Seeds of doubt being sown, Part II: ‘What will processors do with all that skim?’ Oh my!

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By Sherry Bunting, Farmshine, Feb. 23, 2024

EAST EARL, Pa. — The status of the Whole Milk for Healthy Kids Act, S. 1957, has 17 Senate sponsors from 13 states, including 12 Republicans, 4 Democrats, and 1 Independent. 

Even though both NMPF and IDFA have shown support for the measure, a bit of resignation can be sensed — riding the overwhelming House vote as enough progress for one legislative session. After taking bows for the performance of the bill in the House, representatives of both NMPF and IDFA – while speaking at winter meetings – have indicated a prevailing view that Senate opposition to S. 1957, is a big barrier. 

They say they are working to get the science in front of the Dietary Guidelines Committee, which has been tried before – over and over.

The DGA committee operates under a USDA that does not want whole milk options in schools or SNAP or WIC. This same USDA is proposing to remove chocolate milk options from schools, except for senior high students, and is proposing to reduce WIC milk by 3 gallons per recipient per month. This same USDA projects 20 billion more pounds of milk will be produced in the U.S. by 2030, according to IDFA CEO Michael Dykes, presenting future trends at the Georgia Dairy Conference in Savannah.

Seeds of doubt about the whole milk bill are being sown among farmers. Some asked me recently if their co-ops will lose money on the deal.

Last week, we discussed ‘Confusion’ — the first of 3 C’s that are facing the whole milk bill within the dairy industry. 

This week we look at the second C: ‘Consternation’ — a fancy word for fear.

“What will they do with all of our skim?” farmers asked me at a recent event. Is this something they are hearing from a milk buyer or inspector?

Here are some facts: Whole milk sales move the skim with the fat — leaving some of the fat through standardization, but not leaving any skim. Therefore, an increase in whole milk sales does not burden the skim milk market.

Surely, the practice of holding schoolchildren hostage to drinking the byproduct skim of butter and cream product manufacturing is a poor business model if we care about childhood nutrition, health, and future milk sales. 

Furthermore, the market for skim milk powder and nonfat dry milk is running strong as inventories are at multi-year lows in the U.S. and globally.

Cheese production, on the other hand, is what is cranking up, and it has been the market dog for 18 months. Like whole milk sales, cheesemaking uses both fat and skim. But cheesemaking leaves byproduct lactose and whey, and it can leave some residual fat depending on the ratios per cheese type.

Things are pretty bad for farmers right now in cheesemilk country. Some tough discussions are being had around kitchen tables. The 2022 Ag Census released last week showed the dire straits for farmers nationwide over the last five years as the number of U.S. dairy farms declined below 25,000, down a whopping 40% since 2017.

Wouldn’t an increase in whole milk sales through the school milk channels help pull some milk away from rampant excess cheese production that is currently depressing the Class III milk price, leading to price divergence and market dysfunction?

While there is no one data source to specifically document the percentage of the milk supply that is sold to schools, the estimates run from 6 to 7% of total fluid milk sales (Jim Mulhern, NMPF, 2019), to 8% of the U.S. milk supply (Michael Dykes, IDFA, 2023), to 9.75% of total fluid milk sales (Calvin Covington, independent analysis, 2024). 

If even half of these sales became whole milk sales, it could modestly positively impact the amount of excess cheese being made even as processors say they plan to make more cheese because people eat more of their milk than are drinking it. (Fig. 1)

Meanwhile, the cheese price is under so much downward price pressure that there is a $2 to $4 divergence of Class IV over Class III causing farmers to lose money under the ‘averaging’ formula for Class I milk. In many parts of the country, farmers lose additional money when the milk that is used in Classes II and IV is depooled out of FMMOs.

Without the ‘higher of’ pricing mechanism that was in place from the year 2000 until May 2019, Class I can fall below the higher manufacturing price, removing incentive to pool, which leaves pooled producers with smaller payments for their milk and leaves the decision about what to pay depooled farmers up to the processors after they’ve succeeded in reducing the benchmark minimum by depooling.

Ultrafiltered (UF) milk represents 2.4% of fluid milk market share, having grown by more than 10% per year for four years with sales up 7.7% in 2023 vs. 2022, according to Circana-tracked market data shared by Dykes.

UF milk is also cheese-vat-ready-milk with capability to remove not just the lactose but also the whey as permeate at the front end for use in distilleries that are now funneling lactose into ethanol production in Michigan and whey into alcoholic beverages in Michigan and Minnesota.

Processors want farmers to do “a tradeoff” to decide how much revenue comes to their milk checks and how much goes to processing investments for the future. The future is being dictated by where we are in fluid milk consumption relative to cheese production.

This is one reason IDFA and Wisconsin Cheesemakers, as well as NMPF, had proposals asking USDA to increase the processor credits (make allowances) that are embedded in the dairy product price formulas. IDFA and Milk Innovation Group also put forward other proposals to further reduce regulated minimum prices.

We wonder with these new processing investments, how is it that the make allowances are too small? Only bulk butter, nonfat dry milk, dry whey, 40-lb block Cheddar and 500-lb barrel cheese (yellow not white) are surveyed for the circular class and component price formulas. Everything else that doesn’t meet CME spec for these specific product exchanges is excluded.

This means the costs to make innovative new products and even many bulk commodity-style products, such as bulk mozzarella, unsalted butter, whey protein concentrate and skim milk powder, can be passed on to consumers without being factored back into the FMMO regulated minimum prices paid to farmers.

If market principles are applied, processors wanting to encourage more milk production, to make more cheese, would pay more for the milk – not less. But when the margin can be assured with a make allowance that yields a return on investment, all bets are off. Cheese gets made for the ‘make’ not the market.

We saw processors petition USDA in the recent Federal Milk Marketing Order hearing to reduce the minimum prices in multiple ways so they can have the ability to pay market premiums to attract new milk. This would be value coming out of the regulated FMMO minimum price benchmark for all farmers to get added back in by the processors wherever they want to direct it.

Cheese is in demand globally, and the U.S. dairy industry is investing to meet this. Dykes told Georgia producers that processors want to grow and producers want to grow. He wasn’t wondering what to do with all of the skim when he asked: “Where will the milk come from for the over $7 billion in new processing investments that will be coming online in the next two to three years?”  

This is happening, said Dykes, “due to market changes from fluid milk to more cheese production (Fig. 1). There’s a lot of cheese in those plans. With over $7 billion in investment… These are going to be efficient plants. You’re going to see consolidation. If you are part of a co-op, you’re going to decide how much (revenue) comes in through your milk check and how much goes into investment in processing for the long-run, for the future. That’s the debate your boards of directors will have.” 

Even the planned new fluid milk processing capacity is largely ultra-filtered, aseptic and extended shelf life, according to Dykes.

“That’s the direction we are moving,” he said. “We are seeing that move because as we think about schools, are we still going to be able to send that truck driver 20 miles in any direction with 3 or 4 cases of milk 5 days a week? Or do we do that with aseptic so they can store it and put it in the refrigerator one night before, and get some economies of scale out of that, and maybe bring some margin back to the business?”

As the Class III milk price continues to be the market dog, we don’t see milk moving from Class III manufacturing to Class IV, perhaps because of the dairy processing shifts that have been led by reduced fluid milk consumption. 

Allowing schoolchildren to have the choice of whole milk at school is about nutrition, healthy choices, future milk consumers, and the relevance of fresh fluid milk produced by local family farms in communities across the country. Having a home for skim does not appear to be the primary factor affecting milk prices where Class III is dragging things down.

Bottomline, dairy farmers should have no consternation (fear) over what processors are going to do with “all of that skim” once they are (hopefully) allowed to offer schoolchildren milk with more fat.

Next time, we’ll address the third ‘C’ – Competition – If kids are offered whole milk in schools, will it reduce the butterfat supply and impact the industry’s cheese-centered future? 

A final note, just in case the question about ‘what to do with all that skim’ still bothers anyone… What’s wrong with animal feed markets for skim milk powder? Protein is valuable in animal health, there are livestock to feed, and people spend major bucks on their pets too. Did you know dog treats made with nonfat dry milk powder, flour and grated cheese are a thing?

That idea got a good laugh from those farmers when I suggested it.

However, Cornell dairy economist Dr. Chris Wolf noted recently how China’s purchases are what drive global skim milk powder and whey protein prices, and that much of that market for both is to feed… you guessed it… Pigs. 

Seeds of doubt being sown, Part One, Confusion: ‘Will this bill really improve milk prices?”

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By Sherry Bunting, Farmshine, Feb. 16, 2024

EAST EARL, Pa. — While decades of scientific debate in terms of childhood health and nutrition is the curtain opponents hide behind, the anti-animal agenda is the top hurdle for the Whole Milk for Healthy Kids Act in the Senate.

Senator Roger Marshall (R-Kan.) is the prime sponsor of the Senate bill, and he is a medical doctor in obstetrics and is taking a beating from billboards sponsored by Physicians Committee for Responsible Medicine (PCRM) in his home state of Kansas. PCRM is a known arm of PETA. This tells us quite a bit, doesn’t it?

Meanwhile, the top 3 C’s facing the bill within the dairy industry, itself, need to be addressed. 

1) Confusion… Will it really improve milk prices? Addressed in this article

2) Consternation (fear)… What will processors do with “all of that skim”? Addressed in Part II here

3) Competition… Will it reduce the butterfat supply and affect the ramp up in cheese manufacturing or other dairy products? Addressed in Part III here

Plus…. the Checkoff Commitments… Will it interfere with checkoff-funded Milk Molecules Initiative for new beverages that identify and separate specific milk molecules for specific benefits (sleep drinks, energy drinks, immune function drinks, specific protein type drinks)? 

All of these questions are quietly floating around and sowing seeds of doubt, leading to analysis-paralysis, while the industry focus is on innovation and exports, not on fresh milk, or a healthy next generation of U.S. milk consumers.

All of these questions will be answered one at a time over the next several weeks, starting with the first “C”: Confusion.

“Will this bill really improve our milk prices?” was the question I was asked by a few farmers at a recent farm show. My response was to ask them if they are concerned about kids having healthy milk options they enjoy and if they are concerned about seeing further erosion of fluid milk sales, and losing another generation of milk drinkers?

I reached out to Calvin Covington, former milk cooperative CEO in the fluid milk markets of the Southeast and a primary architect of pricing milk by component yield even before Order Reform during his years with American Jersey Cattle Breeders.

Covington ran the numbers using 2023 average prices, and calculating pounds of milk, fat, and skim, utilization, and values, which yield a gross value of a hundredweight of milk being used for fluid processing at different fat levels. 

“At a $3.00 Class I differential, a hundredweight of milk going for 3.25 fluid milk (whole milk as standardized), returns an additional 25 cents per hundredweight over skim milk,” Covington writes, noting that the difference will change based on different Class I differentials.

Even in the counties with small or zero location differentials on the map, the base differential of $1.60 per hundredweight is still included, which means at least a 13 cents per hundredweight difference.

Previously, Covington has noted in presentations that milk prices improve as the average fat level of total fluid milk sales increases. The current average of all sales, nationwide, stands at 2%. A few years ago, it was below 2%. A fractional change in either direction influences Federal Milk Marketing Order blend prices.

Fluid milk demand also plays a role in manufacturing class prices, affecting farmers in regions where prices are based almost exclusively on cheese. 

That’s especially true right now as cheese production has been exploding, and the Class III milk price has been imploding, creating a wide spread below Class IV and pushing FMMO blend prices lower as milk is not moving out of Class III to the higher value Class IV. But the Federal Milk Marketing Law gives Class I dibs to attract milk. So Class I demand is relevant for cheese milk pricing too.

As whole milk sales have increased year-over-year, whole milk became the largest category of fluid milk sales in 2021. It is a bright spot in the fluid milk category.

In 2023, gains in whole milk sales and in lactose-free milk sales are credited with boosting the entire fluid milk category for year-over-year gains in back-to-back months of October and November. This helped flatten the year-to-date loss-curve on total fluid milk sales that had been running 2 to 4% lower year-over-year to be just 1.5% lower cumulatively at year end compared with 2022, according to USDA’s December estimated packaged fluid milk sales report, released in mid-February.

Still, there is ground to make up, as fluid milk sales volume in 2023 is 7.8% lower than pre-Covid 2019, when volume totaled 46.24 billion pounds, down 1.8% from 2018. Then, during pandemic lockdowns, milk sales stabilized, putting the total at 46.2 billion pounds for 2020, virtually unchanged from 2019. In 2021, fluid milk sales volume declined 4.1% to 44.3 billion pounds, followed by a 2.4% decrease in 2022 to 43.3 billion pounds, and now a 1.5% decline in 2023 at 42.6 billion pounds.

NMPF chart, Circana Inc. full-year 2023 data

Meanwhile, the big news reported recently is that plant-based fake-milk beverages saw sales decline by 6.6% in 2023, the second straight year of declines and the smallest sales since 2019, according to data from Circana Inc reported recently. 

Real dairy milk sales volume of 42.6 billion pounds in 2023 is not only a much larger category than the lookalikes at 337.7 million pounds, real dairy milk outperformed lookalikes on a trend basis in 2023 — down just 1.5% vs. plant-based being down 6.6%.

By comparison, plant-based beverage sales volume in 2023 was a fraction of 1% (0.8%) the size of real milk sales volume.

Whole milk education and awareness have helped drive this result. Consumers are paying attention to food science, even if the Dietary Guidelines Advisory Committee, USDA (and FDA on labeling) continue to ignore it. Still, more education and freedom for children to enjoy milk is needed. The concern is that even though it is a smaller percentage loss, the 1.5% sales volume loss in the real milk category in 2023 represented 644 million pounds; whereas a 6.6% sales volume loss in plant-based beverages in 2023 represented 24 million pounds.

Speaking with a local milk bottler and ice cream maker recently – a producer handler – I learned he focuses on how his cows are fed to maintain their rolling average 5% butterfat during the summertime to make ice cream and satisfy consumer demand for whole milk. Their whole milk sales have skyrocketed, and this in turn, to the delight of the grocery store they are in, has helped boost sales of all fluid milk as a category in that store.

This has him thinking of doing a 5% butterfat, non-standardized, maybe even cream top, full-fat milk in glass bottles for the store. The store displays a 97 Milk banner at the entrance and 97milk.com website stickers at the dairy case.

Speaking with a manager at a different grocery store chain with stores in Pennsylvania and surrounding states, I learned their sales of whole milk have also increased by leaps and bounds in the past several years, boosting the entire fluid milk category by 14% at their stores throughout the region. They include the 97milk.com website and information in their sales circulars to their shoppers.

As for the schools — If even half of the schools offered a mix of milkfat choices as the Whole Milk for Healthy Kids Act would allow them to do, the amount of butterfat sold as Class I would increase. This would improve the fat side of the fat/skim pricing in the three Southeast Orders and Arizona. It would also help the Federal Order pool dollars reach after actual components are paid first in Multiple Component Pricing Orders everywhere else.

Total Class I fluid milk sales have dropped like a rock since Congress passed the Healthy Hunger Free Kids Act in 2010, which removed whole and 2% milk options from school meals, followed by USDA in 2012 further banning whole and 2% milk as a la carte or vending machine ‘competing beverage’ options in the Department’s Smart Snacks regulations.

Look at the graph above. It was shared as part of Dr. Mark Stephenson’s testimony in the recent USDA FMMO milk pricing hearing.

Improved total sales of school milk hold potential to increase total Class I fluid milk sales. A Pennsylvania school trial in 2019 showed a 52% increase in milk sales when whole and 2% milk options were offered. Students showed a 3 to 1 preference for whole milk over the 1% milk option.

When their options were expanded, more students chose milk instead of refusing it. Students were able to choose, and some of them continued to choose low-fat, and that’s okay! The Whole Milk for Healthy Kids Act is about choice.

A conservative estimate of a 25% increase in school milk sales can be anticipated if Whole Milk for Healthy Kids gets over the finish line in the Senate after its overwhelming passage in December in the House. That is half of the increase seen in the Pennsylvania school trial. If realized, a 25% increase in school milk sales equates to a little over one billion pounds of additional annual milk sales, which could raise the entire Class I fluid milk category by a little more than 2%.

This is based on the fact that kids aren’t just throwing away milk at school. Some are refusing to take the milk they are offered with school meals. This means sales are being lost.

Fluid milk sales declines will only get worse if USDA implements one of two draft proposals the Department announced a year ago. One would eliminate flavored milk from elementary and middle schools altogether. The other would require added sugar levels to be reduced dramatically in flavored milk at school. It’s widely known that when milkfat is retained in making chocolate milk, less added sugar is needed! 

Demand for whole milk is beneficial on both the milk fat and skim sides of the equation because whole milk sales move the nearly-complete product – the skim with the fat — leaving some of the fat through standardization, but not leaving any skim.

The result of these options in schools could be even better depending on how many schools choose to exercise these options.

If the industry doesn’t supply what consumers demand, sales are lost. Schoolchildren are already the dairy industry’s consumers, and they will hold the purse strings in the future.

Just as the Dietary Guidelines Committee and USDA continue to ignore science on milkfat, we are all ignoring our nation’s schoolchildren and what they are telling us about why they are turning away from nutrient-dense milk at a time when the nutrients milk delivers – that we may think they are receiving — have never been more important.

When the Pennsylvania school trial ended after one school year, a 95% reduction in the average daily volume of discarded milk was recorded. The school Student Council did an environmental project to measure this by measuring the volume of milk thrown away in unopened and partly consumed half-pint containers.

Shouldn’t we be listening to what the young people are telling us? They are our future, after all.

In the next part of this series, we’ll address the question: “What are the processors going to do with all of that skim?” Oh my!

In the meantime, consider this: Fresh fluid milk is the most notably locally-produced dairy product maintaining dairy farm relevance in regions and communities across America. What will the dairy industry look like five years from now, even one year from now? Maybe we should be asking the schoolchildren to answer that question.

As of Feb. 14, 2024, the Whole Milk for Healthy Kids Act, S. 1957, has 15 sponsors from 12 states as illustrated on this map. Graphic by Sherry Bunting

AFBF seeks ‘whisper of hope’ in request for USDA emergency decision on Class I mover

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Farm Bureau economist Danny Munch closes FMMO hearing Jan. 30, 2024 with emergency request for USDA to return Class I ‘mover’ formula to ‘higher of’


By Sherry Bunting, Farmshine, Feb. 2, 2024

CARMEL, Ind. – Over 5 months and 500 exhibits have gone by in the nearly 50 hearing days since the long-awaited national hearing on Federal Milk Marketing Order modifications began Aug. 23, 2023. It ended Tuesday, Jan. 30th with a last-minute witness bringing forward American Farm Bureau’s request for an emergency decision by the USDA Secretary to restore the ‘higher of’ method for calculating the skim portion of the Class I ‘mover’ price.

This hearing went on longer than expected, and the implementation of any final decisions from a multitude of proposals in various areas of FMMO milk pricing are at least 12 to 18 months away under ordinary post-hearing processes, hence the AFBF request for emergency decision-making on the Class I mover to go back to the higher of.

“If USDA would implement this on an emergency basis, it helps with the confidence and perception piece of it. So, if there is a whisper of hope, to see that there will be a positive outcome coming soon, an optimistic change that is coming that fuels them. Do they see things getting better? Or are things going to stay the way they are? ” said AFBF economist Danny Munch while being cross-examined after reading into evidence the letter signed by Sam Kieffer, AFBF vice president of public policy.

The letter stressed that FMMO reform is in step 5 of a 12-step process and a long way from a final rule. Meanwhile, the change in the Class I mover formula was intended to be revenue neutral to farmers, but farmers have lost over $1 billion in 56 months of implementation. This does not even include further losses from depooling of manufacturing milk when the Class I fluid milk price has been out of alignment in FMMO revenue-sharing pools.

“The comprehensive process of amending federal orders, though important, means dairy farmers remain stuck with current pricing regulations until USDA publishes a final rule,” Kieffer wrote in the letter Munch read into evidence. “The current Class I mover was a well-intentioned policy misstep that has reduced dairy farmers’ checks, with little relief in sight. Emergency implementation of the ‘higher-of’ Class I mover formula will help buffer against persistent losses associated with mistaken and outdated policies that have left dairy farmers struggling to make ends meet.”

Munch noted that members re-affirmed going back to the ‘higher of’ calculation in policy meetings during the AFBF National Convention last week, and they voted to make it a priority of urgency.

“Dairy farmers are facing closure. A lot of our members are facing the hard decision about whether to sell their cattle or not. That’s a little window into what our members mentioned last week,” said Munch.

The other reality that is setting in is the fact that large losses are mounting quickly again. The Class IV over III divergence is quite wide – ranging $3 to $4.00 per hundredweight – and the futures markets show it could be above the $1.48 per cwt threshold through the end of 2024.

Farmshine’s Market Moos columnist Sherry Bunting has updated the graph showing how the supposedly revenue-neutral change from the ‘higher of’ to an averaging formula for the Class I mover May 2019 through March 2024 will have reduced Class I value in farm milk checks over 59 months of implementation. This graph of cumulative and year-to-year losses does not include additional losses many farmers have incurred when manufacturing class milk is out of alignment with Class I, and is depooled, with the revenue excluded from the FMMO pools and benchmarks.

In fact, the Class I mover prices announced for January and February 2024 could produce well over $80 million in losses in just the first two months of 2024 once the pounds of Class I milk are sold and counted.

Munch also took the opportunity to remind everyone that when AFBF held the dairy stakeholders forum in Kansas City in October 2022, returning the Class I mover calculation to the ‘higher of’ was the main item that got consensus from every table in the room.

When the difference between the manufacturing classes exceeds $1.48 per cwt, then pooled producers receive less money for their milk under the averaging formula compared with the previous ‘higher of’ formula. When the difference between Class III and IV is $3.48, for example, that lowers the Class I price by $1.00 per cwt. In an FMMO with 75% Class I utilization, that’s a 75-cent loss on all of the milk, not just Class I. In an FMMO with 25% Class I utilization, that’s a 25-cent loss on all of the milk.

Even members of Congress have been doing the math and have talked about putting reversion language in the Farm Bill. They are aware of their role in putting what they were told was a “revenue neutral” change into the 2018 Farm Bill that IDFA and NMPF at the time agreed upon, while adding language that USDA could hold a hearing in two years to vet it for the future. 

We are now nearly five years into this change, and it is just one piece of the hearing that just concluded, which included many proposed modifications from milk composition and price surveys, to make allowances and differentials.

Without emergency decision-making by USDA on the Class I mover piece, any potential changes from this hearing are a good 12 to 18 months away, depending on how the post-hearing processes move along, from post-hearing briefs due April 1st to rebuttles, draft decisions, comment periods, referendums, final decisions, and there are proposals that have asked for further delays after the process plays out to avoid “affecting” exchange-traded risk management instruments. 

Dairy farmers are just looking for some relief and transparency for the future, according to Munch. 

Meanwhile, IDFA and Milk Innovation Group (MIG) have opposed returning to the ‘higher of’ and have proposed several averaging methods for the Class I mover that would continually look backward to compare and change adjusters to make up past losses gradually out into the future.

Farmers have testified that this doesn’t help if it takes two to three years to get that money back after they’ve already lost the farm.

What it boils down to on the Class I mover is the industry wants to move toward more fractionation of milk, more aseptic and shelf-stable beverages, and away from fresh fluid milk. These are the products that can sit in a warehouse for 9 months and for which processors testified they do 9-to-12-month pricing contracts largely with foodservice and convenience stores. Fresh fluid milk already has advance pricing that aligns with the turnaround of that product so hedging on the futures markets is not typically done, and averaging is not needed.

When asked whether AFBF has looked at how the spread may continue in the future to make the averaging formula a loser for farmers, he said Class IV will likely persist above Class III, and yes, they expect the spread to remain large.

Earlier testimony by processor witnesses blamed these Class I formula losses on Covid disruptions, food box programs and large government cheese purchases, but as Munch pointed out, the driver of these losses is something else. When Class IV is over III, we don’t see it in a negative PPD, but milk is depooled, and the full extent of the depooling losses are incurred by farmers, they just aren’t easily enumerated.

“In 2020, the losses (in Class I value, alone, without including the impact of depooling) were over $700 million. In December 2023, the losses crossed over $1.05 billion as they have continued to add up,” said Munch. “The financial detriment is not solely due to a ‘black swan’ event. Some of our farmers were waiting to see if it showed markets shifting. Now, years later, this is still an issue.

“That’s another reason why we are asking for an emergency decision on this right now, and why it came up at our meeting at the convention last week,” Munch testified. “It was intended to be revenue neutral, but it has turned out not to be.”

During cross-examination, Munch also confirmed there hasn’t been much trust by producers to believe processors will replace the dollars they are asking to be removed from FMMO pricing by paying over-order premiums, instead.

“There is a lack of trust and not knowing where their price comes from. There has been a lot of concern about how their milk checks are calculated,” Munch related. “That’s one of the proposals that the American Farm Bureau put forward is more uniform, clear milk checks. There is a perception that things in milk checks have been manipulated. There is a perception of mistrust.

“If there are ways we can build back the trust, and if one of those ways that our farmers have targeted is switching back to the ‘higher of,’ then it’s easier for farmers to understand that calculation, and it has shown, in the most current of times, to be more advantageous to them.”

“It is my pleasure at 10:18 a.m. on 2024 January 30 to determine that this Hearing has ended,” said U.S. Administrative Law Judge Jill Clifton after 506 exhibits have been entered into evidence for and against 21 proposals in various areas of FMMO pricing modification during the 49 Hearing days that stretched over 5 months since its start on Aug. 23, 2023 in Carmel, Indiana. Screen captured from Hearing livefeed

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Feb. 16, 2024 Milk Market Moos in Farmshine: SHRINKFLATING DAIRY — steep loss of dairy farms, down 40%, and much, much more

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By Sherry Bunting, Farmshine Weekly Column

Carrot… and stick?

Opening the Feb. 14th House Ag Committee hearing with USDA Secretary Tom Vilsack, Committee Chairman G.T. Thompson of Pennsylvania said the clear message he has heard as he has traveled across the country on farm bill listening sessions is that, “Agriculture needs government to work for them, not against them.”

Vilsack was pressed at least 8 times by 8 different members of the Committee for clarity and details on the Climate Smart deal. Representatives wanted an update on how the billions of dollars in Inflation Reduction Act (IRA) funds for conservation programs and Climate Smart Partnerships are making it directly to farmers.

Rep. Mary Miller of Illinois went so far to say the climate cult is a scam and pointed to what is happening in Europe, airing her concerns about incentives for solar panels on good farmland pricing farms out of rented acres. She expressed concern about getting farmers reliant on “environmental payments” instead of a food system that allows farms to succeed producing food, and she wondered about being beholden to the global climate-cult, which means (I’m paraphrasing) she is concerned about the stick that follows the climate-smart carrot.

While the purpose of these conservation and Climate-Smart IRA funds, said Vilsack, is to ‘get money to farmers,’ his update acknowledged that, “There’s a lot of work to do. We’re assisting and guiding (farmers) into participating,” he said.

“We’ve increased the number of people working at NRCS (1500 new hires, total 4000 new hires planned). We’ve entered into cooperative agreements so we have a broader reach (hire estimated 3000 technical staff through conservation partners), so that those who might not be able to understand that they qualify for the program are finding out,” Vilsack explained, noting that this is necessary in order to actually implement the Inflation Reduction Act.

(Translation: Money hasn’t gone directly to farmers so much as it has gone to program infrastructure, such as more USDA staff, partnership staff, and developing the herding routines to get farmers ‘guided’ on board for Climate Smart data collection and monitoring. In contrast, the IRA funds going to traditional and oversubscribed conservation program EQIP have largely been obligated to farmers at this point.)

“Roughly 85 to 88% of farmers in this country today require off farm income to be able to keep the farm. It’s about people who love what they’re doing and frankly want to do more of it, but they don’t have the income streams to support it, so they have to have an off farm job,” said Vilsack, defending the deal.

“To me, the key here is to create opportunities for that farm to generate more revenue,” he added.

Rep. Marie Gluesenkamp Perez of Washington State made the point that, “Farmers should not have to rely on value added ventures to survive, like agro-tourism or solar panel installations. These are ventures in their own right and should not be necessary for farmers to continue and pass on their farms to the next generation,” she said.

Rep. Doug LaMalfa of California pushed the point that farmers like the traditional conservation programs, like EQIP, but the IRA-funded Climate-Smart Partnerships deal for “tying up carbon is going to require them to jump through hoops,” he said, noting that no-till and cover crops aren’t possible on some types of farms, like rice production.

Vilsack countered: “It’s voluntary. It gives us the opportunity to figure out what works and what doesn’t work, and it doesn’t necessarily put people at a competitive disadvantage.”

He maintains that these projects “do not require farms to go through hoops and in some cases, it’s actually paying them for what they’re already doing.

“The idea here is to measure, monitor and verify the results so that we know what works and what doesn’t work, so that we don’t invest in what doesn’t work,” said Vilsack.

Congresswoman Abigail Spanberger of Virginia gave the example of a farmer in her district doing no-till and cover crops. Vilsack nodded and replied: “There is an opportunity, potentially, for that farm to qualify for ecosystem market payments. So, now, instead of just a crop, they’re going to get an environmental payment.”

That’s the carrot, where are they hiding the stick?

40% decline and a loss of 15,866 dairy farms in 5 years.

The number of dairy farms in the U.S. declined by 40%. That’s 4 in 10 dairies lost over 5 years. The 2022 Census of Agriculture Report released Tues., Feb. 13 held a bit of a surprise not seen on available summaries. Clicking through the ‘quick stats’, we learn that the number of dairy farms with milk sales on December 31, 2022 totaled 24,082, and the number of farms with milk sales but no milk cows or calves in inventory at the end of 2022 was 388 for a total 24,470 dairy farms with milk sales in the U.S. at the end of 2022.

It’s also 3,462 fewer dairy farms than the 27,932 licensed dairies reported as an average number for 2022 last February as part of the January 2023 milk production report.

(Note: The 2023 annual average dairy data that was included in the January 2024 Monthly Milk Production Report Feb. 21 pegged the average number of licensed dairies in the U.S. in 2023 at 26,290, down 6% from the annual report filed for 2022. The Census and NASS Milk Production Reports count some types of multi-site dairies under the same ownership differently. By the way, USDA revised the entire 2023 year of production lower yet for the fourth time, now revising 11 of the 12 months of prior data reported for milk production, cattle numbers, and output per cow. We questioned the figures all last year, asking where the cattle were coming from, pointing to cattle inventory numbers on heifer replacements a year ago indicating a shortage of freshening 2-year-olds, etc., and pointing to the substantial increase in Whole Milk Powder Imports into the U.S. and other factors USDA may have left unaccounted for in prior estimations.)

In Pennsylvania, dairy farm numbers declined from 6,914 on Dec. 31, 2017 to 4,027 on Dec. 31, 2022, that’s a 42% decline over 5 years. It’s also 973 short of the average number of licensed dairies reported by USDA NASS for the 2022 year.

The 2022 Census of Ag also shows that of the 24,470 farms with milk sales, 3,439 accounted for 59% of milk sales and 1012 accounted for 46%. This compares with the 2017 Census, which reported 3819 farms accounted for 55% of milk sales and 793 farms accounted for 43%.

We will dig into the national and state by state 2022 Census data relative to dairy in a future report.

In agriculture, overall, the 2022 Census of Ag shows a loss of 142,000 farms (down 7%) and a loss 20 million farm acres (down 3%) in the past 5 years.

Between 2017 and 2022, the number of U.S. agricultural producers held steady at 3.4 million, while the number of farms continued to decline at 1.9 million covering 880.1 million acres that generated food, fiber and fuel. Average age of farmers was up at 58 years. But the number of beginning farmers (over 1 million), increased also, according to the Report.

The number of small and mid-sized farms across all commodities declined between 2017 and 2022. Large (sales $1-5 million) and very large farms (sales of $5 million or more) increased in number. The 105,384 farms in those top two categories (sales of $1 million or more) represented fewer than 6% of all U.S. farms and sold more than 75% of all agricultural products. The largest farming operations and a small number of states accounted for the majority of agricultural production and sales.

The overall value of agricultural production and income increased between 2017 and 2022, according to the Ag Census. 2022 was a high year in agricultural price cycles, and government payments were still part of the economic calculus through prior CFAP and Pandemic Assistance. Milk made it into the top 5 commodities (at No. 5). Combined, the top 5 — accounted for two-thirds of the value of all agricultural production.

The value of crop production was $281 billion, up 45% in 2022 vs. 2017, while the value of livestock production (including dairy) was $262 billion, up 35% over the same period.

Shrinkflation this, shrinkflation that

The January Consumer Price Index (CPI) released Tues., Feb. 13 increased 0.3% on a seasonally adjusted basis. Over the last 12 months, the all items index increased 3.1% before seasonal adjustment. The food index, up 0.4% in January, increased 2.6% over the last 12 months. The food at home index was up 0.4% in January, and up 1.2% over 12 months, while the food away from home index rose 0.5% over the month and 5.1% over 12 months. The dairy and related products index is up 0.2% in January, down 1.1% over 12 months.

In contrast, the energy index fell 0.9% over the month, down 4.6% on the year due mainly to the decline in the gasoline index.

The Biden Administration announced intentions to investigate supermarkets for over-charging as the food index has not followed energy lower. What further complicates the food inflation indexes is that food commodities like milk and eggs have moderated while processed consumer packaged goods continue to inflate.

Another ripple is captured in the new term coined by food, ag, and business analysts — “shrinkflation” — meaning smaller packages, same price.

For farmers, shrinkflation is a good way to describe what is happening to milk margins. Yes the central feed and energy costs are moderating, but many other fixed and adjustable costs — from interest rates and insurance to supplies and services — continue to move higher, shrinkflating profit margins.

Meanwhile, the Census of Ag data showed big gains for farm revenue and net income in 2022 vs. 2017, but this unique comparison does not factor in the margin-squeeze in 2023, nor the impact of losing the last of the CFAP and Covid pandemic assistance payments that were still trickling into 2022.

In the dairy sector, the milk markets send mixed messages as the Class IV milk price sits $4 above Class III, with cheese being the market dog for the past 12 months. Yet milk is not moving from Class III manufacturing (cheese/whey) to Class IV (butter/powder). Why? New Class III manufacturing capacity has come online and will continue, needing to run full to turn a profit.

At the recent Pennsylvania Dairy Summit in a presentation about navigating the future, Phil Plourde of Ever.Ag highlighted the critical importance of exports to the industry. “Export or perish!” he said, focusing the admonition on the opportunities to export more cheese, including mozzarella.

IDFA CEO Michael Dykes in a presentation in January, issued the challenge to producers to fill the production gap that $7 billion in planned processing investments will bring online in the next three to five years.

Meanwhile, U.S. dairy farmers are seeing price pressure from a buildup of cheese via lackluster exports suffering from what are seen as inadequate trade policies and lack of new trade agreements.

Reflecting on the recently concluded FMMO hearing of 21 milk pricing proposals — some of which seek to reduce regulated minimum milk prices — we see processors are focused on a shrinkflated milk pricing system, shrink prices and inflate capacity because growth has got to happen.

They say USDA sets the regulated minimum prices too high, which must be reduced to ‘market clearing’ levels so they can have the freedom and band width to then be able to pay market premiums to their farmers.

On the eve of the Pennsylvania Dairy Summit Feb. 6, Cornell economist Dr. Chris Wolf talked about the recent FMMO hearing, noting that, “Regulated minimum prices are the whole deal right now. Premiums are gone.”

He showed charts tracking the difference between the All Milk price and Mailbox price (above), progressively negative since 2015, reflecting higher transportation costs and evaporation of over-order premiums, not to mention milk check assessments, marketing adjustments, balancing fees.

If regulated minimum prices are reduced, will processors voluntarily fill that gap by paying more premiums so producers have the financial wherewithal to fill the production gap?

Things are pretty bad for farmers right now in the milk markets that are based on cheese, where capacity has ramped up in the Central U.S., and where tough discussions are being had around kitchen tables about operating margins and the future.

Milk futures move lower

Milk futures were unevenly lower this week, with most of the downward pressure on first-half 2024 contracts for both Class III and IV milk. The spread between Class III and IV milk — according to this week’s CME futures markets continues to be range between $2.20 and $4.00 per cwt in every single month of 2024, well above the $1.48 mark where the ‘averaging’ formula is a loser for orderly marketing compared with the ‘higher of.’ On the close Wed., Feb. 14, Class III milk futures for the next 12 months averaged $17.91, down 10 cents from the previous Wednesday. Class IV milk contracts average was $20.57 — down 7 cents.

Back on the see-saw

The daily CME spot market for dairy products was mixed and mostly lower this week, except dry whey was higher and barrel cheese fully steady. Spot butter was pegged at $2.7175/lb, down a nickel from a week ago with zero loads trading. Grade A nonfat dry milk was $1.18/lb, down 4 cents with a single load changing hands. On the Class III side, 40-lb block Cheddar gave up 7 cents in Wednesday’s session, alone, when declining bids with no trades left the spot price pegged at $1.5150/lb, down 11 cents from the previous week. Barrel trade had moved higher earlier in the week, but a 2-penny loss Wednesday left the spot price firm on the week at $1.5750/lb with 2 loads trading. Dry whey at 52 cents/lb was 3 cents higher than a week ago with no trades.

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Whole Milk for Healthy Kids Act S. 1957 needs more cosponsors: We need your help! Please contact your state’s two U.S. Senators

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The Whole Milk for Healthy Kids Act has moooved to the Senate. S. 1957 is identical to H.R. 1147. As of Feb. 21, 2024, the Senate bill has 15 sponsors from 12 states. This map shows what states have both Senators or one Senator signed on and which states have none. We need more cosponsors to get this bill out of the Ag Committee and onto the Senate floor for a successful vote. Will YOU call or write TWO? Map by Sherry Bunting

By Sherry Bunting, Farmshine, January 26, 2024 (Cosponsor data updated Feb. 21, 2024)

WASHINGTON — The Whole Milk for Healthy Kids Act is now up to the Senate, where more cosponsors are definitely needed to push it past some barriers and get it to the floor for a successful vote.

Senate bill S. 1957 is not a mandate for whole milk. This bill ends a mandate against whole milk, which is federally banned from schools (2% reduced fat milk is also prohibited. Only fat-free and 1% low-fat milk are allowed to be offered with meals or a la carte or in vending machines).  

In December, Senator Debbie Stabenow (D-Mich.) blocked the unanimous consent motion by Senator Roger Marshall (R-Kan.). Marshall was seeking an immediate Senate vote on H.R. 1147 – Congressman G.T. Thompson’s bill – on Dec. 14, 2023, just one day after it was overwhelmingly passed in the House of Representatives by a bipartisan 330-99 vote. It was previously passed in the House Education Committee in a bipartisan 26 to 13 vote.

Marshall chugged a glass of whole milk and gave an inspiring speech about getting the bill to the President’s desk for Christmas. Sen. Marshall is a medical doctor, an obstetrician, and a member of the Senate Ag Committee.

“This is a slam-dunk for American families,” he said.

Sen. Stabenow played the role of the Grinch stealing the opportunity for immediate whole milk passage in the Senate on the heels of the overwhelming House vote as she objected to the unanimous consent request on Dec. 14.

But that’s not the end of this story, just the beginning.

An identical Senate bill, S. 1957, The Whole Milk for Healthy Kids Act was introduced in June 2023. It was read twice on the Senate floor and referred to the Senate Agriculture Committee, chaired by — you guessed it — Sen. Stabenow of Michigan. This means she is in a ‘gate-keeper’ position for this bill. If it doesn’t come before her committee, it will have trouble getting to the floor.

This is where we can help by raising the number of Senate cosponsors! There are 15 sponsors as of Feb. 21 (updated). We need to get to one-third or one-half of the Senate. That’s 35 to 50.

While news reports indicate Sen. Stabenow will retire after this term and is not seeking re-election, her legacy in caring about childhood nutrition and agriculture may be important to her. She stated on the Senate floor that these decisions about milk in school should be made by the scientific committees. She wants to “keep having these conversations.”

Let’s take her up on that by having conversations with our Senators to cosponsor S. 1957. The Dietary Guidelines Advisory Committee has for three cycles and over 15 years refused to consider the preponderance of sound evidence about the benefits of milkfat that the USDA keeps screening out of their deliberations process. 

The DGA Committee is meeting right now for 2025-30 DGAs that seek to refine the current dietary patterns, not re-evaluate them. Even the DGA Committee in 2020 admitted their recommended dietary patterns are deficient in key nutrients that milk delivers.

Here’s the bottom line: S. 1957 was introduced in June 2023 by Sen. Marshall (R-Kan.), along with Senators Peter Welch (D-Vt.), Kirsten Gillibrand (D-N.Y.), Ron Johnson (R-Wis.), John Fetterman (D-Pa.), Chuck Grassley (R-Iowa), Cindy Hyde-Smith (R-Miss.), James Risch and Mike Crapo (both R-Idaho), Susan Collins (R-Maine), and Angus King (I-Maine).

Four more cosponsors have been gained, they are Senators J.D. Vance (R-Ohio), Jerry Moran (R-Kan.), Marsha Blackburn (R-Tenn.), and Mike Braun (R-Ind.)

As of January 24, 2024, S. 1957 has 14 sponsors from 11 states in the U.S. Senate. Of these 15, seven are on the Senate Ag Committee (Marshall, Hyde-Smith, Gillibrand, Fetterman, Welch, Grassley, Braun). 

We need the rest of the Ag Committee, including Ranking Member John Boozman (R-Ark.). If you live in Arkansas, contact him. If you live in Minnesota, contact Ag Committee Senators Amy Klobuchar and Tina Smith; in Illinois, Sen. Richard Durbin; in Ohio, Sen. Sherrod Brown; in Kentucky, Sen. Mitch McConnell; in Iowa, Chuck Grassley has already signed on, but Joni Ernst has not; in North Dakota, talk with Sen. John Hoeven; in South Dakota, Sen. John Thune; in Nebraska, Sen. Deb Fischer; in Georgia, Sen. Raphael Warnack; in New Mexico, Sen. Ben Ray Lujan; in Alabama, Sen. Tommy Tuberville; in Colorado, Sen. Michael Bennet; and in New Jersey, Sen. Cory Booker.

No matter where you live, contact your state’s two U.S. Senators. We need as many Senate cosponsors as possible, and we need Senators motivated to speak with Chairwoman Stabenow, to ask her to please stop putting the ego and agenda of Washington bureaucrats above the health and welfare of America’s children and the economic stability of America’s dairy farmers.

This bill is about choice. It is not a mandate. It simply allows schools to offer whole and 2% flavored and unflavored milk at school lunch and breakfast without financial penalties for exceeding outdated milkfat limits that are unnecessary or even harmful to children.

If we want children to benefit from the nutrition milk delivers, then we need to deliver the permission for our children to be able to choose milk they will love at school where they have two meals a day, five days a week, three-quarters of the year. That’s how they actually benefit from the complete protein and 13 essential nutrients milk delivers.

Let’s stay positive. We can’t afford to lose ANOTHER generation of milk drinkers and think we will still have a dairy industry in many parts of the U.S. The Whole Milk for Healthy Kids Act is an opportunity for dairy farmers to revitalize and renew fluid milk demand, but more importantly, it’s an opportunity for schoolchildren to choose milk they will love for life and health. It’s also an opportunity to drastically cut the amount of wasted milk in school cafeterias, a win for stewardship of resources and the environment.

A 2021 survey by IDFA showed that 78% of American parents who described themselves as voters, choose 2% or Whole Milk for their families as the most delicious and nutritious option, but their children can choose neither 2% nor Whole milk at school where they have two meals a day, five days a week, three-quarters of the year.

This survey is consistent with what a Pennsylvania school trial in 2019 showed. The students preferred Whole Milk 3 to 1 over the 1% low-fat milk. When 2% and Whole Milk were offered in the coolers, students consumed 52% more total milk and the average daily volume of discarded milk was reduced by 95%. This means more students took the offered milk instead of refusing it, and fewer students threw away the milk they took with their meals.

The Grassroots Pennsylvania Dairy Advisory Committee, under chairman Bernie Morrissey’s leadership, has launched a letter-writing and phone-calling campaign seeking cosponsors for S. 1957. They have put together the tools, but grassroots farmers and citizens must be the ones to carry it out and send the letters and make the calls.

We need to help Senate Ag Committee Chairwoman Debbie Stabenow understand this issue is about lifting the federal school lunch and breakfast ban that was placed on delicious nutritious whole milk in 2012 so that school districts, parents and students can make healthy milk choices that are enjoyed and not discarded.

This bill is not a mandate for whole milk. This bill ends a mandate against whole milk.  

This is about options, choice, and a future for kids and dairy farms. Will YOU call or write your TWO?

Let’s keep this bill moooving. Every state has two U.S. Senators. Click here for a sample letter.

Find the Washington addresses and phone numbers for your state’s Senators at https://www.senate.gov/ – Click the icon in the top left corner, select your state from drop-down menu to see how to contact them. Or look for your state in this printable directory.

For a more detailed letter, like the one sent by the Grassroots PA Dairy Advisory Committee to Senator Robert Casey, Jr. of Pennsylvania, click here.

For a simple phone message guide for contacting Senate Ag Committee Chairwoman Debbie Stabenow, Majority Leader Chuck Schumer and Minority Leader Mitch McConnell (and if in PA Senator Robert Casey) click here.

See the complete Action Packet and find some additional resources in a folder here

To email your Senators: Go to https://democracy.io/ – type in your address, city and zip code, click submit. Your two Senators and one Rep. will show up with red check marks. Click ‘Write to them.’ Then, on the next screen, write the body of your letter. If you want, you can start with who you are, where you live, what you do. You can also mention if you have school-aged children or grandchildren. Then copy and paste from the text below or write your own message simply asking your Senators to cosponsor S. 1957 The Whole Milk for Healthy Kids Act

**************

RE: Whole Milk for Healthy Kids, S.1957 by Senators Roger Marshall and Peter Welch

I write to ask you to cosponsor S. 1957, the Whole Milk for Healthy Kids Act, to bring back the choice of Whole Milk in schools. This bill is not a mandate, it is about choice, so students can have the delicious Whole Milk option to benefit nutritionally from milk they will love. The House passed this in a 330 to 99 vote in December. We hope you will soon add your name to the list of cosponsors for the Senate. Whole milk is standardized at 3.25% fat (3.5% in Calif.). Systematic reviews of the scientific literature show milkfat should no longer be demonized by federal policies, especially for children.

Currently, 95% of U.S. schools are in the National School Lunch Program, which in 2012 made rules requiring only fat-free and low-fat (1%) milk be available to students during school hours. Since then, student milk consumption has declined drastically, and milk has become a most frequently discarded item. A 2021 survey showed 78% of parents choose whole or 2% milk for their families, but these options are restricted at school, where kids receive two meals a day, five days a week, three-quarters of the year. A 2019 school trial showed milk consumption increased by 52%, and waste volume decreased by 95%, when offerings were expanded to include Whole and 2% milk. More students chose milk, and fewer students threw away milk. That is a win for kids, dairy farmers and the environment.

This is a critical time to provide what milk delivers — complete protein and 13 essential nutrients. When students aren’t drinking the milk offered at school, they don’t receive its nutrition. In fact, the Dietary Guidelines Committee in 2020 admitted their recommended dietary patterns lack enough key nutrients, including three of the four nutrients of public health concern that milk provides: potassium, calcium, and Vitamin D, which is fat soluble.

Thank you in advance for helping bring the nutritious, delicious option of Whole Milk back to school lunch and breakfast by cosponsoring S. 1957.

**************

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Letter-writing campaign launched by grassroots group seeking U.S. Senate cosponsors for Whole Milk for Healthy Kids Act

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‘Will you write to your two?

By Sherry Bunting, Farmshine, January 12, 2024

EAST EARL, Pa. – In December, the House passed Congressman G.T. Thompson’s Whole Milk for Healthy Kids Act, H.R. 1147. This is a major milestone for this bill, which passed in the U.S. House of Representatives by an overwhelming bipartisan 330 to 99 vote.

Pictured are a few of the members of the Grassroots Pennsylvania Dairy Advisory Committee and others who joined them for a staff briefing at the Capitol last summer. The focus now is on the U.S. Senate. From left are Christine Ebersole, school nurse in Blair County, Pa.; John Bates, then executive director of The Nutrition Coalition; Nelson Troutman, Berks County dairy farmer and his granddaughter Madelyn, 2022-23 Lebanon County Dairy Maid; Congressman G.T. Thompson (R-PA-15), the champion and prime House sponsor of the Whole Milk for Healthy Kids Act; Sara Haag, 2023-24 Berks County Dairy Princess; Krista Byler, school foodservice director in Crawford County, Pa.; and Sherry Bunting, Farmshine contributor and volunteer advocate for whole milk in schools. Photo courtesy Maddison Stone

“The next stop is the Senate, and we are going to have to work hard to get the Senate bill (S. 1957) to the floor and passed. In Pennsylvania, we need to work on our Senator Bob Casey. We already have Senator John Fetterman as a cosponsor of the bill, but we need Senator Casey also,” says Nelson Troutman, Berks County farmer and originator of the Drink Whole Milk 97% Fat Free baleboards that led to the 97 Milk effort and 97milk.com

“We also need more Senators to cosponsor S. 1957 from across the country,” adds Bernie Morrissey, retired agriculture advocate from Robesonia, Pa. “We need dairy farmers, agribusinesses, organizations and citizens all across the country to reach out to their Senators to cosponsor this bill.”

The Senate bill has 14 cosponsors from 11 states as of January 20th. They include Republicans, Democrats and an Independent as follows: both Dr. Roger Marshall (prime sponsor) and Jerry Moran of Kansas, Peter Welch (prime cosponsor) of Vermont, Ron Johnson of Wisconsin, John Fetterman of Pennsylvania, both James Risch and Mike Crapo of Idaho, both Susan Collins and Angus King of Maine, Kirsten Gillibrand of New York, Cindy Hyde-Smith of Mississippi, Chuck Grassley of Iowa, J.D. Vance of Ohio, and Marsha Blackburn of Tennessee.

“Every state has two United States Senators. We want every dairy farmer, every organization and business calling their two Senators. If they are already a cosponsor, thank them. If they are not a cosponsor, please write to them, and use our sample letter (or the template at the end of this article),” Bernie explains.

(Find the Washington addresses and phone numbers for your state’s Senators at https://www.senate.gov/ – Click the icon in the top left corner, select your state from drop-down menu to see how to contact them. Go to the end of this article to learn about email options. Some additional resources can be found in a folder at https://qrco.de/WholeMilk-Info )

“We have written to Senator Casey (see letter at top) to let him know how important this is to us, to the children of Pennsylvania, and to the dairy farmers. We need more people, organizations, and businesses to write to him also. If this doesn’t work, it will be our own fault for not getting involved,” he stresses, adding that constituent phone calls and visits are also welcome.

“We must also contact Senate Ag Committee Chairwoman Debbie Stabenow of Michigan. It is important that she knows how vital this bill is to come through her committee to the Senate floor,” Bernie notes. (The call-in notice below was published in the Jan. 5 Farmshine).

The Grassroots Pennsylvania Dairy Advisory Committee asks organizations and agribusinesses to use the sample letter on this page as-is or tailor it to their state’s Senators and also send it out to all their members or customers asking them to each sign it and send it to their two Senators as well.

“Let us know if you did this,” Bernie continues. “We want to know: Did YOU contact your TWO?” (Email Sherry Bunting at agrite2011@gmail.com or text or call 717.587.3706 to confirm you contacted your two.)

“After all,” Bernie observes: “If the dairy farmer’s next generation of consumers – the children — cannot choose milk they will love, what is your future as a dairy farmer? And what is their future as tomorrow’s leaders?”

“Whole milk is nutritious and delicious. Science supports this choice. It’s up to each one of us to get it done.”

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To email your Senators directly, go to https://democracy.io/  – type in your own address, city and zip code, click submit. Your two Senators and one Representative will show up with red checkmarks. Click ‘Write to them,’ and on the next screen compose the body of your letter. First, say who you are and where you live/work/farm and mention if you have children or grandchildren in school, if you wish. Sample text about cosponsoring S. 1957 can then be copied and pasted from the template below:

———————————————————————————————————————-

Dear Senator,

I write to ask you to stand up for our children, parents, schools and dairy farmers by cosponsoring S. 1957, the Whole Milk for Healthy Kids Act, to bring back the choice of Whole Milk in schools. This bill is not a mandate, it is about choice, so students can have the delicious Whole Milk option to benefit nutritionally from milk they will love. The House passed H.R. 1147 in a bipartisan 330 to 99 vote in December. We hope you will soon add your name to the list of Senate cosponsors for S. 1957.

It is vital to have this choice. Whole milk is standardized at 3.25% fat (3.5% in Calif.). Systematic reviews of the scientific literature show milkfat should no longer be demonized by federal policies,
especially for children.

Currently, 95% of U.S. schools are in the National School Lunch Program, which in 2012 made rules via the Healthy Hunger-Free Kids Act requiring only fat-free and low-fat (1%) milk be available to students during school hours. Since then, student milk consumption has declined drastically, and milk has become a most frequently discarded item. A 2021 survey showed 78% of parents choose whole or 2% milk for their families, but these options are restricted from their children at school, where they receive two meals a day, five days a week, three-quarters of the year. A 2019 trial at a PA school showed milk consumption increased by 52% and waste volume decreased by 95% when offerings were expanded to include Whole and 2% milk. More students chose milk, and fewer students threw away milk. That’s a win for kids, dairy farmers and the environment.

This is a critical time to provide what milk delivers — complete protein and 13
essential nutrients. When students aren’t drinking milk offered at school, they don’t receive its nutrition. In fact, the DGA Committee in 2020 admitted their
recommended dietary patterns lack enough key nutrients, including three of the four nutrients of public health concern that milk provides: potassium, calcium, and Vitamin D, which is fat soluble.

Thank you in advance for helping bring the delicious option of Whole Milk back to school lunch and breakfast by cosponsoring S. 1957.

Sincerely

————————————————————————————————————————–

USDA FMMO hearing resumes, Dr. Stephenson testifies for MIG proposal to end $1.60 Class I base differential

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USDA’s cross examination reveals possible flaw in simulator model result

By Sherry Bunting, Farmshine, Jan. 19, 2024

CARMEL, Ind. — Shadow pricing, demand elasticity, commoditized loss of prior incentives, balancing cost, give-up cost, base differential, uniform differential, market-clearing price…

These terms ruled the day when the USDA National Hearing on Federal Milk Marketing Order (FMMO) proposals resumed in Carmel, Indiana this week after a more than four-week recess.

The hearing began in late August. It did not conclude by Fri., Jan. 19, so it will again recess until Jan. 29. 

American Farm Bureau estimates that another 270 days of post-hearing processes must follow before a USDA decision could be implemented, and even this is subject to proposals that seek a 15-month delay between decision and implementation due to potential impacts on CME futures-based risk management tools, such as Dairy Revenue Protection (DRP).

This is far from over, and hanging in the balance is the Class I price calculation, now based on an averaging method, under which farmers have lost more than $1.02 billion since May 2019 vs. the previous ‘higher of’.

Testimony Tues., Jan. 16 included Dr. Mark Stephenson, retired UW-Madison dairy economist on behalf of Milk Innovation Group (MIG), made up of ‘innovative’ and branded fluid milk processors, including fairlife, HP Hood, Anderson-Erickson, Danone North America, Shamrock, Organic Valley, Aurora Organic, and Pennsylvania’s own Turner Dairy Farms.

Dr. Stephenson delivered his bombshell for MIG that was based on analysis he did using 2016 data in a simulator model, from which he made “certain discoveries.”

First, Stephenson suggested that fluid milk is shifting to become price-elastic vs. the long-held belief that fluid milk sales are price-inelastic. This was followed up by fluid milk processor representatives showing post-Covid fluid milk sales volumes declined as prices rose.

Stephenson cautioned USDA to refrain from setting regulated prices too high, saying this would reduce returns to producers by reducing total fluid milk sales. 

This suggestion was challenged in cross examination. In fact, AFBF chief economist Dr. Roger Cryan noted the FMMO focus on fluid milk was originally partly predicated on its “public good” as a food staple, almost akin to a “public utility.”

In cross examination on Jan. 17, Stephenson also revealed he was paid by MIG to analyze the $1.60 base differential, and his work began before MIG finalized its proposal to remove the $1.60 per cwt. base differential all the way down to zero for all Class I milk, nationwide.

Currently, the $1.60 base differential is built uniformly into the Class I price for every regulated county across all FMMOs. The varied location differentials are added to the base differential and spread across the revenue-sharing pools.

Stephenson used the U.S. Dairy Sector Simulator Model (USDSS) to develop a map as though a “milk-dictator” could efficiently “move milk to its highest global use” through various constraints. 

In the marginal value map result, Stephenson said the U.S. average value of the differences was minus-38 cents, indicating on a national average, it is more valuable (cost saving) to the model to have milk in a cheese plant than in a fluid plant in most counties. The range goes from somewhat more than $2 per cwt more favorable to a cheese plant (in red) to somewhat more than $2 per cwt more favorable to a fluid plant (in green) in the Southeast. From this “potent revelation,” Dr. Stephenson concludes that, “The model result bolsters the argument to not dilute the value of the $1.60 into the pool if that value represents a balancing cost for fluid and an opportunity cost (give-up) for manufacturing plants. Rather, require the fluid plants to pay the $1.60, but let the fluid plants pay that directly to the farms, cooperatives or manufacturing plants who supply the milk” to the fluid plant.

The map showed the incremental differences in ‘Class I minus Class III “shadow pricing,” across the country.

These marginal value differences, said Stephenson, reflect the opportunity costs of getting manufacturing plants to give up milk to fluid plants in the Central U.S., where milk production exceeds population vs. the cost to balance fluid milk markets in the East, particularly the Southeast, as well as in California and southern Nevada, where population exceeds milk production.

It was the questioning from USDA AMS administrator Erin Taylor on the ‘shadow pricing’ figures in various anchor cities that prompted Stephenson to concede: “You may have caught a major flaw in what I have done here, so I would want to look at this more carefully.”

Yes, he will be back to address such questions when the ever-lengthening hearing resumes on January 29.

Notwithstanding exposure of a possible flaw in the simulator analysis, Stephenson said the ‘market-clearing’ price is the target to aim at, and the system of setting regulated minimum prices “should err on the side of being too-low instead of too-high.”

He said processors will pay premiums in the breach of a ‘too-low’ minimum price, but there are few options for processors to deal with a ‘too-high’ minimum price — other than to opt out of regulation for manufacturing plants (de-pool), but that fluid milk plants have no ability to opt out. They are required to remain regulated by FMMOs.

“Manufacturing is by far the largest use of milk in our dairy industry,” he said, noting that Class I fluid use at 18% of total U.S. milk production (regulated and unregulated). Therefore, he said, manufacturing use should no longer be treated in the FMMO system as “the trailing spouse in the marriage.”

On MIG’s behalf, he introduced a new way of looking at the marginal value between Class III and Class I, and a mechanical change that could be made in how the $1.60 base differential is paid as needed directly to producers, cooperatives and plants that actually supply milk to Class I plants, instead of being paid to the FMMO pools.

The $1.60 became a uniform part of the Class I price in the 1999 Order Reform. About 40 cents of this $1.60 was included to represent the cost of farmers transitioning from Grade B to Grade A. The rest represents ‘give up’ costs from manufacturing to Class I and balancing costs to serve the fluid market.

Stephenson backed up MIG’s assertion that farmers don’t need any of this $1.60 base differential because virtually all milk produced today is now Grade A. During cross examination, NMPF attorneys brought up the cost farmers have to maintain Grade A status. Don’t their costs count here?

Undeterred, Stephenson suggested that these costs are accounted for in the classified pricing since all milk for all uses is Grade A, today. He said that USDA uses ‘minimum pricing’ as a tool so that the regulated price leaves space for voluntary premiums that processors can pay to “incentivize something else.”

“Being chronically above the market-clearing price creates a surplus product, which the market can’t clear,” said Stephenson. “Our dairy markets have always walked on a knife’s edge. Being plus or minus 1% on milk supplies can cause some pretty big swings in prices as the markets do attempt to clear that.”

As for removing the $1.60 uniform price differential either from the price or the pool, Stephenson said it is like “other premiums” that have become “commoditized.” 

He likened it to the rbST premium and milk quality premiums, saying those premiums have also become “commoditized.” 

For example, when farmers were first asked to give up rbST and sign pledges, a premium was offered. Now, that premium is not paid, he said, because the practice of abandoning rbST is now “commoditized.” 

Likewise, said Stephenson: “Milk quality (low SCC) has improved so much that those premiums are not there anymore. They have also become commoditized.”

So, the better dairy farmers get, the more their incentive premiums — and even big chunks of their regulated minimum price — are at risk to be cannibalized by milk buyers because the farmers have now done what they’ve been incentivized to do, so they don’t need to be paid to do it.

MIG also seeks to stop NMPF’s proposal to tweak and raise location differentials across the Class I surface map, putting on the stand some of their members to show how unfair competition arises between independent bottlers and cooperatively owned fluid milk plants in the same region.

For his part, Stephenson noted the concept of pulling the $1.60 base differential out of the pool may discourage non-productive distant pooling.

This week was certainly eye-opening as MIG is all about the processor costs with zero regard for producer costs. They even put an HP Hood representative on the stand who included the $120 million recently announced for expanding the Extended Shelf Life (ESL) plant in Batavia, NY as a “balancing cost,” that somehow justifies giving back the base differential to processors even though processors can pass their costs on to consumers, whereas farmers cannot. 

Under cross examination, Hood’s representative admitted that plant-based beverages are also bottled in those so-called ESL ‘milk balancing’ facilities, along with premium products like Lactaid.

Meanwhile farmers continue to incur costs associated with a whole host of improvements that were at one time incentivized. It appears the processors expect farmers to forgo being paid for those costs simply “because everyone’s doing it” and incentives are no longer needed.

The idea here is to deflate regulated minimum prices as much as possible in search of the elusive and not-well-defined Holy Grail: the market-clearing price. 

Processors want cheaper milk, and they’ve got multiple proposals to accomplish that. They want to deflate the regulated minimum milk price to free up their ability to pay premiums for “something else.”

In fact, in his testimony, Stephenson admitted that as these costs and premiums are “commoditized,” space is freed up to “pay premiums for something else.”

What is the “something else” that processors will pay to incentivize after they potentially succeed in reducing the regulated minimum price in multiple ways through multiple proposals?

Are climate premiums the next thing coming once the milk price is deflated far enough? Will USDA buy what MIG and IDFA are selling?

Stay tuned.

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New Year, New Hope: 2024 will be year of reckoning, Part One

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From whole milk in schools to farm bill to climate-warped food transformation, scientists and lawmakers are getting busy, farmers need to get busy too


In the global anti-animal assault, real science must lock horns with political science and defend American farmers — the climate superheroes that form the basis of our national security. Photo by Sherry Bunting

By Sherry Bunting, Farmshine, Jan. 5, 2024

EAST EARL, Pa. – It’s a New Year, and we have new hope on several fronts that are all linked together, in my analysis.

Top 2023 headlines for dairy farmers revolved around dairy markets that underperformed, successes and challenges in the quest to get Whole Milk choice back in schools, a plethora of draft USDA and FDA proposals that dilute real dairy, farm losses and governmental hearings on federal milk pricing, negotiations and extensions for the farm bill, and acceleration of ‘climate-smart’ positives and negatives buckling down for business in an area where political science is trumping real science on the rollercoaster ride ahead.

All of these headlines are inextricably linked. There is a global anti-animal assault underway, but people are wising up to the not-so-hidden agenda that is grounded in climate transitions and food transformation that give more power and control over food to global corporations while diminishing what little power farmers have in Rural America where our national security is at risk.

Real science locks horns with political science

As we head into 2024, a bit of good news is emerging as scientists are mobilizing to defend the nutritional, environmental and social honor of livestock — especially the much-maligned cow.

After an international summit of scientists in October 2022, work has been underway to bring together an international pact.

Dubbed the Dublin Declaration of Scientists, experts around the world have authored and are getting colleagues to sign-on to this document that calls for governments, companies, and NGOs to stop ignoring important scientific arguments when pushing their anti-animal agendas in the name of climate, transformation, and the Global Methane Pledge.

To date, nearly 1200 scientists have signed the Dublin Declaration, aimed foremost at the Irish government’s proposal to slaughter cows to meet methane targets. The Dublin Declaration represents the work of scientists across the globe for a global audience beyond Ireland.

Here in the U.S., we are sitting on the cusp of Scope 3 emissions targets of global milk buyers that have been hastily formulated based on the science of greed, not the science of greenhouse gas emissions. It’s time for the dairy organizations and land grant universities that represent, serve and rely on farmers to drink up on their milk and strengthen their spines.

Farmshine has brought readers the news about what has been happening in Europe, such as in the Netherlands and Ireland, regarding proposed farm seizures and cow slaughter, and the response of farmers there has been to challenge the political establishment.

The U.S. is not far behind. At COP28 recently, American cattle industries were criticized, and even Congressional Ag Leaders are miffed by what they heard. 

Still, some of our dairy organizations brag about being at COP26, 27, 28 and taking part. Even the dairy farmers’ own checkoff program is caught flat-footed. They’ve already caved to the Danone’s, the Nestles, the Unilevers, and such.

In fact, DMI’s yearend review touted its increase in U.S. Dairy Stewardship Commitment adopters to 39 companies representing 75% of the milk supply with membership in the Dairy Sustainability Alliance standing at 200 member companies and organizations. But what are they doing with those relationships to STAND UP ON SCIENCE FOR THE COWS?

The Stewardship Commitment includes DMI’s Net-Zero Initiative, where the cyclical short-lived nature of methane and the role of cattle in the carbon cycle is still not appropriately accounted for and is one of the points made in the Dublin Declaration of Scientists.

In the U.S. dairy industry, the trend on GHG revolves around DMI’s Innovation Center for U.S. Dairy, which placates large multinational corporations in the development of voluntary programs, telling farmers they are in control with their organizations as a sort of gatekeeper. That is, until those programs become mandatorily enforced by those milk buying corporations, while the science on methane and the cow’s role in the carbon cycle as well as U.S. data vs. global data continue to be ignored when they are sitting in the midst of UN Food Transformation Summits, COP26, 27 and 28, and the WEF at Davos.

In fact, during the annual meeting webinar of American Dairy Coalition in December, U.S. House Ag Chairman G.T. Thompson of Pennsylvania was asked his thoughts on some of the statements that came out of COP28 recently criticizing American dairy and livestock consumption.

“My first response was to find it laughable because it really shows you the difference between political science and real science,” he said. “It’s sad when people are so illiterate about the industry that provides food and fiber that they don’t understand how livestock contribute to carbon sequestration.

“We have a real battle,” Thompson said, adding that those putting out such statements criticizing American livestock “don’t even know which end the methane comes from. The world needs more U.S. farmers and less UN if we want a better world. The facts and the science are on our side. Let’s not let the other side control the narrative.”

Bottomline for Thompson is this: “The American farmers are climate heroes sequestering 10% more carbon that we emit. No one does it better anywhere in the world. Let’s be speaking up and speaking out. We can push it back with the facts and the science. I would encourage each of us to do that and become effective just telling that story,”

In the same ADC webinar in December, Trey Forsythe, professional staff for Senate Ag Committee Ranking Member John Boozman of Arkansas agreed.

“The language coming out of COP28, a likely European-led effort, shows what we are up against from people with no background on the role of dairy and livestock. We have to keep beating that drum on the efficiency of U.S. dairy and livestock farms,” he said.

In the same accord, scientists are getting busy, and we all need to get more involved.

In a dynamic white paper released last year, scientists made 10 critical arguments on this topic of livestock greenhouse gas emissions (GHG). Here’s what the scientists behind the Dublin Declaration are saying and why it’s so important for our land grant university scientists to sign on.

“Livestock agriculture creates GHG emissions, which is a serious challenge for future food systems. However, arguing that climate change mitigation requires a radical dietary transition to either veganism or vegetarianism, or the restriction of meat and dairy consumption to very small amounts is overly simplistic and possibly counterproductive,” the scientists wrote in a recent description of the Dublin Declaration.

“Such reasoning overlooks that dietary change has only a modest impact on fossil fuel-intensive lifestyle budgets, that enteric methane is part of a natural carbon cycle and has different global warming kinetics than CO2, that the rewilding of agricultural land would generate its own emissions and that afforestation comes with many limitations, that global data should not be generalized to evaluate local contexts, that there are still ample opportunities to improve livestock efficiency, that livestock not only emit but also sequester carbon, and that foods should be compared based on nutritional value. Such calls for nuance are often ignored by those arguing for a shift to plant-based diets,” they continued, listing these 10 Arguments with scientific explanations for each one.

Here is how the growing number of international scientists, including Dr. Frank Mitloehner of UC-Davis, situate the problem:

Argument 1 – Global data should not be used to evaluate local contexts

Argument 2 – Further mitigation is possible and ongoing

Argument 3 – Only a relatively small gain can be obtained from restricting animal source foods

Argument 4 – Dietary focus distracts from more impactful interventions

Argument 5 – Nutritional quality should not be overlooked when comparing foods

Argument 6 – Co-product benefits of livestock agriculture should be accounted for

Argument 7 – Livestock farming also sequesters carbon, partially offsetting its emissions

Argument 8 – Rewilding comes with its own climate impact

Argument 9 – Large-scale afforestation of grasslands is not a panacea

Argument 10 – Methane should be evaluated differently than CO2  

These arguments take nothing away from the technologies that are being developed to help dairy and livestock producers further reduce emissions and sequester carbon. Technology has a role in amplifying the cow’s position as a solution, not to cure a problem she does not have! And farmers deserve to get credit for what they’ve already achieved.

Farm, food, and national security interdependent

The 2018 Farm Bill was extended for another year at the end of 2023, but the urgency to complete a new one continues as a big priority for House Ag Committee Chairman G.T. Thompson. In the recent ADC annual meeting webinar, he said: “You don’t want us writing farm bill legislation — or any legislation — just listening to voices inside the Beltway in Washington. It would not work out well.”

He thanked and encouraged farmers for being part of the process, saying there’s more to do.

“We’re building this farm bill listening to your voices, the voices of those who produce, those who process, and those who consume — all around the country,” said Thompson, noting nearly 40 states were visited for nearly 80 listening sessions over 2.5 years on the House side.

“This farm bill is about farm security. It’s about food security. And it’s about national security – all three of those are interdependent,” he added.

The extension and funding of the current farm bill for another year — while Congress works on the new one — means programs like Dairy Margin Coverage will continue for 2024, but the enrollment announcement has not yet been made by USDA.

In past years, the enrollment began in October of the previous year and ended at the end of January for that program year. When DMC first replaced the precursor MPP, enrollment was announced late and continued into March of the first program year (2019). At that time, farms could sign up for five years through 2023 or do it annually.

In 2023, DMC paid out a total of $1.27 billion in DMC payments for the first 10 months of the year.

Chairman Thompson noted that effective farm policy is the key, and the extension means no disruptions, he said: “We attached good data for dairy with policy changes, including for DMC, and some positive changes for the nutrition title within the debt ceiling discussion.”

On DMC, the supplemental production history was added in the legislation extending the current farm bill that was signed by the President at the end of November.

“It provides our dairy farmers the certainty that their additional production will be covered moving forward,” Thompson confirmed, adding that they are looking at moving up the tier one cap to be more reflective of the industry.

The farm bill is also being crafted to use no new tax dollars by reworking priorities, looking at the Inflation Reduction Act (IRA) funds, administrative funds and shoring up funds from the Commodity Credit Corporation (CCC) priorities to secure the farm bill baseline for the future.

The $20 billion in IRA funds being thrown about for conservation and environmental programs as well as ‘climate-smart’ grants is already down to $15 billion without spending a dime because of how it is designed to phase down and go away in 2031 and the fact that USDA is believed to not have the authority to keep these funds outside of the farm bill, Thompson explained. Negotiations are considering bringing this into the farm bill baseline so that it is there – and used for farmers – now and in the future.

“(The IRA) is not a victory if agriculture does not get the full benefit of these dollars. We can make that happen in this farm bill,” said Thompson. “Reinvesting the IRA dollars into the farm bill baseline will allow us to perpetually fund conservation in the future.”

Conservation programs are historically oversubscribed and underfunded.

Thompson expects crafting and advancing of the next farm bill to continue in earnest. He hopes to have a chairman’s mark of the bill released by the end of January and have it before the House by the end of February. Much of this timeline depends on House leadership, and the Senate has its own time frame, said Thompson.

He urged dairy farmers to spread the word to their members of Congress that farm security and food security are national security.

He also noted that the nutrition title had some of its toughest elements ironed out during the continuing resolution process in which the farm bill was extended. 

“I’ve managed this in such a way that we’ve accomplished already the hard things in that title,” said Thompson.

Deploying dairy farmers on legislative efforts

“Passage of the Whole Milk for Healthy Kids Act is good for kids good for the dairy industry, and good for the economy. It simply restores the option, the choice, of whole milk and flavored whole milk, and holds harmless our hardworking school cafeteria folks by making sure the milkfat does not count toward the meal recipe limitations,” Thompson reported.

He wanted well over 300 votes for H.R. 1147 in the House to send a strong message to the Senate. On Dec. 13, the House gave him 330 ‘yes’ votes for Whole Milk for Healthy Kids.

“I would like to deploy you now on the Senate. The bill in the Senate (S. 1957) has the same language and it is tri-partisan with Republican Senator Roger Marshall, a medical doctor, Democrat Peter Welch and Independent Angus King as original sponsors,” said Thompson to dairy farmers gathered virtually for the ADC annual meeting webinar.

“There are other co-sponsors as well (12), and from my state of Pennsylvania, Senator John Fetterman is a cosponsor. Our other Senator (Bob Casey, Jr.) has not cosponsored and seems to be in opposition to it,” he said. “We need you to weigh in with your senators that this is about nutrition and health of our kids and the health of our rural communities. You are in a good position to tell the story of what happened in 2010 when fat was taken out of the milk in schools.”

Thompson noted that, “As you are doing that, you are developing relationships that will help us in the farm bill also. On the farm bill, talk about return on investment, the number of jobs and economic activity and taxes from agribusinesses, about the food security and national security and environmental benefits, science, technology and innovation in agriculture,” he said. 

“Less than 1.75% of what we spend nationally is the farm bill. That’s a big return on investment, again, for food security and national security.”

Questioned about the milk labeling bill of Pennsylvania Congressman John Joyce, a doctor, Thompson said it is a strong bill. He confessed his dismay with USDA caving on this question and called FDA “a problem child” on milk labeling. 

“This bill is not self-serving for dairy. This is about consumers having the information to make proper decisions on their nutrition,” he said.

To be continued

Danone’s sale of Horizon Organic fulfills transition to fake-milk brands

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New owner is global giant with $47 billion portfolio

By Sherry Bunting, Farmshine, Jan. 5, 2024

PARIS — On the first day of 2024, another brand of fluid milk was sold to a private equity firm. 

This time was no surprise: Paris, France-based Danone announced on Jan.1st its agreement to sell organic dairy businesses, including flagship Horizon Organic, to Platinum Equity, based in Los Angeles, California.

The sale is said to be part of the Renew Danone Strategy announced in March 2022 and is mentioned in Danone’s 2023 Climate Transition Plan. 

Danone graphs its “Impact Journey” this way in its 2023 “Climate Transition Plan,” which includes reducing methane emissions by 30% by 2030, aligning with the Global Methane Pledge, and achieving Net-Zero emissions by 2050 as the global giant says it will “continue to transform the food system.”  (Web image from Danone Climate Transition Plan)

The company reported its organic dairy sector represented approximately 3% of its global revenues in 2022 and had a “dilutive impact” on sales growth and operating margin.

But mainly, said CEO Antoine de Saint-Affrique, the organic dairy business “fell outside our priority growth areas of focus,” he said, reiterating his very words to investors a year ago when he first announced “eyeing sale” of Horizon Organic and Wallaby.

Terms of sale were not disclosed, but Danone will retain a non-consolidated minority stake in the business, executives said. The closing of the transaction is subject to customary conditions and regulatory approvals.

“Today marks an important milestone in delivering this (Renew Danone) commitment while giving the Horizon Organic and Wallaby businesses the opportunity to thrive under new leadership. This sale, once completed, will allow us to concentrate further on our current portfolio of strong, health-focused brands and reinvest in our growth priorities,” said de Saint-Affrique.

According to Platinum Equity’s New Year’s Day announcement of the acquisition, Horizon Organic is deemed the largest organic fluid milk company in the world and the first brand of organic milk available coast to coast in the United States. It has since grown to include organic creamers, yogurt, cheese and butter.

Platinum Equity Co-President Louis Samson said the acquisition will “build on that legacy and support Horizon Organic’s growth as a standalone company.”

Horizon Organic became the first public organic food company in 1994 and was purchased by Dean Foods in 2004, where it became part of WhiteWave holdings alongside International Delight, Silk and other fake-milk brands. A 2012 spin-off separated WhiteWave from Dean, taking former Dean CEO Gregg Engles with it as the WhiteWave CEO. In April of 2017, Danone purchased WhiteWave, and Engles continued as a current Danone S.A. board member.

Wallaby is an Australian-style organic yogurt found mostly in natural food stores as well as the Whole Foods chain throughout the U.S.

Platinum Equity estimates that the total U.S. dairy category is valued at $68 billion in sales with fluid milk comprising approximately $17 billion of that total. Of that $17 billion in packaged fluid milk sales, organic milk sales comprised 6.7% of the  volume for the first 10 months of 2023, according to the most recent USDA Monthly Packaged Fluid Milk Sales Report.

Meanwhile, Danone has launched full-force into expanding the fake side of its 2017 WhiteWave purchase, adding products and launching new brands of plant-based and AI-engineered biological concoctions of fake-milk, fake-yogurt, fake-cheese, and other fake-dairy products in its quest for so-called “Climate Transition” and “Food Transformation.”

The sale of Horizon to a global private equity firm that specializes in mergers and acquisitions also comes on the heels of Danone’s December 2021 decision to end contracts with all of its New England and eastern New York dairy farms after sourcing milk from larger organic farms to the west and south.

After the sale of Horizon Organic is completed, Danone will be able to completely withdraw from Federal Milk Marketing Orders (FMMO) to do Cost Performance Model (CPM) pricing with a much smaller number of dairy farms, just like with other ingredient sources. Only Class I fluid milk sales are required to participate in FMMOs, and the sale of Horizon Organic to Platinum Equity ends Class I milk sales for Danone because the rest of their former WhiteWave beverage holdings are plant-based.

While Danone moves on to grow its fake-dairy business, owning the largest plant-based manufacturing facility in the world located in northern Pennsylvania and launching new plant-based alternatives to disrupt the dairy case, the Managing Director of Horizon Organic’s new owner, Adam Cooper, sees organic and value-added products as the “premium offerings” that are “driving growth in the dairy milk category.

“Horizon Organic is a pioneer of that segment and is in position to continue capitalizing on and accelerating the trend,” said Cooper.

Platinum Equity has completed more than 450 acquisitions over the past 28 years, and today operates about 50 global businesses that have been shaken loose from larger corporate entities. The global firm’s current $47 billion portfolio includes a few other companies in the food and beverage sector, such as biscuits, wine, seafood, packaged meat and bakery products, and food ingredients distribution.

“We are excited about Horizon Organic’s potential as an independent business with a renewed sense of focus and a commitment to investing in its success,” said Cooper. “We look forward to partnering with Horizon Organic’s management team to ensure a seamless transition and chart a path for continued growth and expansion.”

Already deemed a “component stock of leading sustainability indexes,” Danone’s ambitions are entrenched with ESG investors, the Global Methane Pledge, Climate Transition, Food Transformation and aspirations to be the publicly-traded global company that is B-Corp certified at the global level in 2025. (Danone is already B-Corp certified in the U.S.)

Over the past seven years, Danone North America has moved toward branding its ‘sustainability’ as increasingly plant-based.

In 2022, Danone North America received a $70 million USDA Climate-Smart grant, which the company says will be used to: 1) reduce methane emissions for dairy through innovative manure management, 2) create infrastructure to sustainably grow and trace U.S. food-grade oats and soybeans, and 3) build processing for traceable organic soy.

During the White House Conference on Hunger, Nutrition and Health in September 2022, Danone announced a $22 million investment by 2030 to improve access to, and availability of, “nutritious and health-promoting foods,” the bulk of these funds will be used to “educate consumers and healthcare providers” (aka, marketing).

Shortly thereafter, the FDA Milk Labeling Proposed Rule hit the Federal Register for comment requiring only voluntary compliance for nutrition comparisons on labels of fake-milk using the term ‘milk.’ This rule has not been finalized as FDA continues to look the other way when it comes to milk and dairy label standards of identity abuses.

(Rest assured, Danone’s big goal is to become ‘net zero’ by 2050 by transforming food. Sound familiar?)

DANONE FOOD TRANSFORMATION TIMELINE

July 2016, Danone launched the Dannon Pledge for non-GMO verified, positioning its conventional milk supply around a concept of ‘almost-organic.’

Apr. 2017, Danone purchased the Dean WhiteWave spinoff, which included Horizon Organic and Silk, So Delicious, and Alpro plant-based brands. The DOJ Antitrust Division required Danone to simultaneously divest its Stonyfield Farms subsidiary.

Apr. 2018, Danone quietly notified smaller Horizon Organic dairy farms in the western states that their future contracts would not be renewed amid a glut of organic milk and differences in how USDA’s organic livestock origin rules were being applied. Some of these producers were offered conventional non-GMO milk contracts using Danone’s proprietary Cost Performance Model (CPM). Some found other markets, and many exited the business. According to Danone’s 2021 Regenerative Agriculture Report, more than half of all U.S. milk collected by Danone now comes from farms with CPM contracts. 

Feb. 2019, Danone completed construction of the world’s largest plant-based yogurt factory in Dubois, Pennsylvania, where other non-dairy lookalike products are also made.

Feb. 2020, Danone told investors the rising global temperature is a business opportunity, and the company would accelerate food transformation with climate at the core of its growth strategy.

Oct. 2020, Danone announced its partnership with a bioscience startup to use artificial intelligence to explore new formulations to improve taste and texture of plant-based dairy alternatives.

Jan. 2021, Danone’s So Delicious launched its first plant-based cheese and Danone S.A. was acknowledged as the largest plant-based company in the world with 10% of total sales coming from plant-based dairy alternatives. The company told investors it would grow this with further acquisitions and a “plant-based acceleration unit.”

Apr. 2021, Danone and the EAT Lancet Commission announced a strategic partnership to promote a so-called “healthier and more sustainable food system by driving a change to planetary diets.” Danone pledged to use its ‘One Planet. One Health’ framework to “accelerate this food revolution.”

July 2021, Danone announced three new plant-based fake-milk launches for 2022, along with a list of other lookalikes. During the July 2021 earnings call, Danone executives identified the U.S. as a “key plant-based market,” but noted 60% of U.S. consumers are not in the category because of product taste and texture. They announced a plan to win them over “with new dairy-like technology under Silk NextMilk, under So Delicious Wondermilk and under Alpro Not Milk.”

Aug. 2021, Danone sent letters notifying all 89 of its organic dairy farms in New England and eastern New York that their milk contracts would be terminated in 12 months’ time. Later, under pressure from organic groups, officials and consumers, Danone agreed to a Feb. 2023 extension.

Jan. 2022, Danone launched the three new fake-milks: NextMilk, Wondermilk, and Not Milk. 

(Interestingly, the Silk NextMilk Whole Fat has 6 grams of saturated fat from processed coconut and seed oils. That’s more saturated fat per serving than Real Whole Dairy Milk naturally from cows. Danone’s Silk NextMilk is packaged in red and white cartons with the words ‘Whole Fat’ appearing directly under the brand name to mimic the Whole Milk appearance. Interestingly, the FDA’s proposed healthy labeling rule sets a tougher threshold for saturated fat in dairy products compared to saturated fats from plant-sources.)

Mar. 2022, Danone described its Horizon Organic and “traditional dairy” holdings as “troubled offerings,” telling investors: “There are no sacred cows,” as they “keep pruning” the portfolio to “boost growth” and “distance” the company from “underperformance”… by investing more in “winning products” and selling existing brands or buying new ones.

May 2022, Danone launched its “Dairy & Plants Blend” baby formula (60% plant-based, 40% dairy) “to expose children to food tastes early in life that can help shape their future food preferences… while shifting toward plant-rich diets and embracing alternative sources of protein to help reduce carbon emissions.”

Sept. 2022, Danone joined the White House Conference on Hunger, Nutrition, and Health to announce a $22 million ‘nutrition and health’ investment by 2030 with $15 of the $22 mil. Earmarked “to further nutrition education for consumers and healthcare providers.” (Sounds like marketing). This includes Danone’s new pledge to increase the nutrient density of its plant-based beverages.

Sept. 2022 — Danone was part of a team that was awarded a $70 million USDA Climate Smart grant for projects that include: 1) Reducing methane emissions for dairy through innovative manure management, 2) Creating the infrastructure to sustainably grow and trace U.S. food-grade oats and soybeans, 3) Building processing for traceable organic soy.

Oct. 2022, Danone announced it would use artificial intelligence through its bioscience partner BrightSeed, to reformulate over 70% of its plant-based fake-milk alternatives to reduce added sugars and increase nutrient density. At the same time, it allocated $15 million to “partner with retailers on healthy eating education” and $7 million to partner with community-based programs that provide nutritious foods.

(Timing is everything: Danone is among the financial supporters of the infamous Tufts University Food Compass, launched recently into the federal nutrition policy arena through the Biden-Harris Hunger, Health and Nutrition Strategy and the FDA proposed rule on  “healthy labeling.” The Food Compass nutrition profiling algorithm rates nonfat dairy yogurt high as an encouraged food, along with plant-based fake-milks; but real milk and cheese are rated lower as foods to moderate or discourage. More artificial intelligence, to be sure.)

Jan. 2023, Danone announced it was looking for a buyer for Horizon Organic, saying it fell outside of their growth areas of focus.

Feb. 2023, Contract extensions ended for terminated Horizon Organic dairy farms in the Northeast. Some have gone out of business. Others have gone to Stonyfield or Organic Valley, which eventually agreed to take on the remaining Northeast farms facing Horizon termination, along with 40 organic dairies cut last year by Maple Hill in New York.

Mar. 2023, Danone launched a fake-milk-mustache campaign for its Silk NextMilk brand using children, nieces, and nephews of three original real-milk-mustache celebrities to twist the knife.

Apr. 2023, Danone launched an organic alternative beverage: ‘So Delicious Organic Oatmilk’ in ‘original’ and ‘extra creamy.’

May 2023, Danone launched So Delicious Dairy-Free Yogurt

Jan. 2024, Danone announced its agreement to sell organic dairy businesses — Horizon Organic fluid milk and Wallaby yogurt to Platinum Equity.

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‘Twas the Day Before Recess: How Senator Grinch from Michigan blocked Santa’s Whole Milk delivery… for now.

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Even Dr. Seuss’s Grinch had a change of heart. So let’s get to work calling our Senators in Every-Who-Ville!

The House of Representatives overwhelmingly passed H.R. 1147, The Whole Milk for Healthy Kids Act 330-99 on Dec. 13. Senator Roger Marshall (R-Kan.) put forward a unanimous consent motion for a Senate vote on Dec. 14 in the hopes of delivering the Whole Milk bill to the President’s desk for Christmas, but this motion was blocked by Senator Debbie Stabenow (D-Mich.). Marshall has an identical Senate Bill S. 1957 referred to the Senate Ag Committee of which he is a member and she is the chair. That bill has 12 total sponsors from 10 states. We need more. Make your lists and check them twice, Call and find out if YOUR Senators will be naughty or nice!

 

By Sherry Bunting, Farmshine, December 22, 2023

‘Twas the day before Recess

And all through THE HOUSE,

The Representatives were stirring,

Some as if they saw a mouse.

 

The amendments had been laid

By the Speaker’s desk with great care

In hopes that healthy choices

Of Whole Milk for kids would be there.

 

The bipartisan support was nestled

All snug in cosponsorship,

While opponents spoke of ‘experts’

And hurled their ‘expert’ admonishments.

 

Opposers, few, with empty platitudes

And supporters, many, full of truth

Had just settled in for 

A long hour of dispute.

 

Then what to my wondering eyes

And ears should appear?

But the words, and the vote 

We had — for so long — waited to hear.

 

Whole Milk for Healthy Kids 

Won the House vote

Three Hundred Thirty to Ninety-Nine,

But when a whole-milk-drinking Doctor 

From Kansas over in the Senate began to opine

It was Senator Grinch from Michigan 

Who crushed his bill sweetly on the vine.

 

“My esteemed colleague is making me hungry,”  

Said Senator Grinch with a sugary smile.

“He’s reminding me of growing up with 

Cookies and milk,” she giggled all the while.

 

“I grew up with a family of dairy farmers,” 

Said Senator Grinch, Chairwoman of Ag.

“I certainly support milk and the dairy industry,” 

She said, tucking the Kansan’s milk bill into her bag.

 

“This is an important conversation 

To have and continue having,” she grinned,

Putting it to bed.

… But Senator Grinch, we must tell you

This conversation, for 10 long years,

We have had and have had and have had!

 

Make no mistake, 

The smiling Senator Grinch did say

She fully supports healthy options for kids 

And lauded milk and dairy that day.

“But one thing is clear,” she said,

As her eyes began to narrow and jaw firmly set.

“Those school standards for children, 

They are and should continue on dietary science to be set.”

 

But wait, what else to my wondering 

Eyes and ears did appear?

A recorded memory of Villain Vilsack 

In 2015 (at a House hearing to be clear.)

“I wish there were scientific facts, 

But this is about well-informed opinions”

That’s how we do Dietary Guidelines, my dear.

He talked of preponderance 

Of evidence and such.

He said: ‘Oh no’ we can’t include 

Diets that treat obesity so much.

 

He said: “These Guidelines are not 

What you shall, but what you should,

These guidelines,” he said,  

“Are something we think is good

For you to consider, but yes, 

People will make choices too.”

 

You can choose. I can choose,

That’s true, you see,

Unless you are a child in school 

Eating meals two of three

Each day of each week 

Nine months or more each year.

If you are that child, 

Then no choices for you, my dear.

 

But don’t fret and don’t fear!

You may choose low-fat 

And fat-free, 

And a plethora of drinks 

Sweetened artificially. 

Your choice can be fruity, fizzy 

And caffeinated too! 

You can choose what you want

If federal bureaucrats agree with you!

 

So pop-tarts, chips, cookies, 

Doritos, donuts, go ahead!

But whole milk for kids, 

Government bureacrats want 

That deal to be dead!

 

As Senator Grinch from Michigan 

Reminded us all that day,

She grew up in a family of dairy farmers, 

And supports you all to say

Milk is good and is great, to be sure

But Guidelines ARE supreme

And children must obey!

 

“We should not be supporting 

Individual food products 

That are in our states,” 

The Michigan Grinchwoman of Ag

Did scold with a finger wag.

But isn’t Michigan the #5 MILK State?

I wondered aloud, 

Then I remembered their specialties 

Are ultrafiltered, shelf-stable, dairy-based 

With big cheese and ingredient plants

Making them proud.

 

Did Senator Grinch read the bill?

Did she look at the evidence?

Talk to schools, parents or kids, if you will?

She could not have done her homework

Of that I am sure,

Because she said, smiling sweetly,

Just have those conversations some more.

 

And so she went on about USDA, 

Dietary Guidelines and Such.

They are the experts, 

And heed them we MUST

‘They are THE EXPERTS’ 

And they are meeting RIGHT NOW 

To decide for 2025-30 what is best 

In Any-Who-Ville and how!

 

With the sweetness of honey, 

The Ag Grinchwoman did say

All these things as she blocked 

The Senate’s Whole Milk vote that day.

So now it’s up to us.

We need more cosponsors to enter the fray.

We need them from Every-Who-Ville 

That has a Senator today.

 

We need cosponsors from North 

And from South, East and West.

We need them to care that children, 

Parents and schools can choose best.

 

We need them to talk to Senator Grinch 

From Michigan

As only another Senator 

In the Senate really can.

 

We need them to smile sweetly and say,

Shouldn’t children be offered milk

They will drink and not throw away?

 

We hope as Congress return

To Every-Who-Ville this holiday

That they consider the children 

All around them at school and at play,

That they consider their health,

For which whole milk doth provide

Flavor and nutrition, and that they strive

To do better by signing onto this bill right away

The Whole Milk for Healthy Kids Act,

Senate Bill S. 1957 by the way.

 

And that perhaps, just maybe, 

We hope and we pray,

Senator Grinch from Michigan’s heart

Can grow 10 sizes – or more – this holiday.

-30-

PHOTO CAPTION: Senator Debbie Stabenow, the Democrat from Michigan who chairs the Agriculture Committee on the Senate side, was certainly all smiles and pleasant as she shut the door on what Senator Roger Marshall, the Republican from Kansas, called “a slam-dunk for American families.” Marshall is a medical doctor, an obstetrician, and member of the Senate Ag Committee. He chugged a glass of whole milk on the Senate floor last Thursday, Dec. 14, before introducing his unanimous consent motion to put the House Whole Milk for Healthy Kids Act to a Senate vote the day after it had passed the House of Representatives in an overwhelming 330 to 99 count.

Let’s make our (Senate) lists and check them twice. We need to find out who’s naughty and nice. As Senator Marshall put it, this bill could have been on the President’s desk this week and delivered to farmers and schoolchildren by Christmas. But that special Santa delivery was ultimately blocked by Chairwoman Stabenow. Current sponsors of the Senate’s identical bill, S. 1957 include Senator Marshall, along with Senators Peter Welch (D) of Vermont, Susan Collins (R) and Angus King (I) of Maine, Kirsten Gillibrand (D) of New York, John Fetterman (D) of Pennsylvania, Cindy Hyde-Smith (R) of Mississippi, Ron Johnson (R) of Wisconsin, James Risch (R) and Mike Crapo (R) of Idaho, Chuck Grassley (R) of Iowa, and just this week a new cosponsor signed on, Jim Vance (R) of Ohio.

We need many Senate cosponsors to sign on, especially members of the Senate Ag Committee, and we need Senators motivated to speak with Chairwoman Stabenow, to ask her to please stop putting the agenda of Washington bureaucrats above the health and welfare of America’s children. Let’s keep this momentum going. Call the two U.S. Senators who represent your state and find out if they are naughty or nice. If they need more information, visit 97milk.com and download the handout Why Whole Milk.

If your Senators are already signed on to S. 1957, thank them. If they have not signed on, ask them to consider this level of support for the bill so that it goes to the floor to allow children to choose  milk they will love and consume instead of throwing it away — so the options of whole and 2% milk can be offered by schools instead of only fat-free and 1% low-fat milk. This is about health, nutrition, learning readiness, and the future. C-Span screen capture graphic by Sherry Bunting