Covering Ag since 1981. The faces, places, markets and issues of dairy and livestock production. Hard-hitting topics, market updates and inspirational stories from the notebook of a veteran ag journalist. Contributing reporter for Farmshine since 1987; Editor of former Livestock Reporter 1981-1998; Before that I milked cows. @Agmoos on Twitter, @AgmoosInsight on FB #MilkMarketMoos
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.
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.
— 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.
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.
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.
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.
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.
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.
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!
DMI gets more aggressive in launch of ‘blending’ vision
By Sherry Bunting, Farmshine, August 27, 2021
CHICAGO, Ill. – The future of dairy is “blending”, according to recent messaging and product innovation launches supported with dairy checkoff dollars.
In 2019, the Live Real Farms, “purely perfect blends” – Dairy Plus Almond and Dairy Plus Oat beverages – were launched in test markets in Minnesota. Earlier this year, the roll-out arrived in Northeast markets, including Pennsylvania. For example, in Lancaster County, Pa., certain Giant stores are handling the drink.
According to USDA FMMO definitions for Class I fluid milk, the either/or protein or total solids percentage of this “blend” does not meet the Class I standard, and an official from the Pa. Milk Marketing Board also confirmed in a phone interview that the 50/50 blended products are not regulated as Class I under the PMMB.
This is another aspect of the move toward blending in fluid milk products. Some of these new checkoff-funded fluid milk “revitalization” products classify the milk used in them at manufacturing class prices.
But that’s another story. This article focuses on how DMI is positioning future dairy messaging and supply-chain innovation through blending.
First, many farmers will recall the words of Paul Ziemnisky, executive vice president of DMI’s Global Innovation Partnerships when he spoke in a Center for Dairy Excellence call last fall and again in a webinar during the February 2021 Pennsylvania Dairy Summit.
In those settings, Ziemnisky gave a look at the future of dairy beverages, going so far as to say new processing facilities will “need to be built as beverage plants able to handle all kinds of ingredients for the blended products of the future.”
“We will see the beverage space set up differently and our manufacturing plants will need to be set up as dual plants to make milk-based beverages because that is where the consumer is going, and it is our job to keep them where dairy is front and center,” Ziemnisky explained, noting that these blends “are shelved with milk. We’re adding plants to dairy, making lactose-free dairy to address gut health. Our partners have led, and we have driven growth by over 1 billion pounds.”
But where is the sales data on the blends? The dairy industry identity shift has been in the making for the past 12 to 13 years, and ramping up in the past five, with the opening, expanding and planned construction of huge dairy ingredient facilities, processing cheese and “nutritionals”.
Ultrafiltration and low-fat or fat-free milk figure prominently in these blends.
‘Best of all milks?’
So, how is DFA / DMI marketing the checkoff-partnered fluid milk innovation that is Live Real Farms “purely perfect blends”? The evolving liverealfarms.com website, as well as social media platforms, tell the story.
These “blends” of milk plus plant-based beverages, these 50/50 blends, are touted as “the best of all milks,” and “the milk for modern tastes.”
Interestingly, the Live Real Farms “about us” page demonstrates that its marketers may be even more confused about whose farm products they are promoting because the photo is clearly that of a farmer standing in a field with BEEF cows – Hereford and Charolais. There’s not a dairy breed in the bunch on the full screen photo at DFA’s Live Real Farms “about us” page.
Across the beef cow and farmer photo are the words “Keeping it real.” (We have to wonder how the photo of beef cows and a blended product keep it real, but that’s a question for another day.)
Moving down through the verbiage, beneath the photo are the words: “Live Real Farms is owned by a co-op of real farmers (DFA) with one really tasty goal: to create deliciously modern dairy products bursting with goodness. Nothing fancy. Nothing artificial. Nothing we wouldn’t put on our own tables.”
Underneath this verbiage, we finally do see a Holstein, and below that picture are these words: “Love Milk Like Never Before: Something so delicious happens when you blend real milk with real almond or oat drink. We love the luscious texture. We love the subtle sweetness and nutty flavors. We love the health benefits too. And so will you.”
Various consumer spots are included touting this blended drink as healthier because you can “sneak more plants into your diet,” or because the blending with oat drink make it better in coffee, and on and on.
The instagram account even urged putting 50/50 Dairy + Almond blend out for Santa last Christmas Eve. (Sorry, but Santa prefers 100% real milk).
A milk identity crisis?
The chocolate dairy plus almond product was recently reviewed by Afoolzerrand.com – the saga of a man traveling the world tasting and reviewing brands of chocolate milk – over 1500 of them to-date.
Even he was confused about the ‘blend’, stating in his video review that he was “curious about who this (blended) product is for…
“Is there crossover between people who buy almond milk and people who buy regular milk? Maybe? Is it some sort of a compromise? I don’t know. I’m sure they did research to back up putting out the product, but I find it strange who the target market is,” he said.
“It is amusing that at the website for Live Real Farms, about us, it talks about ‘keeping it simple’ and ‘we believe in eating food the way nature intended. It’s funny for me to think about nature intending on a 50/50 almond milk / cow milk blend, let alone a chocolate flavored one. To consider that to be the way nature intended has some comedy value for me,” the chocolate milk connoisseur said in his video review of the product.
He noted that, “It sort of tastes like you would expect sun block to taste,” observing a “dusty” flavor that’s “more sweet than chocolatey”.
He talked about the other 50/50 blends in the line-up, saying “I’m baffled a bit. I’ve certainly tried worse things, it’s less creamy, which you would expect with half low-fat milk, half almond milk… texture-wise it doesn’t do any favors.”
Rating it a 3 out of 10 (Poor), Afoolzerrand went on to note that it offers a lactose-free claim, but he was quick to point out (and show pictures of) the many other lactose free chocolate milks on the market that are made with 100% real milk, that he said are really good.
Whose healthy halo?
So, what does DMI – the purveyor of the blending vision for dairy farmer checkoff dollars – say?
A recently posted “Undeniably Dairy” video at the USdairy.com website sought to explain the blending direction of dairy “to answer questions raised by recent headlines.”
In the video moderated by Scott Wallin, DMI’s communications director, Kristiana Alexander, director of DMI’s Knowledge and Insights, discusses how “consumer desires are influencing the beverage category and how dairy innovation can encourage more fluid milk use. One of the newest innovations are blended products, which combine the goodness of dairy with other ingredients,” she said.
Alexander is asked to give a definition for ‘blended dairy’ in the DMI video entitled ‘Why Fluid Milk Innovation is Important.’
“We are talking about products that are combining dairy with other ingredients or foods that is then made into a single product,” she said.
Wallin notes that Alexander’s team is “constantly monitoring consumer trends” and asks what they are finding when it comes to blended dairy. “What is it that they are looking for?” he asked.
“Today, people are focused on living a ‘holistic lifestyle,” said Alexander explaining what she called DMI’s “overarching framework.”
The holistic lifestyle is “a lifestyle that emphasizes the connection of the mind, body and planet. It encompasses the well-being of the individual, the family, and everything around them. People want to know, is this good for my body? Will I enjoy it? Will I feel good about buying it?,” Alexander says.
She talked about how blended products are showing up in the marketplace, saying: “It’s all about nutrition and flavor experience. It’s about bringing the foods and ingredients that people want more of … and bringing them into dairy. This can include fruits and vegetables for vitamins and antioxidants, functional foods that boost immunity, healthy grains – think like oats and quinoa, nuts, and ‘super powders’ like matcha and turmeric that have a perceived ‘health halo’ around them. And beyond nutrition, it’s flavor experience. Consumers are looking to step out of their comfort zones,” said Alexander.
(Author’s note: Who is promoting milk’s natural healthy halo? The vitamins, minerals, high quality protein, hydrating water, electrolytes, healthy matrix of fats, important fatty acids, essential nutrients of concern in today’s diets, and more? Does dairy suddenly need other ingredients to improve its health halo, according to DMI consumer research? Because consumers do not know much about the health and nutrition of real milk and dairy, blending is the answer?)
Everyone’s doing it?
Alexander went on to say this “blending” trend is not just happening in dairy.
“We see it in meat and poultry,” she said, flashing brands of blended products always using the word “plus” on the screen (like the Live Real Farms does with dairy) and touting chicken-plus-grains blends and beef blended with pea-protein as “great new products” that meet consumer desires.
“We are tapping into consumers’ desires for enhanced nutrition and flavor exploration,” Alexander explained.
“The big question for farmers is, ‘what does it mean for the dairy industry?’” asked Wallin.
Alexander responded to say: “Bringing it home, what it means for dairy and looking at blended dairy… first, we know people are always looking to consume more vegetables, and we are seeing this take place in meat and poultry, and now in dairy.
“It’s not about eliminating foods,” said DMI’s Alexander. “It’s having different options available, and these hybrid foods that provide dairy and vegetables, they do that. There’s ice cream, cheese crackers, dairy beverages that all let consumers get more vegetables in their diets. And then there’s dairy blends that incorporate grains and nuts, meeting different consumer needs.”
She noted that Live Real Farms milk plus almond and oat, in particular, “provide that blended enhanced nutrition.”
(Author’s note: Enhanced nutrition? Over real dairy milk? Really?)
She also noted the “indulgent” blends, such as Shamrock’s milk swirled with almond drink and chocolate as being a new “comfort food” for people looking to indulge and “be comforted” after a stressful year.
Alexander also noted the blended cheeses with lentils and chickpeas providing new textures and … you guessed it… “enhanced nutrition.”
This ‘blending’ discussion has not even publicly touched upon the bioengineered yeast-excrement makers already talking with the largest global makers of ice cream, yogurt and cheese to blend their dairy protein analogs at a starter rate of 5%.
As Alexander noted in the DMI video, it’s happening in meat and poultry also.
Bottom line, dairy farmer checkoff dollars are using the World Wildlife Fund (WWF) supply chain leverage model to move consumers and producers in a direction that certainly appears to be one that transforms food by diluting animal-sourced foods like real milk and dairy.
Business will do what business will do, but should dairy farmers be paying to promote, launch, create, and foster the blending and dilution of their milk and dairy products, including the reclassification of the milk in these beverages at manufacturing class prices? Are they funding their own demise? Should they be funding the education and promotion of dairy’s own superior healthy halo so that consumers know what 100% real dairy provides and can make informed decisions as the lines get blurred?
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.”
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.
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!
HARRISBURG, Pa. — As part of the 2021 Pennsylvania Dairy Summit, virtual attendees had the option of ‘attending’ a zoom session sponsored by American Dairy Association Northeast (ADANE), entitled What has dairy checkoff done for you lately? Moderated by Jayne Sebright, executive director of Pennsylvania’s Center for Dairy Excellence, the guests included Rick Naczi, CEO of ADANE, Barb O’Brien, DMI president, Karen Scanlon, senior VP of sustainability, Paul Ziemnisky, executive VP of global innovation partnerships, and Marilyn Hershey, DMI chair.
The first part of the program was a history lesson on how and why DMI (Dairy Management Inc) was formed to “bring greater efficiency” to how checkoff dollars are used. Leaders stated that DMI “eliminates millions spent in redundant money.” A graph was displayed showing that since the formation of DMI in 1995, total dairy disappearance has risen, along with milk production, to record levels.
A key point made is that DMI leaders see the unified and integrated plan “has helped the dairy industry grow, to help fulfill the dairy producers’ goal of growth.”
Leaders acknowledged that consumers trust farmers, but they believe checkoff’s role is defined as “educating consumers about that trust.”
Paul Ziemnisky gave a look at the future of dairy beverages, going so far as to say new processing facilities will need to be built as beverage plants able to handle all kinds of ingredients for the blended products of the future. In essence, he said, the future of fluid milk is “dual purpose” processing plants.
“We have taken milk to the energy arena, the cold brew with milk arena. We’re adding plants to dairy, making lactose-free dairy to address gut health. Our partners have led, and we have driven growth by over 1 billion pounds,” he said.
Touching on full fat dairy, O’Brien said DMI is “leveraging” the growth in full fat science.
A pressing question of farmers was asked: “Why do we not see television ads?”
The answer, said O’Brien, is “We are going to market differently from the consumer standpoint with less traditional TV ads and shifting to social and retail media channels like other companies are doing. We are looking to our partners, dairy brands, and foodservice brands to elevate their presence and elevate dairy’s presence within that,” she explained.
Ziemnisky pointed out the significant growth in foodservice investment in promoting products that highlight cheese within their own advertising channels.
“For the fluid milk category to be successful,” he said, “Brands need to establish the relationship with consumers.”
Hershey noted that the list of companies that advertised in the Super Bowl 10 years ago include Blockbuster video, Gateway computers, companies that are not in business any more, indicating that television ads are a large investment of ‘past’ industries (even though this year’s Super Bowl had ads by milk’s up-and-coming new competitors).
O’Brien and Hershey explained that DMI and MilkPEP (the fluid milk processor checkoff fund of over $90 million a year) work in “lockstep on consumer understanding, messaging and coordinating with the science.”
“We (DMI) are investing in thought-leadership and university partnerships while they (MilkPEP) have a consumer-focused charter,” said O’Brien.
An example she gave is Amazon launching into groceries in 2017 and ramping up in the last 12 months.
“They won’t settle for being second or third in 10 years, and we (DMI) get to be the ones to educate them on dairy,” she said, stating that Amazon Fresh dairy offerings today are 90% cows’ milk. “That could have been 50/50. We are a voice for dairy in the category.”
This led into further discussion of DMI’s target and the move to blended product partnerships.
Ziemnisky said “90% of consumers who buy plant-based drinks also buy milk today. The urban/suburban mom trying to get in shape is looking for low fat and looking for flavor. We have to give her more flavor. She is looking for advanced nutrition and things to energize her. She’s buying 27 gallons of traditional milk and 5 gallons of plant-based beverage a year because we did not give her almond flavor and oat flavor. She has to trust that we will give her the products she is looking for.”
Toward that end, said Ziemnisky, “We are blending to specific consumers around their dietary needs.”
“We will see the beverage space set up differently and our manufacturing plants will need to be set up as dual plants to make milk-based beverages because that is where the consumer is going, and it is our job to keep them where dairy is front and center,” he explained, noting that these blends “are shelved with milk so that the consumer is not walking over to the plant-based aisle.”
(In most stores, the plant-based is shelved in the dairy aisle so it’s hard to know how these blended products pull sales from solo-dairy or solo-plant.)
Ziemnisky noted, as farmers have heard before, that, “We have to be relevant, to develop formulations that make sure dairy is front and center, but provide the taste, nutrition and sustainability consumers are looking for.”
O’Brien said DMI’s mandate has been to “build trust” and address “shared priorities” while streamlining dairy promotion to be more efficient.
“We know accountability is absolutely critical,” said Hershey. “Farmers make the program and budget decisions through the significant farmer input” of United Dairy Industry Association (UDIA), the portion of the national branch that represents the state and regional promotion entities.
The bottom line, DMI leaders explained, is that the national decisions, strategies and unified marketing plan are ultimately governed by DMI’s board of 15 farmers, with two-thirds of dairy funding still residing with local leadership, but aligning with the “unified marketing plan” as all the state and regional organizations making up UDIA giving 2.5 cents of the local dime to DMI.
DMI works on two levels, said O’Brien, one being as a “global umbrella that farmers have created to address threats over time.”
The other level, they talked about was the domestic side, focused on youth wellness, developing a “deep bench” of nutrition experts and organizations to work with, and engaging on hunger with the food bank system.
On that “global umbrella” level, they explained that the U.S. Dairy Export Council, formed in 1995 receives $20 million annually in checkoff funds and is made up of the membership of 125 dairy companies, including cooperatives.
The Innovation Center for U.S. Dairy was later formed in 2008-09, with World Wildlife Fund (WWF) at the table right from the beginning “to bring farmers, cooperatives, manufacturers and customers around common sustainability metrics.” Essentially, WWF has been involved from the beginning in the shaping of the FARM program and the sustainability metrics that are part of DMI’s Net Zero Initiative.
O’Brien and Hershey talked about GENYOUth (formed in 2008-09), saying it was “founded by farmers and brings tens of millions of dollars in from other sources to support dairy’s commitment to youth wellness in schools.”
O’Brien noted that since its founding, GENYOUth has “brought in” $100 million from companies outside the dairy industry to achieve the goal of what they calculate to be over 800 million servings of milk per year, and accounting for what they say are school sales of 400 million “incremental” pounds of milk.
In existence for 12 years, with an annual budget of around $10 million, $4 million of which is line-item national and regional checkoff funding, the percentages show the GENYOUth budget now includes more outside money than inside money; however, there is no clear accounting for the ‘vehicle’ costs of the various staff and fixtures, which would likely be additional. Furthermore, there’s the $6 million paid annually to the NFL, which is DMI’s GENYOUth ‘partner’. The purpose of this money was not divulged by DMI leaders during the session.
Leaders also spent a good portion of time talking about how GENYOUth “worked tirelessly” to raise $17 million of “other people’s money” to support the distribution of milk to schools as cafeterias shut down during the pandemic. They maintained that without these efforts by GENYOUth, milk and dairy products would not have flowed steadily to children through schools. They said GENYOUth grants were given to 14,000 schools to pay for things like coolers for off-site meal distribution.
“We have insured milk and dairy products got to schools during the pandemic,” said O’Brien. She and Naczi both shared how they believe their organizations “pivoted and kept milk flowing” through schools, food banks, CFAP food boxes and other government feeding programs as well as “educating” schools on how to use the waivers for milk and dairy food sizes and packaging during the pandemic. They described national and regional checkoff organizations as the logistical coordinators for the flow of dairy to hunger channels – even though much of this was connected to the USDA CFAP programs.
They also explained how ADANE staff worked with stores to get the purchase-limit signs removed and to keep the dairy cases stocked during the height of the pandemic shut down last spring.
“We knew foodservice channels would get disrupted and looked at how to be sure dairy was going with and through the industry. With the retail influx of volume (purchases), we looked at how we can work across the supply chain,” said O’Brien, adding that dairy outperformed the growth in the rest of the retail sector by three percentage points during the pandemic.
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.
In that same June 2019 hearing, animal scientist and greenhouse gas emissions expert Dr. Frank Mitloehner of University of California-Davis explained the methane / CO2 ‘biogenic’ cycle of cows.
He said that no new methane is produced when cow numbers are “constant” in an area because methane is short-lived and converts to CO2 in 10 years time, which is then used by plants, cows eat the plants, and the cycle repeats.
Dr. Mitloehner also said that this cycle changes when cattle concentrations move from one area to another.
The milk produced and bottled in the Northeast and Southeast milksheds is not just carbon neutral, it’s already carbon negative, producing not just no new methane, but less than prior-decades’ methane.
Bear in mind, these new dairy-‘based’ — blended — beverages are NOT Class I products. I have been informed that the 50/50 blends, for example, do not meet the standard of identity for milk, nor do they meet the milk solids profile that requires Class I pricing. This means that even though milk is part of a fluid dairy-‘based’ beverage, it is not priced as Class I.
The milk used in these emerging products that combine ultrafiltered solids with water, additives and maybe an almond or two, fall into Class IV, some are Class III if whey protein is used. Examples include products like DFA’s Live Real Farms ‘Purely Perfect Blend‘ that arrived recently in Pennsylvania and the greater Northeast after its first test-market in Minnesota.
Think about it. Unity is great on many levels, and is to be encouraged in an industry such as dairy, but when it comes to marketing, who is calling the shots for future viability within the DMI integration strategy, otherwise known as unity?
Pre-competitive alliances and ‘proprietary partnerships’ working on food safety are wonderful because all companies should work together on food safety. But animal care? Environment? Climate? Why not just offer quality assurance resources and pay farmers certain premiums for investing as companies would like to see and pay them for providing the consumer trust commodity — instead of implementing one-size-fits-all branches in programs like F.A.R.M.?
These so-called voluntary programs have the power to negate contracts between milk producers and their milk buyers even though consumer trust is a marketable commodity that producers already own and are in fact giving to milk buyers, and their brands, without being compensated.
Instead, producers are controlled by arbitrary definitions of the consumer trust commodity that the producers themselves originate. This goes for Animal Care, Worker Care, Environment, and Climate.
The pre-competitive model used in food safety is applied to all four of the above areas today. This is exactly the supply-chain model World Wildlife Fund (WWF) — DMI’s ‘sustainability partner’ — set in 2010 to “move the choices of consumers and producers” where they want them to go.
In the 2019 Senate hearing referenced at the beginning of the above op-ed, Dr. Mitloehner stated that the mere fact there are 9 million dairy cattle today compared with 24 million in 1960 and producing three times more milk shows that dairy producers are collectively not only emitting zero new methane, they are reducing total methane as old methane and carbon are eradicated by the carbon cycle and less new replacement methane is emitted.
The problem may be this: Year-over-year cow numbers for the U.S. are creeping higher. While still much lower than four to five decades ago, the issue emerging for DMI’s Innovation Center for U.S. Dairy is how to accommodate growth of the new and consolidating dairy structures to attain the checkoff’s expanded global export goal and to accommodate massive new dual-purpose plants if dairy farms in other areas remain virtually constant in size, grow modestly, or decline at a rate slower than the ‘designated’ growth areas are growing.
DMI is at the core of this, you see, to reach it’s new collective net-zero goal, cow numbers would have to decline in one area in order to be added in another area, or they will all have to have their methane buttons turned off or the methane captured because now the emissions are being tracked in order to meet one collective “U.S. Dairy” unit goal under the DMI Innovation Center and F.A.R.M.
At that 2019 Senate hearing,Dr. Frank Mitloehner testified that dairies already create zero new methane but this can be tricky when cattle move from one area to another (as we see in the industry’s consolidation).Then we have DMI’s Dairy Scale 4 Good claiming the dairies over 3000 cows can be net-zero in 5 years and ‘spread their achievement’ over the entire milk footprint. Do we see where this is going?
Will all dairy farms have to meet criteria — set by organizations under the very umbrella of the checkoff program they must fund — to get to a ‘collective’ net-zero using the GHG calculator developed by the checkoff-funded Innovation Center in conjunction with its partner WWF (12 year MOU)? This GHG calculator has been added to the FARM program. These are the big questions.
By Sherry Bunting, both parts of a two-part series in Farmshine, July 2021
The dairy industry continues to wait for USDA to provide details on three areas of dairy assistance already approved by Congress or mentioned as “on the way” by Ag Secretary Tom Vilsack.
The fly in the ointment, however, is the record-high 2021 milk production (Table 1) and accelerated growth in cow numbers (Table 2) at a pace the recent USDA World Agriculture Supply and Demand Estimates (WASDE) expect to continue into 2022.
USDA is reportedly looking at production reports — up vs. year ago by 1.9% in March, 3.5% in April, 4.6% in May — to determine how to assist without adding fuel to expansion that could threaten late 2021 milk prices in the face of rising feed costs and a worsening western drought. (The latter two challenges could temper those forecasts in future WASDEs.)
May milk production a stunner
U.S. milk production totaled 19.9 billion pounds in May. This is a whopping 4.6% increase above 2020 and 2018 and a 4.1% increase over May 2019.
Let’s look at year-to-date. For the first five months of 2021, milk totaled 96 billion pounds, up 2.3% vs. the 93.8 billion pounds for Jan-May of 2020, and it is 4.4% greater than the 91.9 billion pounds of Jan-May milk produced in pre-pandemic 2018 and 2019. Of the four years, only 2020 had the extra production day as a Leap Year.
Milk per cow was up 3% over year ago in May. Compared with 2019, output per cow is up 2.2%, according to USDA.
Cow numbers vs. 2018 tell the story
Milk cows on U.S. dairies in May 2021 totaled 9.5 million head, up 145,000 from May 2020’s 9.36 million, up 172,000 from 2019’s 9.33 million, and up 83,000 head from 2018’s 9.42 million.
Counter to the national trend, Pennsylvania had 48,000 fewer milk cows than May 2018 — dropping 30,000 into 2019; 10,000 into 2020, and 8,000 into 2021.
Elsewhere in the Northeast and Southeast milksheds, among the 24 major monthly-reported states, New York had 4000 more milk cows in May 2021 than 2018, Vermont 8000 fewer. Georgia dropped 1000, Florida 12,000, and Virginia 11,000. In the Central states, Illinois was down 10,000 head.
The total decline in cow numbers for the 24 lesser quarterly-reported states, the collective loss in cow numbers is 59,000 head from May 2018 to May 2021
Accelerated growth is coming from three key areas where major new processing assets have been built or expanded.
In the Mideast, where the new Glanbia-DFA-Select plant became fully operational in Michigan this spring, there is a net gain of 32,000 cows for 2021 vs. 2018, Ohio’s cow numbers that had been declining 2018-19, began recovering in 2020-21. Indiana had 18 months of substantial growth, and Michigan returned to its growth pattern in 2020. Taken together, the Indiana-Ohio-Michigan region had a loss of 8,000 cows heading into 2020, but gained a whopping 40,000 cows over the past year.
In the Central Plains, where new plant capacity is starting up this spring and summer — Minnesota, South Dakota and Iowa, combined, added 40,000 cows May 2018 to May 2021.
In the Southern Plains, where joint-venture processing capacity continues to grow, Texas has continued full-steam-ahead, gaining 87,000 cows from 2018 to 2021, along with 29,000 added in Colorado and 17,000 in Kansas. New Mexico regained earlier losses to be 2000-head shy of 2018.
The growth patterns in these regions somewhat mirrored dairy exits from other areas — until Jan. 2020 (Table 2). The past 17 consecutive months of year-over-year increases in cow numbers leave the U.S. herd at its largest number in 26 years (1995).
However, the assumption that ‘dairy producers are okay because the industry is expanding’ ignores several essential factors. The playing field has become more complicated and inequitable. There are four main factors at play. We’ll look at them one at a time.
Factor #1 — Milk dumping and base programs
A year ago in April and May 2020 — at the height of the Coronavirus pandemic disruptions — the dairy industry saw dumping of milk, stricter base programs and bigger milk check deductions. Producers culled cows, dried cows off early, changed their feeding programs, even fed milk in dairy rations.
But milk production still grew, according to the USDA data.
Some cooperatives and milk buyers, like Land O’Lakes, had base programs already in place and triggered them. Others made changes to prior programs or implemented new ones.
Dairy Farmers of America — the nation’s largest milk cooperative, largest North American dairy processor and third-ranked globally by Rabobank — quickly implemented a new base program in May 2020, seeking 10 to 15% in production cuts from members, varying by region, with overage priced on ‘market conditions.’
It is difficult to assess the ‘equity’ in these base programs and the cross-layers among producers between and within regions, or to know how these ‘bases’ are being handled presently. When questioned, spokespersons say base decisions are set by regional boards.
Meanwhile, product inventory and pricing schemes affect all regions, and milk rides between FMMOs in tankers and packages — with ease.
According to USDA, the 11 FMMOs dumped and diverted 541 million pounds of milk pooled as ‘other use’, priced at Class IV, during the first five months of 2020, of which 350 million pounds were in April alone. This is more than three times the ‘other use’ milk reported by FMMOs during the first five months of pre-pandemic 2019 (171.4 million pounds). By June, the amounts were double previous years.
Of this, the largest amount, by far, was the 181 million pounds of ‘other use’ milk in the Northeast FMMO 1 during Jan-May 2020, comprising one-third of all the dumped and diverted milk pooled across all 11 FMMOs in that 5-month period.
In the Southeast milkshed, the Appalachian, Florida and Southeast FMMOs 5, 6 and 7, together pooled 88 million pounds of ‘other use’ milk in the first five months of 2020. The Southwest FMMO 126 had 106.2 million pounds of ‘other use’ milk; Upper Midwest FMMO 30 had 46.1 million pounds; Central FMMO 32 had 36.7 million pounds; Mideast FMMO 33 had 30.7 million pounds; California FMMO 51 had 28.9 million pounds; Arizona FMMO 131 had 21.7 million pounds; and Pacific Northwest FMMO 124 had 1.3 million pounds.
The dumping had begun the last week of March 2020 and was heaviest in the month of April. Producers also saw deductions as high as $2/cwt. for balancing costs, lost quality premiums, and increased milk hauling costs. Unaccounted for, were the pounds of milk that had reportedly been dumped on farms without being pooled on FMMOs.
All of this against a backdrop of pandemic bottlenecks and record-high March-through-August imports of butter, butteroil, milkfat powder, and blends — adding to record-high U.S. butter inventories and contributing to the plunging Class IV, II and I prices vs. Class III (PPD).
Meanwhile, not only did production growth in key areas move ahead, so did strategic global partnerships. Just one puzzling example in October 2020, after eight months of deflated producer milk checks, depressed butterfat value, burdensome butter inventory, record butterfat imports, and a plunging Class IV milk price that contributed to negative producer price differential (PPD) losses, Land O’Lakes inked a deal to market and distribute cooking creams and cream cheeses — Class II and IV products that use butterfat — from New Zealand’s Fonterra into United States foodservice accounts.
The New Zealand press reports were gleeful, citing this as a big breakthrough that could be followed by other of their cheeses entering the “huge” U.S. foodservice market through the Land O’Lakes distribution.
Factor #2 — Class price wars and de-pooling
As reported in Farmshine last summer, dairy farmers found themselves in uncharted waters. As Class IV prices tumbled from the get-go with all of the ‘other use’ dumping and diverting, butter inventory building as butter/powder plants tried to keep up with diverted loads at a disruptive time, the USDA Food Box program started drawing products in the second half of May, and really got going by July 2020.
Cheese, a Class III product, was a big Food Box winner. The cheese-driven Class III milk price rallied $7 to $10 above Class IV, and massive volumes of milk were de-pooled by Class III handlers, which has continued through May 2021.
Reviewing the class utilization reports, an estimated 80 billion pounds of Class III milk normally associated with FMMOs has been de-pooled over the past 26 months.
At the start of this ‘inequitable’ situation, academic webinars sought to explain it.
“We’re seeing milk class wars,” said economist Dan Basse of AgResource Company, a domestic and international ag research firm in Chicago, during a PDPW Dairy Signal webinar a year ago.
He noted that under the current four-class pricing system, and the new way of calculating the Class I Mover, dairy farmers found themselves “living on the edge, not knowing what the PPD (Producer Price Differential) will be” (and wondering where that market revenue goes).
“A $7.00 per hundredweight discount is a lot of capital, a lot of income and a lot of margin to lose with no way to hedge for it, no way to protect it, when the losses are not being made up at home as reflected in the PPD,” Basse said in that summer 2020 webinar.
What does this have to do with year-over-year milk production comparisons?
Two words: Winners. Losers.
Some handlers, and producers won, others lost — between and within regions.
Here’s why all of this matters from a production comparison standpoint: Dairy economists — Dr. Mark Stephenson, University of Wisconsin, and Dr. Marin Bozic, University of Minnesota — are both on record acknowledging that USDA NASS uses FMMO settlement data, along with producer surveys, to benchmark monthly milk production.
So, on the one hand: How accurate are these data for comparison over the past 26 months, given the inconsistent FMMO data from dumping, diverting and de-pooling?
On the other hand: Did the negative PPDs and de-pooling, resulting in part from the 2018 Farm Bill change in the Class I Mover, allow Class III handlers to capture all of that additional market value and use it to fuel the 2020-21 accelerated milk growth for regions and entities connected to the new Class III processing assets?
Factor #3 — New dual-processing concentrates growth
Accelerated growth in cow numbers is fueling record production in 2021. It is patterned around ‘waves’ of major new processing investments in some areas, while other areas — largely fluid milk regions — are withering on the vine or growing by smaller margins with fewer cows.
In the 24 major milk states, production growth was even greater than the All-U.S. total — up 4.9% vs. year ago. In part one, the breakdown was shown vs. 2018.
Here’s the breakdown for just the 12 months from May 2020 to May 2021 — a time in which the industry dealt divergences that created steep losses for some and big gains for others, while FMMOs became dysfunctional.
In just one year, over 40,000 cows were added in Indiana, Ohio, and Michigan, combined, and milk production was up in May 2021 by 12.6, 3.2 and 5.1%, respectively. The draw is the massive new Glanbia-DFA-Select joint-venture cheese and ingredient plant that began operations late last year in St. Johns, Michigan. Sources indicate it reached full capacity this spring. Add to this the 2018 Walmart fluid milk plant in Fort Wayne, Indiana and other expansions in Ohio and Michigan.
Ditto for the Central Plains, where new cheese and ingredient line capacity became operational this spring and summer. Supplying these investments, Minnesota grew production 6%, South Dakota 14.6%, and Iowa 6.2% over year ago.
Number two Wisconsin grew by 5.6% in May 2021 vs. year ago.
Milk production was up 5% in number one California, even though cow numbers were down by 1000 head, and dairy farmers in a referendum voted recently by a slim margin to keep their quota system. They are also dealing with a devastating drought that news reports indicate is now impacting both the dairies and the almond growers.
Then there’s Texas, where growth continues to be a double-digit steamroller, up 10.8% in May 2021 vs. 2020 — pushing New York (up 4.2%) to fifth rank.
The Southern Plains has had several strategic investments, starting in Texas and New Mexico (up 6% vs. year ago).
In Colorado, where production was up 5.3% in May, DFA’s joint ventures and strategic partnerships with Leprino, Kroger and others have fueled growth.
Kansas grew milk production 7.3% vs. year ago. In 2018, a state-of-the-art whole milk powder and ingredient plant became fully operational in Garden City, Kansas. The plant was to be a joint-venture between DFA and the Chinese company Yili but ended up as a joint-venture between DFA and 12 of its member farms that are among the 21 Kansas dairies shipping milk to it.
DFA’s Ed Gallagher gave some insights on this during a May 2021 Hoards webinar. He said, “We went through a period of investing in powder plants in the U.S. It seems like there is a follow-the-leader approach when deciding on investments, and it goes in waves. The industry just completed a wave of a lot of investment in Class IV manufacturing plants, and now… it’s flipping to Class III.”
Looking back on the Class IV ‘wave’ 2013 through 2018, there were several times in those years that Class IV beat Class III, leading to FMMO de-pooling, but not to the extreme extent seen in the past 12 months as Class III now beats all other classes, including Class I, leading to negative producer price differentials (PPDs).
Gallagher sees Class III and IV prices “coming together” in the “next period of years” because the ‘wave’ of capacity investment has flipped from Class IV to III. He predicted more Class III capacity will be added.
Are these past 26 months of PPD net losses for producers the industry’s answer to, in effect, increasing processor ‘make allowances’ without a hearing?
The average PPD value loss (see chart) across the seven multiple component pricing FMMOs was $2.57 per hundredweight for 26 months, which began with implementation of the new Class I pricing method May 2019 through the most recent uniform price announcements for June 2021 milk.
Applying a conservative 5-year average PPD (prior to Class I change) for each FMMO, only the few gray blocks on the chart represent ‘normal.’
This means even positive-PPDs show margin loss for farm milk pooled on FMMOs. In fact, the CME futures markets as of July 14 show August through December divergence between Class III and IV above the $1.48 mark, indicating Class I value loss and negative PPDs or smaller positive PPDs could return after barely a two-month reprieve.
Many handlers that don’t pool on FMMOs also use the uniform prices as a benchmark.
This $2.57 net loss for seven MCP FMMOs across 26 months represents almost a doubling of the current make allowance levels.
Current USDA make allowances and yield factors add up to a processor credit of $3.17 per hundredweight on Class III and $2.17 on Class IV. This already represents 11 to 25% of farm milk value, according to 2018 analysis by John Newton, when he was Farm Bureau’s chief economist.
Why is this important? Because we are already seeing additional margin transfer from Class I to Class IV as the industry moves to blended beverages that mostly use ultrafiltered (UF) milk solids. Blends using whey would fall under Class III.
Looking ahead, DFA now owns most of the former Dean Foods’ Class I fluid milk plants since May 2020. New manufacturing synergies are undeniable, considering the direction of dairy checkoff’s fluid milk revitalization plan emphasizing these dairy-based-and-blended beverages and ‘dual-purpose’ processing facilities.
As low-fat UF milk solids are blended with other ingredients in a manufacturing process to make new combined beverages, the result is a competing beverage, and the milk in the beverage drops from Class I to Class IV.
Meanwhile, these beverages cost more at the grocery store, and the ingredients are not part of the USDA end-product pricing ‘circle’. Therefore, no new make allowances should be requested because processors are already getting a reduced class value, and a higher margin.
DMI’ vice president of global innovation partnerships, Paul Ziemnisky, gave some insights into this “future of dairy beverages” — and how it ties into new processing plants investments during the virtual Pennsylvania Dairy Summit in February.
Ziemnisky went so far as to say new processing facilities will “need to be built as beverage plants able to handle all kinds of ingredients” for the blended products of the future. In essence, he said, the future of fluid milk is “dual purpose” processing plants.
While 11 of the top 24 states had milk production increases of 5% or more in May, the 13 states with increases below 5%, or negative, are mainly located within traditional Class I fluid milk marketing areas: Florida, up 0.5%, Georgia up 2%, Virginia down 2.3%, Illinois up 1.9%, Arizona, down 0.5%, Washington, down 0.9%, Pennsylvania and Vermont both up 1.8%, and New York up 4.2%.
Idaho and Utah, up 2% and unchanged, are outliers and largely unregulated by FMMOs. Some beverage assets are coming to that region in the form of ultra-filtration and aseptic packaging, including a plant renovation to make Darigold’s FIT beverage. Additionally, a new Fairlife filtration membrane plant was opened near Phoenix, Arizona in March, and Kroger is doing filtration and aseptic packaging in Colorado.
Meanwhile, Pennsylvania is often described as a ‘fluid milk state’ with a Milk Marketing Board setting minimum prices for fluid milk, and a string of independent milk bottlers that figure prominently in their communities.
Ranked fourth in milk production in 2006, Pennsylvania was passed by Idaho in 2007. By 2016, Michigan had pushed Pennsylvania to sixth. The very next year, in 2017, Texas leapfrogged both Pennsylvania and Michigan. Now, Minnesota has pushed the Keystone State to eighth.
How does the future of dairy affect traditionally ‘fluid milk’ states like Pennsylvania, or the Southeast for that matter?
New dairy-‘based’ beverage innovations can be made anywhere and delivered anywhere, often as shelf-stable products. Most are not Class I products unless they meet the strict FMMO definition which was last spelled out in the USDA AMS 2010 final rule.
For now, this also includes the Pa. Milk Marketing Board. Executive secretary Carol Hardbarger confirms that the 50/50 drinks are not regulated under PMMB, which generally uses federal classification, but that a legal interpretation of the Milk Marketing Law with regard to blends may be in order.
The 50/50 blends are already in some Pennsylvania stores and elsewhere in the Northeast, which is the second phase of the ‘undeniably, purely perfect’ marketing plan for fluid milk revitalization.
Factor #4 — USDA, industry coalesce around climate
Ag Secretary Tom Vilsack has been outspoken from the outset about using and aiming every available USDA program dollar in a way that also addresses the Biden administration’s strategies for equity, supply chain resiliency, and climate action.
Speculating a bit as to why USDA is taking so long to announce details about already funded dairy assistance, it could be that Sec. Vilsack is looking at the fit for ‘climate impact.’
Paid around a million a year in dairy checkoff funds to serve 4 four years as CEO of the U.S. Dairy Export Council — between prior and current Ag Secretary posts — Vilsack understands the future plans of the dairy industry’s checkoff-funded proprietary precompetitive alliances on a global scale.
Vilsack has been privy to the DMI Innovation Center’s discussions of fluid milk revitalization through ‘dual purpose’ plants and blended beverages. He is no doubt looking at the accelerating growth in milk production that is occurring right now for ways to tie dairy assistance to measured climate impacts in the net-zero file.
Producers on the coasts and fringes of identified growth areas have a target — fresh fluid milk and other dairy products produced in regional food systems for consumers who have a renewed zeal for ‘local.’ Fresh fluid milk will have to find a path outside of the consolidating system and cut through the global climate-marketing to directly communicate fresh, local, sustainable messages about a region’s farms, animals, environments, businesses, economies, jobs and community fabric.
It was a deep dive into the impacts of the federal prohibition of whole milk in schools, and positive momentum chipped away at the federal log-jam. The June 16th hearing by the Pennsylvania Senate Majority Policy Committee was livestreamed. A recording as well as written testimony can be viewed at https://policy.pasenategop.com/mp-061621/
Even though senators came and went in person and by zoom — due to a busy morning of meetings and votes — they were engaged with good questions and insights.
By the end of the rapid-fire 90-minutes featuring 11 testifiers in three panels, Chairman Mario Scavello (R-40th) had several actionable pathways.
It was a big day for the 97 Milk effort as several volunteers were invited to testify, and Chairman Scavello (above) read — not once but twice — from a 97 Milk handout, saying he wanted to make sure it gets into the hearing record.
“All of this in an 8-ounce cup of milk is what we are taking away from kids (when they discard or don’t take the fat-free or low-fat milk served). What are they thinking out there?” Scavello declared after reading the 6×6 card Nelson Troutman (below), had given him prior to the start of the hearing.
All 11 testifiers that morning supported whole milk as a choice in schools, bringing various farm, school, organization and consumer perspectives to help state senators understand the federal stumbling blocks. Chairman Scavello complimented “the breadth and depth” of what was learned.
These actions were identified by the Chairman:
— Develop and send a Resolution from Pennsylvania to the Federal Government, and if no results, begin to look at the cost and what would be involved to do something at the state level “on our own” to position Pennsylvania schools to be able to offer fuller fat milk.
— Conduct statewide pilot trials — a school district in every county — like the 2019-20 trial at Union City Area School District, to obtain widespread data and create more awareness. Foodservice director Krista Byler had shared her milk choice trial results, and Sen. Cris Dush (R-25th) noted a similar trial was done at a school in his district.
— Make other states aware of this federal issue and work on getting something done through National Conference of State Legislatures.
— Reach out to federal lawmakers to gain additional support and co-sponsors for H.R. 1861 Whole Milk for Healthy Kids Act, introduced by Representatives Glenn “G.T.” Thompson (R-PA) and Antonio Delgado (D-NY) in the House and to surface a companion bill in the U.S. Senate.
Layers of the onion were peeled.
The issues for students boil down to nutrition and taste.
The issues for dairy farmers are losing a generation of milk drinkers, giving up market share to global beverage brands, and the resulting economics that are driving farms out of business at a rapid rate.
The issues for schools are lack of awareness, a decade of outright federal restrictions, years of fat-free/low-fat indoctrination among school foodservice personnel — some of this “conditioning” performed by the national dairy checkoff’s school wellness program via the MOU with USDA — and the 2 to 5 cent extra cost of whole milk in tight school budgets.
(Author’s note: currently, students aren’t even permitted to purchase whole milk on school grounds as an a la carte or vending machine or fundraiser option. It seems we could start by legalizing it there.)
Lost generation of milk drinkers cited.
“We lost a generation of milk drinkers since whole milk was taken out of the schools,” said Nelson Troutman. The Berks County dairy farmer painted the first round bale Drink Whole Milk 97% Fat Free. He testified that people don’t know much about milk.
“They also don’t know schools are only allowed to offer fat-free and 1% low-fat milk, that the kids don’t like it and throw it away,” he said. “We had to do something to let consumers know whole milk is not 50% fat or 10% fat or 100% fat, it’s 3.25% fat.”
Jayne Sebright, an Adams county dairy producer, mother, and executive director of the Center for Dairy Excellence said the situation is “not only scary for dairy farmers, but also for our children and our future society.
“The truth is that fuller fat milk in schools could mean the difference between a child developing a life-long milk drinking habit, or not. It’s that simple,” said Sebright. “If they don’t like milk in school, they’re less likely to drink it at home, and if they don’t drink it at home, they’re less likely to drink it as an adult, and if they don’t drink it as an adult, they are less likely to give it to their children. So not only are we losing this generation, we’re losing generations to come.”
Rob Barley, a farmer in Lancaster and York counties and chairman of the PMMB (Pa. Milk Marketing Board) encouraged state senators to help influence a change at the federal level and among other states to “fight for future milk drinkers and the farmers that produce this nutritious product.”
Mike Eby, a Lancaster County farmer, talked about how government policies and industry organizations stand between farmers and the public. Eby serves as chairman of National Dairy Producers Organization and executive director of Organization for Competitive Markets. He also represents the southeast district on the Pennsylvania Farmers Union board.
“I see the divide that keeps farmers and consumers apart — on knowledge, markets, fairness and choice. The issue of allowing children to choose whole milk at school is one that seems to escape the application of logic, freedom and fairness,” said Eby.
The state’s interest was made clear.
Troutman said the issue directly affects Pennsylvania.
“This is a fluid milk state. Pennsylvania does not have 10,000-cow dairies or huge cheese factories. We are communities of small and medium-sized farms owned by families that support their communities,” said Troutman. “We have the land, the water, and the people who want to do the work in Pennsylvania. Dairy is 37% of our number one industry: agriculture. Our dairies are struggling. Without them, we lose other businesses, jobs, support for other parts of agriculture and the economy. Tourism, we lose our tourism.”
Barley also pointed out the state’s interest.
“Fluid milk consumption is vital to the survival of the dairy industry, but even more vital to the Pennsylvania dairy producers. The premium provided by the fluid milk market and the additional premium from the Pa. Milk Marketing Board, have helped to keep Pa. dairy farmers in business,” said Barley. “If milk consumption continues to decrease, there will be a continued exit of PA dairy producers.”
Pennsylvania Farm Bureau president Rick Ebert, a Westmoreland County dairy farmer, noted that, “Providing school children with healthy milk choices is one of our organization’s leading concerns when it comes to strengthening the dairy industry. We have supported several legislative efforts in Congress to repeal current standards and give school districts the flexibility to offer whole milk and flavored whole milk if they so choose.”
Eby highlighted the “significant stake in the impact on farms, allied businesses, jobs and revenue,” he said. “Our state also has an interest in children being able to choose milk they will drink, to actually receive the nutrition, considering they eat one or two meals a day at school.”
“Former Senator Scott Wagner told me I should go along on the garbage truck to schools and see how much milk is thrown away unopened,” said Troutman. “I would want our Governor and Secretaries of Agriculture and Education to go to a school at lunch time and see for themselves how much milk is thrown out. They can ask the students why, and they might be surprised by their answers because kids are brutally honest. Be sure to take the TV cameras along.”
Restoring choice would have positive impacts.
Sebright noted potential shifts in sales from nonfat milk to fuller fat milk would help stimulate overall demand for milk. She said that according to the U.S. Dairy Export Council, 16% of milk produced is exported, and most of that is skim solids, not fat. She said the U.S. dairy industry presently uses 97% of the milk fat produced. More whole milk sales in Pennsylvania would mean more demand for Pennsylvania milk.
On the other side of that equation, in a milk pricing system that can be inequitable, lack price-discovery and transparency, Eby noted: “When milk fat is treated as a byproduct, it can be undervalued as a component. If school children had the choice of whole milk, future generations of milk drinkers would not be lost, and new market and processing opportunities could result for dairy farms right here in Pennsylvania.”
Eby also reminded senators that fresh whole milk is the most locally-produced product in the dairy sector, and it is the class that brings a higher value to farmers in their blend price.
“The overall despair that I am seeing among dairy farmers, is the feeling they’ve got nowhere to turn legislatively or through their cooperatives for any hope of speaking up on their behalf. Being heard on an issue as simple as whole milk choice in schools — and seeing progress on this issue — would give a lot of dairy farmers hope,” he said.
Speaking for Farm Bureau, Ebert gave details about Pennsylvania’s dairy processing infrastructure, pricing mechanisms and proximity to population. “The bottom line is our dairy industry has relied heavily on fresh milk consumption. While our farm families are accustomed to market forces, and are adapting their small businesses to these changing conditions, an increase in fresh milk consumption would be an immediate boost,” said Ebert. “Our organization believes that giving schools the ability to offer whole and 2% milk could lead to a new generation appreciating the taste and nutritional benefits of milk.”
Better health, more revenue, but where’s Dept. of Agriculture?
Referring to the Pennsylvania Farm Bill, Troutman said: “$400,000 in grants are given by the Department to modernize dairy farms, but these farmers, technically, could get a termination letter at any time from their processor… They give $400,000 in grants for farm to school education, but dairy is not even mentioned because milk is already in the lunch – but it’s not whole milk that the kids like and need,” he said.
Troutman said further that, “Putting whole milk as a drink choice back in schools would cost the state’s taxpayers a lot less money than other things we do. The benefits of whole milk sales would be huge — better health, more revenue — and we could save our Pennsylvania dairy farms. It’s a win-win.”
Chairman Scavello agreed. “We grew up drinking whole milk, and I think we did okay,” he said.
School nurse gives ‘striking’ data
Speaking of the health aspects, Christine Ebersole RN, BSN, CSN, a school nurse in the Williamsburg School District, with 24 years previously working in a hospital. She also mentioned in her testimony the amount of milk she sees thrown away in the cafeteria.
“In 2008, the Federal Government began prohibiting public schools from serving whole milk to students, presumably to decrease obesity in children. Whole milk has 3.25 % milk fat that’s 97% fat free,” said Ebersole.
She explained that each year school nurses are required to record height and weights on students.
“These are called BMI’s or Body Mass Index which measures body fat based on height and weight. A BMI of 85- 95 % is considered overweight and 95-100% is obese. I thought it would be interesting to compare screenings when whole milk was served in schools with the recent screening where students have been served skim, 1% and 1.5% flavored milk through out their years in school. Our graduating seniors would have been served reduced fat milk during their entire school experience.”
Calling the results “striking,” Ebersole said: “The overweight and obese categories for students in grades 7-12 in 2007-2008 school year was 39% with 60% in the proper BMI scale. In the year 2020-2021, after being served reduced fat milk during school hours, the overweight and obese categories were increased to 52% while the proper range was decreased to 46%. That is a 13% increase over the past 13 years! While one cannot assume that the low fat milk alternatives are the only determining factors, they certainly did not have the intended outcome of reducing obesity in school age children.”
Ebersole suggested that in addition to putting the choice of whole milk back in schools, senators could look at bringing back the afternoon “milk break.”
“The miniscule fat content (in whole milk) is more than offset by the fact that students will actually drink their whole milk instead of sugary drinks with empty calories,” said Ebersole. On the ‘milk break’ suggestion, she explained that many students need an energy boost in the afternoon.
“This would help with meeting their nutritional needs as well as giving then the energy needed to complete their school work,” she explained. “Many junior and senior high school students participate in after school activities, practices and sporting events. The milk would be a nutrient rich drink, that contains 9 essential nutrients to strengthen their mind and bodies.”
Krista Byler, food service director for Union City Area School District in northwest Pennsylvania deviated from her written testimony to address questions raised by senators about the challenges facing school foodservice directors in getting whole milk to ‘fit’ in their federally-regulated lunch tray, not to mention extreme fat restrictions for a la carte beverages.
She said education is needed for school foodservice directors to understand the benefits of milkfat and the impact current policies have on children and farms. The other area to look at will be pricing, she said. Right now, milk is not seen as a priority by most foodservice directors when it comes to using tight budgets to get meals on the tray.
“Food service directors have been conditioned to think in the past 10 to 12 years that anything but skim milk and 1% milk has any place in the schools,” said Byler. “A lot of our directors are still behind on the science. They truly believe that the fat is too much for our students. They’re still on the bandwagon that this is going to solve the obesity epidemic.”
Byler is starting to see some movement from her peers seeing the milkfat avoidance as outdated information.
Sebright also highlighted the multi-faceted issues, having spent her early career working with school foodservice directors. “If there is a way that we can help those school foodservice directors balance that tray, balance their budget and still include that fuller fat milk that is so critical to their kids needs, that would be amazing,” she said.
One way to do that is to make milk a standalone component of the school lunch, like it used to be, so it’s not part of the meal calculation, said Byler. She went over the results of her milk choice trial.
School trial is an eye-opener
Senators were impressed by the school milk choice trial, so much so that one key action they discussed was for the state to support schools that want to set up a similar trial in every county. This step would create widespread awareness and gather statewide consumption, waste and student response data at the same time.
“The students had no idea we were doing the trial, and they had no idea we were restricted from giving them a choice,” said Byler, noting they were “very vocal” when the trial ended, and the 2% and whole milk options were removed from school coolers.
In post-trial student surveys, 64% reported choosing milk more often. On waste, 60% of students said they had thrown milk away before the trial, but after the trial, only 30% of students said they had thrown milk away.
Over half the students said the trial changed their a la carte beverage purchase habits and another 26% of students said the milk choice may have changed their purchase habits. That’s more than 75% impact.
A whopping 85% of the students said they drink whole milk at home.
Statewide trials would help with the education component identified by Byler in her testimony.
“One of the stumbling points we have is getting the schools on board, getting the foodservice directors on board, getting the management companies to come on board and say ‘yes, this is a win-win. This benefits our students. This benefits our Pennsylvania dairy,’” said Byler.
Federal Guidelines drive the school bus
Eby mentioned the Dietary Guidelines for Americans (DGAs) as the umbrella driving the school bus. The most recent 2020-25 DGA cycle was covered extensively in Farmshine over the past two years, drawing tens of thousands of comments, questioning why scientific studies on dietary fat were left out of the process.
“After the 2015 DGA cycle, Congress asked the Academy of Sciences, Engineering and Medicine to review the process. In 2017, their report cited the need for enhanced transparency and stronger scientific rigor,” said Eby.
“Dairy checkoff promotions that farmers must pay into are affected by these guidelines that the industry heartily applauds when they are released,” said Eby. “Checkoff funding of fat-free and low-fat promotion includes innovations that are now blending low-fat milk with almond beverage and ultrafiltration that allows milk solids to move anywhere and be reconstituted in beverages — Coca Cola-style. Meanwhile, the low-fat milk rules at schools turn children away from milk to other drinks in a beverage market dominated by huge global companies. These drinks do not come close to providing the nutrition of whole milk.”
As important to parents as to dairy farmers
Sebright hit the nail on the head when she said: “I think the issue related to whole milk in schools is as important to parents as it is to dairy farmers because really, it’s all about taste.”
In fact, she said, “whole milk builds lifelong consumers.”
Mentioning research about the benefits of whole milk, Sebright noted that there are “nutrients in whole milk that are not found in skim and non-fat that are important for brain development.”
Her testimony also included the benefits of milk, in general, and how critical it is to make sure the children get that nutrition. Sebright talked about her youngest son, who never liked milk in school. She would pay for the milk, and he would throw it away. He did a 7th grade science project, a chocolate milk taste test.
“He had 27 friends blindly taste the two milks, and all of them chose the whole chocolate milk,” Sebright related. “That’s very telling. A processor would tell you it’s because making a good tasting nonfat chocolate milk is very difficult. The fat in milk adds to the flavor appeal, and when that’s not there, it leaves the cocoa tasting bitter.”
In fact when more fat is removed, more sugar is often added in making chocolate milk to make up for losing the pleasing flavor profile contributed by the fat.
Senator David Argall commented on Sebright’s son’s taste test showing 27 to zero preferred whole over low-fat. “(Businesses) are usually happy with 51-49 or 52-48. But 27 to zero, that’s very strong and really rings out to me,” said Argall.
Speaking for the children
Bringing it back to the kids, Tricia Adams of Hoffman Farms, Potter County testified: “I want to talk to you about the good stuff. The good stuff is a phrase I have heard many times throughout the years from my daughters and countless school children I have had the privilege of seeing on our farm tours,” said Adams, testifying as a dairy producer and school-involved mother of three teenage daughters, making it clear she was speaking for the children.
“The good stuff is what they all refer to as whole milk, which is standardized at 3.25% fat. Every day since 2010, our children have been denied milk choice in school,” said Adams. “Why are we allowing a wholesome natural food product to be attacked and denied and substituting it with more heavily processed drinks?”
As a dairy farmer, she said: “This is personal. I have seen our industry weather many storms over the years. I have seen many farms shut their doors, and I have seen our future generations turning away from milk because of this no fat/low fat push. As a farmer, I want the product I proudly produce every day of my life to be enjoyed and provided in its naturally best version. Whole milk is known as nature’s most perfect food. Why change it, especially for growing kids? Countless generations before consumed whole milk and benefitted.”
She noted that, “Some in the industry say ‘let’s not rock the boat’ because it’s only a couple percentage points. They say, does it really make a difference? Just serve whole milk at home and 1% at school. Turn it the other way, it’s only a couple percentage points, so give them the good stuff.”
Adams cited documents showing the extra percentages of milk fat allow for better digestion, reducing some lactose intolerance issues. The fat slows the lactose (carbohydrate) absorption for a more favorable rate.
She pointed to studies (many cited in pages 6 through 15 of this document) showing how whole milk consumption helps kids maintain a healthy body weight, stressing the value of milk’s many essential vitamins and minerals, some of them being fat-soluble, so the milk fat allows the body to get the benefit.
Vitamin D absorption, in one trial, for example, was triple for kids drinking whole milk vs. low fat and risk of being overweight was reduced by 40%.
“That’s huge today,” said Adams.
Senators get it.
Chairman Scavello (below, left) had set the stage for the hearing, noting in his opening remarks that farming is the Commonwealth’s number one industry and dairy is 37% of Pennsylvania agriculture.
“Pennsylvania has the second largest number of dairy farms in the nation, only second to Wisconsin,” he said. “The industry supports approximately 52,000 jobs and contributes $14.7 billion to the state’s economy. Given these facts, it is essential that we continue to follow and review important decisions that are made that can have an impact on such an important part of our economy, such as the federal prohibition of whole milk in schools.”
Senator David Argall (R-29th, above, right) said this hearing “begins a serious conversation about what the state can do to encourage our federal partners to drop this arbitrary provision. Many of our dairy farmers are really struggling, and part of this… is due to the fact that in 2010, Congress passed legislation putting restrictive regulations on the consumption of whole milk in schools.”
He observed that in the first two years of that action, 1.2 million fewer students drank milk at lunch, “but they still had access to sugary juices and soda, which offer none of the nutritional value that whole milk does. This isn’t just hurting our dairy farmers, it’s teaching a terrible lesson in nutrition to our students.”
Joining the Policy Committee by zoom (above) was Senator Scott Martin (R-31st), representing Lancaster County. He chairs the Pennsylvania Senate Education Committee and noted the timeliness of this public hearing topic.
“From an educational standpoint…as a large consumer of milk when I was growing up, it’s amazing from a policy perspective that we ended up where we are trying to teach our kids good habits to what it is now the selection of things that I would put in the category of not so healthy and not having those benefits. What we are teaching and providing, combined with the devastating impact on our family farms? I truly hope we can make inroads in getting the federal prohibition removed,” said Chairman Martin.
“It’s heartbreaking to see as dairy farmers struggle, they are out there educating the public on the nutritional value (of whole milk). You can even see homemade signs or bales of hay wrapped in plastic, talking about the importance of the nutritional value of whole milk,” Martin observed.
Grassroots response is all volunteer
In his brief testimony, retired agribusinessman Bernie Morrissey talked about the start of that ‘homemade’ grassroots campaign, when Berks County farmer Nelson Troutman painted his first wrapped round bale: Drink Whole Milk 97% Fat Free.
“That was the start of this grassroots dairy committee and it’s been going ever since,” said Morrissey about several of the volunteers testifying on panels during the hearing. “The major point is choice for our children, our grandchildren, our great grandchildren… and this area of milk marketing where our farmers have been mistreated, financially. Even on the news yesterday was about the milk prices going up… but not at the farm. The tank truck backs up to their farm, takes their milk. They are business people, just like I am. The truck backs up, takes the milk out of the bulk tank, and they don’t know what they’re going to be paid for it.”
Testifying from the 97 Milk education effort and in her work with dairy farmers through R&J Dairy Consulting, not to mention as a mother with young children, Jackie Behr gave a quick summary of the grassroots whole milk education efforts online at 97milk.com and through the social media platforms. She volunteers in that effort.
“Consumers are savvy. They want to learn. I can’t begin to share all of the countless responses we have received from people saying, ‘I’m going to switch to whole milk,’” said Behr. “Since removing the option of whole milk from schools, we have lost a generation of milk drinkers.”
“Yes, of course I give my kids whole milk,” said Behr. “I have done the taste test with my kids. I gave them skim, 1%, and they all have looked at me and said: ‘what is this?’ My kids taste the difference and I want to know how many other kids taste the difference as well. As a mother, I know if we’re going to give something healthy, they need to like it. Our dairy farms are struggling. I see it every day in my business. Something has got to change or we will keep losing our dairy farms in Pennsylvania.”
A healthy child should be our number one priority
It is really the children who were front and center in this hearing. The testimony of 11 people opened eyes and impressed senators, who confirmed how valuable it was to understand the federal issue in order to begin navigating it at the state level.
“We have a responsibility to help our children be the best they can be and allow them to perform to their highest potential. We should want no kid to be hungry,” Adams testified. “Milk fat allows a body naturally to be satiated, so children can concentrate in school. If a hungry, growing child does not get that feeling, they will turn to sugary snacks or drinks to fill the void. For some kids, the school lunch is the only real meal they get in a day. Some, our daughters included, get two meals at school.”
Whole milk satisfies, she added: “A healthy child should be our number one priority, please let us in Pennsylvania lead by example.”
Frankly, it’s neither. Let’s go behind the mirror, shall we?
In the rule, yogurt is defined as: “Cream, milk, partially skimmed milk, skim milk, and the reconstituted versions of these ingredients that may be used alone or in combination as the basic dairy ingredients in yogurt manufacture.”
The rule states: “Yogurt is produced by culturing the basic dairy ingredients and any optional dairy ingredients with a characterizing lactic acid-producing bacterial culture.”
In its response, NMPF pointed to this language as “reinforcing the concept that where food comes from, and how it is made, matters.
“Logic matters. Consistency matters. That’s why the new FDA rule that defines what is and isn’t yogurt has much broader, and potentially very positive, implications in one of the most contested consumer issues of the day — the proper labeling of milk and dairy products,” NMPF states.
However, given the fact that FDA is still working on the standards of identity (SOI) for milk and dairy within its larger NIS framework, the biggest questions are still unanswered, and FDA indicated their guidance on milk and dairy SOIs won’t come until June 2022.
The yogurt rule simplifies FDA’s books and offers processors more flexibility, to a point. It revokes the previous individual SOIs for low-fat and non-fat yogurt, making one SOI for yogurt, in which low- and non-fat become labeling modifiers.
The intent of this, according to FDA, is to “modernize SOIs for technological advances while preserving the basic nature and essential characteristics.”
In the 22-page rule, FDA writes: “Any food that purports to be or is represented as yogurt, must conform to the definition standard of identity for yogurt.” — That’s the enforcement piece.
The thrust of FDA’s NIS is explained in documents as moving toward both revoking and modernizing standards so foods can compete on a nutritional basis, and to remove barriers to innovations. This includes determining how plant-based and synthetic alternatives are labeled.
New genetically-altered yeast excreting proteins are being made by companies like Perfect Day Foods, and they are pressuring FDA to designate them as dairy proteins, saying they are identical to casein and whey found in milk. They don’t want these proteins labeled as bioengineered because even though the yeast is genetically altered with bovine DNA, the protein excrement is used, not the yeast itself.
This is a bit of what’s under the surface on the dairy SOIs.
In January 2020, IDFA had Perfect Day CEO and co-founder Ryan Pandya on an industry panel at the IDFA Dairy Forum in Arizona. During that IDFA Forum, Pandya told Food Dive in an interview that, “Every major multinational (company) is talking to us.”
Pandya pitched the bioengineered yeast excrement to processors during the IDFA Forum, noting that they work through The Urgent Company, under the leadership of former Glanbia VP of product strategy in a business-to-business model, touting climate impact reductions by ‘partnering’ with the dairy industry to replace just 5% of dairy protein with their analog.
In fact, the January 2020 Food Dive article goes on to quote Monica Massey, an executive vice president and chief of staff for Dairy Farmers of America (DFA), as she told Pandya from the audience during the IDFA panel that she purchased the limited-edition Perfect Day ice cream last year.
“We sat down in a dairy cooperative headquarters and ate it, and I said ‘Oh, we’re screwed’ because it tasted just like ice cream,” Food Dive quotes Massey’s exchange with Pandya during the IDFA Forum.
“In the industry we get hung up on ‘You can’t call it dairy.’ … (Perfect Day’s) not focused on the cow, you’re focused on the consumer, and we are so hellbent on focusing on the cow, the milk,” said Massey.
(Author’s note: Working for a cooperative owned by dairy farmers does kind of make it about the cows and the milk, but it can still be about the consumers, using the milk from the cows.)
An article posted publicly on the day of the new yogurt rule, July 12, gives us a good idea why IDFA is protesting the new SOI for yogurt, and why the big unanswered questions of milk and dairy identity — that the FDA expects to propose a year from now in June 2022 — are so important as the undergirding for individual SOIs like yogurt.
The July 12 article in Dairy ProcessingbyDonna Berry (who is also a contractor on the payroll of DMI — the national dairy checkoff every dairy farmer must pay into, by law), quotes a representative of Perfect Day talking about the so-called ‘animal-free milk proteins,’ saying they are identical to casein and whey. They are excreted from microorganisms such as bacteria, yeast or fungi, that have been genetically altered with bovine DNA and are grown in fermentation vats on sugar substrate.
(The current, though unenforced, FDA SOI for milk is: “Milk is the lacteal secretion…obtained by the complete milking of one or more healthy cows.” Of course, goat milk would be a consistent qualifier in source, characteristics and nutrition, but almond, oat, soy, bioengineered yeast, are not consistent with that legal definition.)
Without FDA guidance and enforcement of real dairy SOIs for milk, and 80 other products with FDA SOIs that come from milk, what’s to stop “seamless” swapping of bioengineered yeast-excrement in place of dairy protein in standardized dairy products and no bioengineered labeling? What ensures that consumers know what they are consuming, and dairy farmers aren’t put out of business by captive supply in the market and?
Yes, deciding what is and isn’t ‘milk’ and ‘dairy’ is still a huge item on the FDA to-do list.
IDFA is protesting what it says are ‘overly prescriptive’ process requirements in the new yogurt rule they claim are “not current with today’s innovations,” such as requiring cream to be added before, not after, lactic acid fermentation to meet standardized 3.25% fat levels. (That’s a bit of a monkey wrench for Perfect Day.)
Just a few of the other things IDFA is objecting about include the requirement for yogurt that contains ‘non-nutritive’ sweeteners be labeled as ‘reduced calorie’, and how high the vitamin A and D levels are set for processors choosing to voluntarily fortify the yogurt.
The rule does offer the industry a peek into where milk and dairy standards could be headed since former FDA Commissioner Scott Gottlieb made the now-famous “almonds don’t lactate” statement at the very same time that the FDA NIS was launched in July of 2018.
Tied-in with the NIS are the stated purposes of addressing chronic diseases like obesity and heart disease by modernizing all 280 standards of identity, updating food labeling rules to educate consumers on nutritional choices, clarifying standards for new innovations (including lookalikes), and developing a voluntary ‘healthy symbol’ for foods so consumers get a ‘quick signal’ to make choices lower in sodium, saturated fat, and calories via the Dietary Guidelines, while including the nutritional quality consumers expect.
Rob Post, with yogurt-maker Chobani, was a presenter that day, and he expressed concerns that the current yogurt standards made it difficult for Greek yogurt to be offered in schools and other institutional feeding situations to accurately quantify the protein levels. Strained Greek yogurt is 52% protein, twice that of regular yogurt, he said.
He asked for a better process that keeps pace with innovation, but he was very quick to defend the current definition of milk and dairy — and its enforcement.
“It’s important to have options,” said Post. “But words matter to consumers and dairy means something specific. It means nutrient dense, minimal processing. It is important that this standard is preserved. Standards are important because they assure the consistency of the product, its authenticity and nutrition.”
Meanwhile, FDA’s new yogurt rule “expands the allowable ingredients in yogurt, including sweeteners such as agave, and reconstituted forms of basic dairy ingredients.”
This simpler, more flexible statement means ultrafiltered (UF) milk solids and even dry milk protein concentrate, can be used in formulation as ‘optional functional dairy ingredients.’ As milk-derived ingredients, these examples don’t reconstitute to the properties of the basic ingredients listed in the yogurt SOI, and must be labeled.
The new rule also “establishes a minimum amount of live and active cultures yogurt must contain to bear the optional labeling statement ‘contains live and active cultures’ or similar statement.” And, if the yogurt is treated for extended shelf life in a way that inactivates viable microorganisms, the yogurt must now include a statement ‘does not contain live and active cultures’ on the label.
“The final rule is already out of date before it takes effect,” wrote Joseph Scimeca, Ph.D., senior vice president of regulatory and scientific affairs for IDFA in a statement. “For the most part, FDA relied on comments submitted 12 or more years ago to formulate its final rule — as if technology has not progressed or as if the yogurt making process itself has been trapped in amber like a prehistoric fossil.”
Scimeca added that the yogurt rule is “woefully behind the times and doesn’t match the reality of today’s food processing environment or the expectations of consumers.”
On the other hand, there were numerous industry comments seeking a more traditional rule in terms of milk and cream vs. ‘milk-derived’ or ‘reconstituted’.
FDA responded in the rule, stating: “Technological advances in food science and technology allow for a wider range of milk-derived ingredients developed with advances in membrane processing technology in the dairy industry. The final rule permits the use of emulsifiers and preservatives to prevent separation, improve stability and texture, and extend the shelf-life of yogurt.”
While the rule, in effect, “permits optional functional dairy ingredients,” and “modernizes the yogurt standard to allow for technological advances,” it also requires the 3.25% milkfat and 8.25% solids not fat threshold at a point in the process before bulky flavorings are added. That’s helpful.
Calling the new rule “a robust defense of standards of identity,” NMPF cited its citizen’s petition filed with FDA in 2019, saying: “With the yogurt rule complete, our petition should be answerable in much less than 21 years.”
“We are continuing our efforts to revoke or amend certain standards of identity — from frozen cherry pie and French dressing to yogurt — especially when the standard of identity is inconsistent with modern manufacturing processes or creates barriers to innovation,” states FDA about its process.
As pieces, like this yogurt rule drift out of that process, a thought emerges: FDA is cleaning its books full of hundreds of SOIs to consolidate and simplify them — before tackling the really big questions of legally defining what the broader SOIs will be.
Still on deck are the all-important SOIs defining and enforcing core milk and dairy terms, even as pressure from plant-based, cell-cultured, yeast-cultured and other lookalikes push for SOIs that simply set nutritional standards for analogs to meet.