the milk business will end.

But with every end, comes a beginning, and Henry Schwartz sees light at the end of his tunnel.

“I’m not depressed anymore,” he said in a telephone interview with Farmshine. “We have other businesses that are related to dairy, and they are successful. We will be bringing out new products under the Elmhurst name.”

Henry referenced the family’s Steuben Foods, Inc. plant near Buffalo, N.Y. where 600 people are employed. Its aseptic packaging spawned a new line of beverages in June of 2015, called Elmhurst Naturals — an offshoot of Henry’s son Cyrus’ business Dora’s Naturals. (Examples include Banana Water and Mango Water). Henry also referenced the family’s Mountainside plant near Roxbury, N.Y., where filtered milk with a longer shelf life has been bottled since 2006.

With both plants already expanded into aseptic packaging and Natural market lines, the next sequence, said Henry, will be further expansion at Steuben into grain, nut and seed beverage products already set to generate half a billion in sales.

Henry was quick to give heartfelt thanks “to a great many people who worked so hard for so long to see that we succeeded.”

He also cited the “enormous economic impact” the company has had in the area through the dairy business.

But, he said, in order to continue to have positive economic impact, things had to change. They had to break free of commodity milk.

“The future of the milk business is value-added,” said Henry. “The milk business as I knew it is unsustainable. Nobody talks about the price of milk anymore, they talk about all of these other things. They talk about quality and services. That is the evolution and an indication that we do not have a totally sound business model in (conventional) milk, so we are trying to diversify in the marketplace.”

When asked whether brand marketing within the conventional dairy milk category can help save this seemingly “unsustainable future,” Henry commented that there are “outstanding people in the marketplace coming out with cutting edge new products.”

He mentioned what fairlife has done to bring out what is basically milk and to market it as a brand.

He mentioned what Chobani did to “take limited assets and build a billion dollar company inside of seven years on branding an old-style yogurt right in front of our eyes.”

He talked about how Daisy revived the sour cream category by specializing in it and branding it.

And he mentioned other products, like the genesis of Lactaid milk right out of Atlantic City and later sold to Johnson and Johnson.

He also mentioned Organic milk as a branded category that “started from scratch into a billion-dollar category.”

“We can create with milk and dairy products tremendous success stories and brands if we are willing to work at it,” Henry elaborated. “In many ways, our Steuben Foods — operating as an offshoot of Elmhurst but now much bigger — is doing that.”

Yes, the Schwartz family of businesses, including Dora’s Naturals started from scratch by Cyrus, is transforming itself according to the wishes of the urban New York City consumers.

Henry’s word of wisdom to the dairy farmers who ship milk to the New York City plant that is closing? “Diversify.”

It was obvious after a 45-minute conversation that he has a soft-spot for dairy farming. But his family’s younger generation is following the trends. They value the economic contribution to the community and dairy legacy of the generations before them, but they see even more economic opportunity and job creation in diversifying their efforts into a variety of beverages and breaking free of the commodity-milk market.

Henry could barely bring himself to call them all ‘milk,’ but he had enthusiasm as he talked of the future. He said that “exciting new products” — derived from grains, nuts and seeds — will be the wave of the future as the family diversifies into branded plant-based beverage businesses, which their website refers to as ‘grainmilk’ and ‘nutmilk’.

Already one of the largest Organic dairy milk processors in the nation under contract for Horizon and other brands, the Schwartz family’s Steuben Foods and Roxbury plants will continue in dairy milk, but Steuben will also branch out into the newer non-dairy beverage categories as well.

Henry said the Roxbury plant is expected to expand opportunities in both the dairy and non-dairy fields also. He said the family has many interesting and proprietary product concepts in store.

“We will continue to be a large milk handler,” he said. “We will also be doing a lot in grains and nuts and seeds. Part of our future will be cow’s milk. That will certainly continue. I have had my whole life in it. There is a bright future ahead and the continuation of something our family started over 130 years ago when my great-grandfather opened the first family farm plant in Middle Village in the 1880s. We are pleased to continue in this milk business, but that continuation will look different in the future than it did in the past.”

The Jamaica, Queens property — where the ubiquitous red barn and silo label of Elmhurst Dairy now fades — will become the site of any one of a number of projects Henry said his family is currently working on.

“I spent a good deal of my youth at my grandmother’s farm plant, Juniper Valley Dairy, where she milked 200 cows, bottled the milk and delivered it until 1948. She was the last farm in Queens County,” he said. Meanwhile, his paternal grandfather’s dairy farm spawned the original Elmhurst Dairy plant, which was started by Henry’s father and uncle at their father’s dairy farm in nearby Middle Village.

“They got all of that together here in Jamaica, Queens in 1948, where we are the last milk plant in the area. Now that it is closing, we expect to make use of the land in a way that is more beneficial to ourselves and to the community,” said Henry.

“It is an evolution of what was once dairy farms that became a dairy company and now is going into other fields that will be beneficial,” he added.

“Yes, it is sad. I spent 76 years, my whole life in it. When I saw the end coming, I was initially upset. But now I realize it is for the best. Even though it is a big change, we are going to use the property in a way that will be good for the community, and we will continue in the milk business near Buffalo, New York, through other forms — both cow’s milk and with grains, nuts and seeds,” he said.

Bottom line according to Henry Schwartz: The future is very much agriculture-based but not 100 percent dairy-milk based. That can be said of the future for the Schwartz family in the post-dairy era as it can be said of the urban food and beverage marketplace of New York City for which they are building new brands and expanding in plant-based beverages.

————-

Story #2 – By Sherry Bunting, reprinted from Farmshine, November 2017

DFA buys Cumberland Dairy, New Jersey’s last independent fluid milk processor

BRIDGETON, N.J. — Cumberland Dairy, the last independent fluid milk processor in New Jersey, was acquired by Dairy Farmers of America, Inc.  The plant has been co-op supplied through Land O’Lakes and its predecessors Atlantic and Interstate as well as Maryland-Virginia milk cooperatives, since its founding, according to president Carmine Catalana IV.

In a phone interview with Farmshine Tuesday (Nov. 7), Carmine said they are moving forward with their current milk supply, which includes a few DFA members commingled on local milk routes.

He acknowledged that the Bridgeton, New Jersey company had interest from other buyers, but that a big consideration in accepting DFA’s acquisition offer — at an undisclosed price – was that Carmine and his brothers would continue in the leadership of the company with the backing of the nation’s largest milk cooperative.

Cumberland Dairy, founded in 1933 by Charles Catalana, is run today by third generation brothers Carmine IV, Frank and David.

The business will continue to operate as Cumberland Dairy, and the (180) employees will retain their current positions, according to DFA’s public announcement of the acquisition. The announcement stated further that, “The Catalana family and existing management team will continue to manage all day-to-day operations, including customer relationships, milk procurement and production.”

“We have the opportunity to move the company forward with the blue-chip customers we serve, and other benefits are sure to come with the backing of a national milk cooperative with 13,000 dairy farms behind them,” said Carmine.

In its press release last Thursday (Nov. 2, 2017), DFA described Cumberland Dairy as a company “proudly serving some of the nation’s top quick-service restaurants, convenience and grocery chains, wholesale food distributors, fine-casual restaurants and dessert concepts to a variety of customers,” stating that the acquisition aligns with DFA’s strategy… to expand into extended shelf life processing.

“DFA approached us because we are one of several extended shelf life (ESL) plants, and they were looking to enter this marketplace and acquire our technology and customer base,” Carmine told Farmshine.

Since the mid-1980s, the plant has been doing ultra high heat pasteurization ESL products in ultra clean packaging to deliver shelf life over 75 days for refrigerated liquid dairy products.

Their ESL process is different from the UHT aseptic packaging that DFA currently uses on the West Coast to package California Gold — a primarily 3.5% fat shelf-stable drinking milk with a non-refrigerated shelf life of one year — which is shipped to Walmart and other chains in China. Those fluid milk sales to China have grown every year since 2014.

“We have not taken the big financial and technology step into the aseptic shelf-stable non-refrigerated dairy market,” said Carmine. But, over the last 30-plus years, the Catalanas have been innovators in the ESL space, before the concept of extended shelf life had a name or an acronym.

DFA noted in an email response that upgrades for aseptic shelf-stable technology may be considered for export from this East Coast plant.

Carmine notes that once his family had implemented an ESL process with a flavor close to fresh milk, “we stopped doing the regular pasteurized milk as a relatively small player, and sold our roots off to a customer, and did nothing but ESL,” Carmine said as he explained the company’s evolution of moving away from conventional milk bottling toward producing their own ESL liquid dairy products under the Freshlife brand and especially into co-packing for private labels.

For example, they do milk and dairy products for Rosenberger’s and other dairies, like Rutters, Schneiders, Wawa, Gallikers, Turkey Hill, and Turner Dairies. While they do everything liquid and refrigerated — from skim milk to heavy cream to dessert mixes — the emphasis is on the ESL products like egg nog, half-and-half and other cream products.

Cumberland Dairy also makes McDonald’s milkshake mix, Rita’s frozen custard, Shake Shack sakes and Kohr Bros. frozen custard, to name a few. In fact, the company’s website shows photos marking when the company began making milkshake mix for “that new drive-in restaurant in the area called McDonald’s” in 1971.

“Most of what we produce has someone else’s label on it,” said Carmine. “We do these products for other dairies, these family businesses that we hold dear as our customers.”

He sees a bright future for the products they currently manufacture. “We have had some conversations with DFA about where this portion of the business is going and how it has continued to grow,” Carmine related. “We felt like this was not something we had the ability to do on our own, and that in DFA, with that many dairy farmers behind them, we had the best partner for the future.”

In an official statement, Carmine said that, “A future with DFA means that we can continue to focus on our values as a company while accelerating our opportunities for growth. This is a very exciting time for the entire Cumberland Dairy family, and we look forward to this next chapter with DFA.”

For DFA’s part, the acquisition “represents a commitment by our farmer-owners to expand our investments in processing and to continue to grow the U.S. dairy industry,” said DFA president and CEO Rick Smith in a DFA press release.

“There are not many independents dairy plants left in this business,” Carmine reflects. “We were the last independent fluid milk processor in New Jersey.”

The Catalana family’s sister business — Innovation Foods LLC, founded by the Catalanas in 2008 — is not included in this transaction with DFA. It will remain independent and wholly-owned by the family, according to the announcement.

At the Cumberland Dairy website, the Catalana family’s retained Innovation Foods LLC is described as “producing high-acid beverage products for our partner NextFoods under their GoodBelly brand.” According to their website, NextFoods, Inc. was founded by Steve Demos, the founder and former president of WhiteWave (makers of Silk soymilk, almondmilk, etc) along with Todd Beckman, a former vice president of business operations at WhiteWave. Their website explains that Demos and Beckman built their NextFoods team to include many who worked at WhiteWave where they helped launch Silk Soymilk “into the stratosphere.”

-30-

 

PMMB responds to Pa. Dept. of Ag with hearings May 2 and 16

Public comment must be pre-submitted by Apr. 30 and May 11 to speak at the hearings on May 2 and 16. Separate from the PMMB hearings, the Pa. Dept. of Ag is seeking public comment to improve the market for dairy in the state and invites the public and industry to provide suggestions or comments online to be considered moving forward.

cropped-milktruck1.jpg

By Sherry Bunting, @agmoos

HARRISBURG, Pa. — In responding to Pennsylvania Secretary of Agriculture Russell Redding’s petition for hearings and review, the Pennsylvania Milk Marketing Board (PMMB) announced April 18 that it will conduct the first of two public hearings on May 2 with an expedited process requiring testimony to be provided in advance by noon on April 30.

The first hearing is set for May 2, 2018 at 9:00 a.m. in Room 309 of the Agriculture Building across from the Farm Show Complex on North Cameron Street, Harrisburg.

A second hearing is set for May 16, 2018 at 9:00 a.m. in the Monongahela Room of the Pennsylvania Farm Show Complex. The second hearing was announced this week, and like the first hearing, stipulates pre-registration with copy of comments provided in advance by noon on May 11.

PMMB states that the purpose of the first hearing on May 2 is to receive testimony and comments regarding the specific “Recommendations for Statutory Changes” found in the Ag Department’s April 5 petition.

The hearing will occur before the PMMB Sunshine Meeting already scheduled on that day, which sources indicate will address another portion of the PDA petition — asking PMMB to amend regulatory provisions dealing with termination of dealer-producer contracts. Since this portion of the petition involves a board-level action rather than a statutory change, steps to begin the regulatory review process will begin during the Sunshine Meeting that follows the public hearing on May 2.

(Author’s note: As you read on, please keep in mind that most Pennsylvania dairy farmers I speak with want transparency. They are not seeking a more complex system. They are seeking truth and a level playing field from which to compete. Pennsylvania is unique in having this lawyered-up state-level milk pricing system cohabitating with two Federal Order milk pricing systems. The state system (PMMB) sets a minimum retail milk price and minimum wholesale milk price for 6 regions of Pennsylvania, and the farm premium built into it only passes back to the farm IF the milk is audited to have met three specific criteria: produced, processed and sold in PA. However, the money is collected from all Pennsylvania consumers on ALL milk sold in Pennsylvania no matter where it came from or what pathway of logistics it utilized in getting to a PA store shelf. In turn, the very high per-gallon minimum price creates an uneven playing field for PA-produced milk as the state has become a magnet for increasing numbers of out-of-state dealer licenses as well as out-of-state milk usage, as well as out-of-state distribution warehouses and companies that specialize in logistics while the nation is overcome by supermarket loss-leading and price wars for customer acquisition).

In Wednesday’s hearing (May 2), PMMB will receive testimony on the following statutory items specifically mentioned in the Ag Department’s petition, many of which were suggested by PMMB staff as far back as 2009, but were never moved on, nor implemented!

LICENSING OF RETAILERS

In its petition, the Pa. Dept. of Ag mentions a recommendation by PMMB staff back in 2009 that was never implemented. It would have enabled the Board to require retailer reporting of volumes of fluid milk purchased and volumes sold in Pennsylvania “to track the amount of fluid milk sold at retail, the amount of consumer dollars being generated by the various components that make up the minimum retail price, and to identify the wholesalers and other sources of all fluid milk sold in Pennsylvania.”

The PDA petition notes that this is “a noted absence of data which prevented Drs. Novakovic, Stephenson and Nicholson’s study from being more conclusive on PMMB pricing’s impact on retail prices and Pennsylvania processing volumes. Such data is necessary for the continuation of credible, industry-supported and publicly-supported, PMMB pricing.”

TITLE TO MILK

Regarding Title to Milk, the PDA petition cites another amendment suggested by the PMMB staff in 2009, but never implemented, “to declare by statute, for the purposes of producer pricing only, that title to milk transfers to a milk dealer at the farm pick-up.”

In its petition, PDA notes that, “This (amendment) enables the Board to account for milk transported for out-of-state processing and to track that milk if it comes back in-state via wholesale or, coupled with the above, by a retailer.”

RETURN ABOVE COST OF PRODUCTION

The PDA petition also cites portions of the statute that result in “a return above the cost of production must always be guaranteed in the wholesale and retail price but not in the producer price.”

The petition recognizes that while the producer price under Section 801 must be, according to statute, “cost of production and a reasonable profit to the producer,” there is this exception stating that ‘the market for Pennsylvania-produced milk is threatened,’ which has “so permanently swallowed the rule that increasingly producers question the legitimacy of the entire PMMB pricing system,” PDA states in its petition.

“This is a major problem that must be addressed with transparency and clarity. This petition specifically requests that the PMMB staff be charged with investigating and recommending options to the Board for a statutory revision that has industry acceptance and equitably allocates the impact of market conditions across producers, milk dealers and retailers. If that is not deemed advisable, consideration of a statutory amendment nevertheless remains necessary to replace the existing language,” the petition states.

(Author’s Note: In other words, in times when the minimum price must be lowered to protect the market, the “pain” should be allocated to the other sectors and not taken on solely at the farm level. For example, when supermarkets loss-lead and get into price wars to acquire customers, should they not calculate that cost to their business rather than pass it back through the chain to the farm? It’s the retailer’s decision to use the price on a staple to acquire customers. It’s the processor’s decision to negotiate for large contracts. In the same sense, farmers cooperatives have admitted (in at least one civil proceeding) to doing the same by “sharing” profits gained by collective distribution efficiencies in the form of rebates to processors that are then passed on to retailers. Meanwhile, farmers are told the efficiencies of these collective distribution efforts are meant to reduce the cost of the hauling that is passed on to the farmer and that cost been steadily rising.)

RETURN OF BENEFIT TO PRODUCERS

Finally, the May 2 hearing will receive testimony on the point in paragraph 18 of the Pa. Ag Department’s petition concerning the return to producers of the benefit of minimum wholesale pricing.

The PDA petition explains it this way: “Much has been said over the years about the language of Section 805 of the Milk Marketing Law and whether the price increase built into the minimum wholesale price for payment of the over-order premium is being ‘given to producers’ as required.

“The allowed exception (‘ … necessary in order lawfully to maintain proper milk markets and outlets for producers and consumers’) has, again, permanently swallowed the rule. As with Section 801 producer pricing, consideration should be given to amending Section 805 to clarify the intended result. This is another area where positive perception of PMMB pricing appears to have been eroded by a perceived lack of clarity and transparency, the petition explains.

The PMMB hearing announcement states that intent to present testimony, and a written copy must be provided by noon on April 30, 2018 either electronically at  deberly@pa.gov or by filing at the PMMB office, Rm 110, Agriculture Building, 2301 North Cameron Street, Harrisburg, PA 17110.

For the May 16 hearing, the purpose is to solicit and consider suggestions for statutory changes to the Milk Marketing Law as requested by the PDA in its petition.

Those wanting to give testimony or comments on May 16 must provide notification and a written copy in advance to the PMMB by noon on May 11 either electronically at ra-pmmb@pa.gov or by filing at the PMMB office, Rm 110, Ag Building, 2301 North Cameron St., Harrisburg, PA 17110.

Announcements for the May 2 and May 16 public hearings indicate that both will be listening sessions with no examination or cross examination by interested parties.

A copy of the Pennsylvania Department of Agriculture Petition can be found at the Board’s website and drafts of the proposed amendments may be obtained on the Board’s website at http://www.mmb.pa.gov/Legal/Documents/Petition%20for%20Hearing%20MMB.pdf.

-30-