Dairy mis-leaders call for unity, bring on misery

By Sherry Bunting, Farmshine Op-Ed, July 19, 2019

Dairy producers find joy in the big and little things in life on the farm, working with family, raising children on the farm, building or continuing a family business, seeing the sun rise and set as they work, producing wholesome milk they take pride in, helping a cow have her calf, watching that calf grow and develop, planting tiny seeds, watching a crop grow.

We know personal stress on farms is at an all-time high, amid price and weather pressures. There is some optimism returning as last month’s milk checks were a bit better, and the futures markets fueled some optimism before hitting the see-saw again. Also, the first round of dairy margin coverage (DMC) checks have been received or are in the mail. (Signups for 2019 DMC end Sept. 20).

But despite the return of some optimism, stress continues to build on our dairy farms because the hole that has been dug is so deep, the ground to make up so vast, and the future sustainability of family farm businesses more challenged by the industry’s control of how they operate.

My thoughts here are based on personal meetings, phone conferences, emails and other communications with young farm families operating small herds and multi-family operations with very large herds. 

In my various work and volunteer efforts as a freelancer — I visit a lot of dairy farms. 

Even though milk prices are gradually rising, net mailbox prices are flat and costs are going up, eating into the price gains. Forages are tight, weather is an added burden, farmers are utilizing new strategies, adopting progressive practices, improving their business management – and yet, their farms and families are fraying over the question of whether to stay the course or sell the cows and leave it behind. 

Many are taking on other work and adding to their already long days with efforts to bring in income to support the farm.

Communities are feeling the long fingers, and farmers and related agribusinesses are supporting each other as best they are able. The levels of farm community unity have probably never been higher in this regard: People are coming together to promote milk through voluntary efforts, to support their neighbors, and to reach out to each other as friends and colleagues.

The industry leaders say the dairy industry must be unified. They say it is wrong to challenge the path of the industry because doing so is “depressing and divisive” and “brings more stress onto the farmers.”

Don’t challenge the system, they say, because this creates negativity and stress when farmers need to stay positive and united. This, I’ve been told by leaders.

Questions and challenges are not meant to divide or stress our farmers. The stress is already there. It may not always be spoken, but it is there, and it is visible. 

This stress cannot be painted over with pretty colors.

Stress on dairy farms today is rooted in the way this industry and various milk pricing and nutrition policies have economically failed our farmers (and our consumers), especially since 2008.

To talk about the industry’s path — to discuss and debate marketing decisions made with producer dollars — does not mean one is being divisive. This is America where ideas and challenges can still be discussed and debated, and where leaders can be questioned and held accountable.

How much more divided can an industry become than to see marriages, families, businesses, dreams fractured from the undue stress of not only a tough deal on the milk pricing but perhaps even more concerning, the increased levels of control that this same system puts upon our farmers, and how they manage their farms, as a condition to keep their milk contracts?

This loss of independence and loss of their ability to control the ‘controllables’ is of utmost concern. If we ignore these trends — in an attempt to be passively non-divisive — does that make the issue or problem go away? Certainly not.

Rapid streamlining of the dairy industry is underway, at least in part because this is the path charted in 2008 by the DMI Innovation Center for U.S. Dairy and the U.S. Dairy Export Council working via memorandums of understanding with USDA Ag Secretary Tom Vilsack who is today a DMI leader as USDEC president and CEO and instrumental in the Innovation Center for U.S. Dairy. 

Both USDEC and the Innovation Center are primarily supported by the mandatory checkoff paid by dairy farmers; but they also partner with food supply chain companies that work on proprietary products, ideas and concepts for the expressed purpose of growing the dairy sector globally.

The industry leaders tasked with spending the farmer’s 15 cents per hundredweight say raising exports to 20% (last year was 16%) is the key for a growing dairy industry.

Most notably, Vilsack reported in May that, “2018 was a record year for U.S. dairy exporters with export volume up 10% from the prior year. Simply put, exports support the growth aspirations of the U.S. dairy sector.”

Nowhere in his statement, or the entire blog post at USDEC, did Vilsack mention the dairy farmers who pay his salary. He mentions the dairy exporters and the dairy sector, but not the dairy producers.

Are exporters and sectors paying his salary of $750,000? No, not really. A small portion of USDEC is funded by ‘industry’ memberships, and importers pay a smaller checkoff, but the bulk of the agency and its CEO Tom Vilsack are funded directly from government-mandated dairy producer checkoff funds.

Where are the statements about a promotion agenda that seeks to return a fair price and livable income to those producers paying the agenda-makers salaries?

At various meetings last year where milk markets were discussed, dairy traders stated that exports do not raise farm-level milk prices. Interestingly, 2018 exports were higher than 2017 while 2018 prices paid to dairy farmers were much lower than 2017.

The direction of the dairy checkoff is toward growth of the dairy sector globally, at all costs, and yet the U.S. dairy farmers are paying the bill for this, with USDA having very close control of it.

This goal has been positioned to farmers as an all-out race to gain global market share before other countries do it, without a methodical approach or review on the impact to domestic markets and producers along the way.

This global agenda is also steering the sustainability frameworks and alliances DMI’s Innovation Center is forming that will control more aspects of management at the farm level in the future.

In recent proof of conversations between farmers and checkoff staff and board members, questions about Innovation Center projects, alliances and partnerships were passed off as though the board receives its information on these projects on a “need to know” basis. A board member stated in these exchanges that they are not concerned with seeing every detail of a proprietary project because DMI’s attorneys and USDA’s attorneys know the details, and the board trusts the staff.

(I have served on boards elected by citizens. Trust in staff is critical, but so is transparency of projects paid for by a checkoff — the same as a school tax.)

For some, a call for unity means don’t ask questions. For others, it means get informed and start mobilizing a grassroots unifying effort.

In a copy of non-executive February DMI board minutes received by Farmshine, a strategy is detailed by the Farmer Relations and Consumer Confidence Committee. According to the minutes, a key discussion at the February 19-21 board meeting was stated as “farmer engagement around checkoff value is more important than ever before.”

A key bullet point was for national and local checkoff board members to “focus on the movable middle.”

Another bullet point of the discussion in the minutes is that DMI is “learning from the checkoff Facebook page and regional media coverage (Farmshine) reinforcing that you do NOT continue to engage with those detractors that cannot/will not be moved.”

While Farmshine was still seeking answers to questions and had not yet published the DMI chair’s letter of response (published Feb. 21), DMI had already taken a position in its Feb. 20 board discussion to “not engage” with detractors, mentioning Farmshine parenthetically by name in this category.

According to the minutes, the rest of the DMI board discussion on this topic centered on the need to “reach out to those farmers who see/hear from the unmovable detractors” (that would mean Farmshine readers as per the above). According to the minutes, “ways to reach the movable middle” were discussed.

So, while organizations chart a course for unity and reaching out to a movable middle, dairy farm families are focused on finding ways to move forward on their farms and to unify and inform their communities.

Even though our legislators are taking notice of the growing crisis — and some sincerely care and are trying to do something — these stopgaps and investments are a drop in a very large bucket. Those drops are appreciated, but there are big things to tackle that require courage when it comes to the needed changes in nutrition rules, checkoff rules, promotion rules, labeling rules (and also lack of standard of identity enforcement), complex milk pricing rules (while processors and co-ops are readying a proposal for their make allowance increases as soon as prices improve a bit), not to mention rules that impact the cost of doing business every day on the farm.

As dairy farm families keep moving forward, finding ways to do more with less, working longer hours with less help, taking on off-farm employment and finding other revenue streams to pay their bills — They are consequently burning the candle at both ends and incurring more stress.

The stress on farms of all sizes can be overwhelming and is felt by even the best operators.

We do need unity, yes, but the question farmers are asking themselves is: Who will be part of dairy’s unified and globalized future? They deserve to know the direction the organizations they fund are taking their product, their market, and the industry they have supplied with wholesome milk for generations.

We can do better than this in America where agriculture truly is our backbone. Without strong farm families, all else fails eventually, including our liberty and security as a nation. 

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Vilsack reveals ‘Net-Zero Project’ in Senate testimony, Climate policy table set

Vilsack lays out plan for USDA to partner in ‘Net Zero’ pilot farms, using results to set governmental policies and incentives

By Sherry Bunting, Farmshine, May 24, 2019

(Above) DMI’s checkoff-funded Innovation Center for U.S. Dairy was formed in 2008, the year Tom Vilsack became U.S. Secretary of Agriculture. This timeline shows the events from 2008 to 2019 around the Innovation Center, sustainability programs, FARM program and various MOU’s with USDA while Vilsack was Secretary and after he became president and CEO of U.S. Dairy Export Council in 2017. 

WASHINGTON, D.C. — FARM program evaluations over the past few months have yielded reports from dairy producers on new questions they are being asked about their feeding practices and usage, nutrient management plans, manure management systems and cropping practices, feed rations by class of cattle, livestock and feed inventories on the farm and heifer inventories raised off the farm, milk receipts and receipts for cattle sold for beef purposes, energy and fuel usage and costs, specific questions about wetlands on farm properties as well as new questions about human resources.

Over the past two years, the National Dairy Farmers Assuring Responsible Management (FARM) has added new ‘silos’ to the 4-part program. In addition to Animal Care, the newer portions are Environmental Stewardship, Antibiotic Stewardship, and Workforce Development. With all four in place, virtually every management aspect of a dairy farm falls under the FARM umbrella.

The FARM program is funded by the mandatory dairy checkoff through DMI’s Innovation Center for U.S. Dairy. FARM is administrated by National Milk Producers Federation (NMPF).

98% of milk enrolled

According to its 2018 Report, 98% of the milk produced in the U.S. is enrolled in FARM. The Animal Care silo is mandatory for all 115 participating cooperatives and processors, and 20 of the 115 adopted the Environmental Stewardship module by the beginning of this year.

Development of the Environmental Stewardship (ES) module began at FARM’s inception in 2009 but did not become a ‘silo’ in FARM until 2017. The FARM website states that this portion is currently “voluntary for program participants.”

This simply means that the 115 cooperatives and processors that are participating in FARM can voluntarily add the ES module. When added by the participating cooperative or processor, the components of the module become — in effect — mandatory for the farms.

The FARM materials clearly state that FARM is not a legal document. And yet, its modules have expanding levels of authority beyond a milk shipper’s legal milk contract obligations, without expanding compensation.

FARM’s Environmental module was developed, according to the 2018 annual report, as “a tool participants (co-ops and processors) can use to communicate progress towards reducing their carbon and energy footprint.”

The report says further that the Environmental portion of FARM is geared toward assuring dairy customers and consumers of the dairy industry’s commitment to “ongoing environmental progress (by) asking a set of questions to assess a farm’s carbon and energy footprint and then providing farmers with reliable, statistically robust estimates.” It also “tracks advances in dairy production efficiency.”

The questions and data are evaluated based on a life-cycle assessment (LCA) of fluid milk conducted by the Applied Sustainability Center at the University of Arkansas, incorporating modeling piloted on 500 example dairy farms across the country.

Checkoff-funded GHG calculator

This LCA development was launched in 2009 at the inception of FARM. By 2010, the greenhouse gas (GHG) LCA was completed, and by 2012, the comprehensive environmental LCA was completed. The program’s ‘Farm Smart’ tracking tool was piloted on the ‘model’ farms in 2013-14.

Farm Smart became a transitional tool in 2016 during a period of analysis, replication, system testing and piloting. In 2017, the FARM program added the Environmental module and began using this ‘Farm Smart science’ to establish the GHG calculator.

FARM environmental audits

For those producers who are being asked these new questions during their FARM evaluations in the past few months, their answers are recorded, and farm data are entered into a spreadsheet, from which annual Environmental audits will be randomly selected.

A video at the FARM website explains the process evaluators use to enter the farm name, zipcode and most recent daily milk shipment in pounds of fat and energy-corrected milk.

The spreadsheet automatically groups these farms by 3-digit zipcode and automatically ranks them within their geographic area by production quartiles — the top 25% of farms with the largest daily milk shipments are in quartile 1 and the smallest 25% are in quartile 4 with the other two quartiles automatically segregated.

Another built-in formula then sorts the farms by 3-digit zipcode and then by production quartile to break out ‘subset’ lists from which 33% of each subset will be randomly selected for annual audits.

Evaluators are told in this training video that the information they are collecting is “purely informational and will be used by National Milk Producers Federation (NMPF) at a later time.”

So, as FARM evaluators come to the dairy farm, ask new questions and record new information to develop profiles of farms to run through a Farm Smart GHG calculator, the tracking of the milk supply is well on its way.

This tracking eventually becomes a point of oversight and internal regulation to reach the goals set by the checkoff-funded DMI Innovation Center for U.S. Dairy.

Checkoff sets GHG goals

During a Senate hearing on Agriculture and Climate Change this week (May 21), former USDA Secretary and current president and CEO of the checkoff-funded U.S. Dairy Export Council stated that “U.S. Dairy” is “on pace” to meet its goal (set while he was Secretary in 2009) of reducing GHG by 25% by 2020.

Vilsack also announced that the new benchmark set by DMI’s Innovation Center for U.S. Dairy is net-zero emissions (by 2030).

When introducing Vilsack at the hearing, the Senate Ag Committee leadership referred to him not only as the honorable Secretary, but as president and CEO of the dairy “exports and innovation.”

The former Ag Secretary in his current role is instrumental in DMI’s Innovation Center for U.S. Dairy as this entity partners with multi-national corporations operating global supply chains sourcing dairy products and ingredients.

In fact, Vilsack spent much of his time in front of the Senate Ag Committee Tuesday pressing for government support and partnership in setting up pilot farms where all technologies for meeting the net-zero benchmark can be “measured, verified, cost-assessed and then marketed.”

He said the dairy industry needs a “showcase” of pilot farms and ecosystem markets, and he said business opportunities and jobs will follow. Vilsack also indicated that a net-zero achievement is necessary so “U.S. Dairy has a marketing advantage to be competitive in global markets.”

In the past, the ‘showcase’ dairies for the various pursuits of DMI’s Innovation Center for U.S. Dairy, have included Fair Oaks, and Mike McCloskey of Fair Oaks, based in northern Indiana has been a key driver in DMI’s Innovation Center for U.S. Dairy, headquartered an hour or so north in Chicago. The Innovation Center also provided funding for fairlife as a startup over the past decade of these developments.

Vilsack involved from inception

The Innovation Center for U.S. Dairy was implemented by DMI in 2008. The FARM program came under that umbrella in 2009. Both the GENYOUth and the Sustainability Memorandums of Understanding (MOU) were signed by DMI and USDA in 2009 and 2010 near the beginning of Vilsack’s 8-year tenure as Secretary. And, in 2010, DMI’s Innovation Center set a goal to reduce the already tiny carbon footprint of dairy by 25% by 2020. As now DMI employee Vilsack testified Tuesday, the Innovation Center’s new goal is net-zero by 2030.

In fact, in the final days of the Obama administration, on January 13, 2017, former Secretary Vilsack stepped from the office of the USDA Secretary on Independence Avenue, Washington D.C., and just 11 days and 4 miles later on January 24, 2017 stepped into his current office as president and CEO of the checkoff-funded U.S. Dairy Export Council, sharing offices with National Milk Producers Federation (NMPF) on Wilson Boulevard, Arlington, Virginia.

As noted, the dairy checkoff — under the increased guidance of the Edelman public relations and marketing firm — started down this road in 2008 with the formation of the Innovation Center for U.S. Dairy and the close working relationship with Vilsack while he was Secretary of Agriculture.

Through the MOU’s signed with USDA at that time, it is clear that DMI and its fledgling Innovation Center for U.S. Dairy was working closely with the USDA for all eight years Vilsack was Secretary and has carried the same direction and workload over to his employment with DMI in continuing to set benchmarks for dairy ahead of the current anti-cow discussions that have percolated over that same time within federal agencies through the influence of activist non-governmental organizations.

The DMI Innovation Center partnership with World Wildlife Fund became solidified in 2016, as Vilsack’s term as Ag Secretary was expiring.

Barely two years into his employment through dairy checkoff, Vilsack is back before the Senate Ag Committee talking about net-zero emissions, pilot farms, ecosystem markets and other concepts that align with the Green New Deal outlook on cows as a problem that needs to be solved by meatless Monday and have its methane button turned off in order to be acceptable in the EAT Lancet world where billionaires have invested in the replacement technologies of fake meat and fake dairy while simultaneously investing in U.S. global policy initiatives that were initiated while Vilsack was Secretary and were referenced by Senator Bob Casey (D-Pa.) during Tuesday’s hearing (that’s another story).

Again, instead of partnering with the private sector and organizations that understand the already small emissions of cattle when looking at the complete carbon cycle, dairy checkoff has aligned with groups like the World Wildlife Fund (WWF) and companies with technologies that are geared toward capturing methane and achieving net-zero GHG emissions.

This all sounds good, right? But what does it really amount to?

Net-zero by the numbers

The current benchmark set by DMI and USDA via the MOU in 2009-10 set the goal of reducing U.S. Dairy’s GHG by 25% by 2020. U.S. GHG inventories — according to the Environmental Protection Agency (EPA) — show that total agriculture accounts for 9%. Dairy and livestock, combined, account for half of agriculture’s contribution at 3.9%. Dairy, alone, is at 1.9% on its way, presumably, to 1.5% by 2020.

Even at that point, 25% of 2 is a savings of 0.5% of total U.S. GHG. Part of the FARM program’s tracking of GHG is to look at the number of animals culled for beef so that a portion of their GHG calculation can be pushed over onto the beef footprint and out of the dairy footprint. Can we see how the minutia goes on and on over tiny fractions of impact vs. standing tall to tell the true story about how small the cow’s impact really is?

Vilsack (above): ‘It’s time to get to net-zero’. Mitloehner (below): ‘Cattle do not increase global warming’.

Methane facts vs. fiction

Scientists are pointing out how the methane focus on cattle is being misplaced, or at least not evaluated properly. They point out in a new report that methane is a ‘flow’ emission, not a ‘stock’ emission. In other words, it doesn’t stick around or build up.

Slightly muted Tuesday was the expert testimony given by Dr. Frank Mitloehner, world renowned GHG expert and professor at University of California – Davis. He separated fact from fiction on the carbon footprint of livestock and dairy.

More importantly, he described methane, which is the main GHG of concern for agriculture and especially livestock and dairy. He explained how methane differs from the other two greenhouse gases – carbon dioxide and nitrous oxide – that together make up total GHG.

“For example, carbon dioxide lives for 1000 years, once we emit CO2 with our vehicles, let’s say, it stays there for 1000 years, same for nitrous oxide,” Mitloehner testified. “But methane is very different… with a lifespan of only 10 years.”

He described how a 1000-cow dairy after 10 years, for example, is no longer an emitter of new methane because the methane emitted is also being destroyed at the same rate, becoming part of the carbon cycle through plant photosynthesis, ruminant consumption of these plants and so forth on a continuum.

He explained this destruction process – hydroxyl oxidation – that “occurs constantly,” saying that, “Any kind of discussions that I am part of is a discussion where that fact is left out, and it shouldn’t be left out because it’s critical.”

In fact, Senator Joni Ernst of Iowa said “Some of us are pretty struck today because we have heard that methane is horrible, we need to reduce our livestock herds, and we should have meatless Mondays. We’ve heard that time and time again. It’s been done in various federal agencies in past administrations.”

Mitloehner pointed out that while methane is an important climate pollutant and almost 30 times more potent than CO2, “If we maintain constant livestock herds and flocks, then we are not increasing methane and therefore not increasing global warming as a result of that.”

In that context, mitigating methane becomes a tool to counteract global warming, which is a different discussion and one that gives the methane mitigation a valuation for potential compensation.

Surprisingly, Mitloehner’s contribution received far fewer questions from Senators than one would expect. Most of the Senators gave Vilsack multiple opportunities to come back to his theme of driving dairy and agriculture to net-zero and the business opportunities and marketing advantages this would provide for “U.S. Dairy” in global markets.

Meanwhile, a growing number of scientists are agreeing with a more realistic perspective on methane, that a more ideal approach would be aimed at zero emissions for stock pollutants that are long-lived such as carbon dioxide (through a combination of energy efficiency, more food per lower energy inputs and carbon sequestration through crops, grasses and forages) while aiming for flow pollutants like methane to be low and stable instead of zero because methane is short-lived and part of a continuous sun-powered carbon cycle in which cows are already an integral part on the positive side.

GHG tracking

With dairy farms representing 1.9% of total U.S. GHG and the transportation sector representing 80%, who is then calculating the GHG impact of transportation in a consolidating industry where the new term coined by Vilsack of ‘ecosystem markets’ substitute on a larger scale for the ‘environmentally-friendly’ concepts of regional food systems and eating ‘local.’

On the methane tracking in this deal, a split in thought processes is beginning to emerge.

Meanwhile, the Innovation Center for U.S. Dairy — and its birthing of the FARM program — provide the vehicle to meet the net-zero benchmark this checkoff-funded entity has set. The pilot farms the former Secretary wants the government to partner in supporting would develop another template of practices and technologies farms can implement to meet new Environmental FARM criteria so the net-zero benchmark can be met and marketed over the next 10 years.  

While achieving, marketing and capitalizing on net-zero emissions sounds great, what does it mean for all of the farms being forced to pay into the dairy checkoff with expectations that this money is for promotion and research of the milk they produce and the care they have always taken of the resources they steward?

When benchmarks, streamlining vehicles, government cross-over specialists, evolving science, assumed needs and fuzzy baselines, converge and align, where does this leave the single-family farm of 50 to 200 cows or multi-generational dairy farm of 300 to 1500 cows?

Will they be credited for destroying as much methane as they produce by keeping their herds fairly stable in size?

Without the financial incentives or compensation to implement template technologies to achieve net-zero, how will their tiny profiled-and-tracked GHG emissions be handled in FARM Environmental Stewardship audits and mandatory correction plans in 2020, 2025, 2030?

The drive toward installation of methane digesters to actually capture the methane is great science, and it works for some farms, but not others. It’s a pathway to net-zero, and yet it is unclear whether these other factors regarding methane will be highlighted in the Farm Smart GHG calculator developed by the DMI Innovation Center for the NMPF FARM implementation. Once in place, this GHG calculator will track dairy farm GHG progress as their cooperatives and processors add the Environmental ‘silo’ to the FARM requirements of shippers.

From Innovation Center documents and USDA MOU’s and WWF partnerships documents, the descriptions of the work done between 2010 and 2016 on the GHG calculator have a tracking focus on the same thing the anti-cow folks are focusing on, and that is methane’s 30-times greater heat-trapping capabilities compared with carbon dioxide, and totally ignoring the fact that the methane is short-lived at 10 years vs. carbon at 1000 years so the livestock and dairy industries have already dramatically reduced methane by having fewer animals producing more food today than 30 and 40 years ago.

Will appropriate credit be given to small and mid-sized dairy farms that have had modest growth rates over decades or generations putting them in a place of zero new methane? Or will they need to capture methane to satisfy the net-zero benchmark their checkoff program has set in order to make space for new cows to be added in the rapid growth and industry consolidation areas of the country?

In fact, as part of a flow pattern that involves plants (feed) and cows in reducing the GHG heat-trapping potential of carbon dioxide and methane, combined (see fig. 2), what’s newsworthy is  science does support more accurate modeling to credit the sequestration of long-lasting carbon and accounting for short-lived methane destruction.

On methane, Dr. Mitloehner stated that the mere fact that there are 9 million dairy cattle today compared with 24 million in 1960 and producing three times more milk shows that dairy producers are collectively not only emitting zero new methane, they are reducing total methane as old methane and carbon are eradicated by the carbon cycle and less new replacement methane is emitted.

The problem may be this: Year-over-year cow numbers for the U.S. creeped higher from 2014 to 2018 before backing off a bit in 2019. While still much lower than three or four decades ago, the issue emerging for DMI’s Innovation Center for U.S. Dairy is how to accommodate growth of the new and consolidating dairy structures to attain the expanded global export goal if dairy farms in other areas remain virtually constant in size or are grow modestly by comparison.

To reach the Innovation Center’s new net-zero goal, cows would have to leave one area in order to be added in another area, or they will all have to have their methane buttons turned off or the methane captured because now the emissions are being tracked in order to meet one collective “U.S. Dairy” unit goal under the DMI Innovation Center and NMPF / FARM. Dr. Frank Mitloehner testified that dairies already create zero new methane but this can be tricky when cattle move from one area to another (as we see in the industry’s consolidation).

Will all dairy farms have to get to net-zero to survive over the next 10 years under the GHG calculator developed by the checkoff-funded Innovation Center, which has now been added to the FARM program? That’s the big question.

Before the Senate, Vilsack repeatedly went back to his main premise that the Net Zero Project is  “critical for U.S. dairy.” His written testimony specified that the Net Zero Project comes out of the collaborative work of several dairy checkoff-funded entities along with various global dairy food companies, including DMI’s Innovation Center for U.S. Dairy in combination with DMI-funded U.S. Dairy Export Council, and checkoff-supported Newtrient LLC, as well as an industry consortium called the Global Dairy Platform.

According to Vilsack, the Net Zero Project presents a  “global marketing advantage for U.S. dairy,” he said.  “This is how U.S. Dairy will compete.”

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Timeline tells the story

Consumer ‘trust-building’ (or activist placating) becomes heavy-hand on the farm

By Sherry Bunting, from Farmshine, May 10, 2019

BROWNSTOWN, Pa. — Dairy promotion has been an organized deal for over 100 years, since the formation of the National Dairy Council in 1915. It’s an understatement to say times, they are a-changing.

There’s a difference between reacting to change and being proactive to get ahead of “the next thing.” And there’s a fine line between being intuitive and proactive to influence the direction of that “next thing” as compared with charting a course that actually positions an industry to require its dairy farmers to implement x-y-and-z in order to sell milk.

Yes, it’s better to be at the table than to be the meal carved on the table by others. But when dairy producer checkoff funds — paid by all dairy producers — are used to launch products that benefit only some producers in more vertically-integrated processing structures or to launch programs that lead ultimately to requirements that determine who can sell milk, those are red flags.

As the accompanying timeline illustrates, a lot has been going on since DMI was established in 1995 to manage the checkoff and develop unified marketing plans. That was also the year the U.S. Dairy Export Council (USDEC) was created.

What is even more apparent is the proliferation of logo’d programs, initiatives and strategies put forth since the 2008 creation of the Innovation Center for U.S. Dairy. This followed closely on the heels of the U.S. Supreme Court decision protecting checkoff speech as “government speech” and insulating the dairy checkoff from future court challenges in terms of the rights of producers paying the checkoff and the ability of outside organizations to challenge dairy promotion messages.

The formation of the Innovation Center for U.S. Dairy brought the processing, manufacturing and other industry sectors within the inner circle of checkoff promotion, education, and ‘streamlining’ strategies. Unification of the dairy industry is a worthy goal from a marketing perspective; however, there is a fine line between streamlining and steam-rolling, and it is important to pay attention to this because these efforts are dairy-producer-checkoff-funded and should therefore benefit — and certainly not harm — all producers paying in mandatorily.

DMI’s Innovation Center is where GENYOUth was born. Under the legal non-profit name of Youth Improved Incorporated, GENYOUth aligns with USDA dietary policy.

In fact, the Innovation Center is the entity from which two Memorandums of Understanding were signed with USDA, one involving GENYOUth and the other involving the Dairy Sustainability Guidelines and Framework.

The Innovation Center is also where new products are born, like fairlife, deemed the dairy checkoff’s fluid milk “success story.” Others are following suit (like the July launch of DFA’s Live Real Farms half dairy / half almond or oat ‘milks’ aka Dairy + Almonds and Dairy + Oats).

The Innovation Center is also where producer checkoff dollars fund the National Dairy FARM program (Farmers Assuring Responsible Management) program and its three sectors by which dairies are increasingly controlled: Animal Care, Environmental Care, and Workforce Development.

While FARM is administered and managed by National Milk Producers Federation (NMPF), it is funded by DMI via dairy producer checkoff monies. According to the FARM program website, 98% of U.S. milk production is “enrolled” in FARM (via processors and cooperatives).

We are seeing evidence that the animal care portion — and in the not too distant future the sustainability and employee care portions — are being implemented with ever-increasing mandatory authority. FARM can now over-ride Veterinary Client-Patient Relationships, federal and state regulatory milk inspections and affect legal contracts to sell milk.

What started as a voluntary program to help farms improve while demonstrating to consumers the ways in which dairy farms care for animals, environment and employees, is morphing today into a mandatory auditing and probation tool with as much or more power as legal contracts and food safety inspections.

The Innovation Center for U.S. Dairy is also the entity where producer checkoff funds are used to develop Sustainability Guidelines, Frameworks and Alliances, which are leading to goals, benchmarks, and now practices. These developments are in the staging process to become mandatory as part of the increasingly “regulatory” approach of the producer-checkoff-funded FARM program.

We got a glimpse of the direction of DMI on “sustainability” in a 2018 Report by DMI CEO Tom Gallagher.

Among the “five keys to building and maintaining consumer and thought-leader trust” outlined by Gallagher in a 2018 report, global nutrition policy and sustainability ranked at the top.

On the global nutrition side, DMI seeks to “work with external groups that are educating the United Nations on what policy should look like,” Gallagher reported. He also linked the 2020 U.S. Dietary Guidelines now being evaluated by a USDA-appointed committee to being the “guidelines that will ultimately focus on how we will achieve the 2030 Sustainable Development Goals.”

He noted that Dr. Greg Miller, head of the science and research of the National Dairy Council, is involved in global discussion to “help U.S. Dairy remain a key player as dietary and sustainability standards are worked out.”

As part of this, Gallagher mentioned the Global Sustainability Framework and Reporting, developed under the Innovation Center for U.S. Dairy and now being made part of the FARM program. “A unified voice that represents the entire dairy community is essential to reinforce consumer trust. This has been core to our programs, through organizations such as the farmer-founded Innovation Center for U.S. Dairy,” said Gallagher in the 2018 DMI Report.

“As the dominant dairy community organization for the U.S. market, the Innovation Center will use the Dairy Sustainability Framework (DSF) to demonstrate global leadership in sustainable food systems,” he said. “The DSF was developed to provide overarching goals and alignment of dairy’s actions globally on the path to sustainability.”

Part of the Innovation Center’s path in this way is its partnering alliance with World Wildlife Fund (WWF) in developing the DSF.

“The DSF will enable Dairy to take an all-encompassing approach to sustainability through a common language and alignment of international activity,” said Gallagher, “and through this generate a common sustainability commitment that can be expressed at global, regional, national and organizational levels.”

These are Edelman-style techniques for building consumer trust. Edelman is the Chicago-based firm with offices worldwide, that has been working for DMI for 20 years, and increasingly over the past 10 years.

In fact, Edelman developed the Undeniably Dairy campaign, which DMI leadership has stated on record is designed to be a new seal for dairy products in the future. DMI states that the goal is to replace the REAL Seal that used to be owned by ADA / UDIA and then DMI but is now owned by NMPF.

The Innovation Center, via DMI, is also part of a relatively new initiative called Newtrient LLC, focused on sustainability, and in particular, manure management systems with a heavy emphasis on methane digesters.

According to its website www.newtrient.com, Newtrient LLC was founded in 2015 by 12 dairy cooperatives — DFA, Land O’Lakes, Maryland-Virginia, Select Milk Producers, Agri-Mark, Darigold, Prairie Farms, Michigan Milk Producers, Southeast Milk, Tillamook, United Dairymen of Arizona, and Foremost Farms. At its website, under “Dairy Leadership”, the logos of these co-ops are shown, and the explanatory paragraph states the ground-floor involvement of Dairy Checkoff and it goes this way:

“Newtrient’s founding entities include leading dairy cooperatives from across the U.S. representing nearly 20,000 dairy farmers — and producing one-half of the nation’s milk supply — as well as the two associations that advance the entire dairy industry in terms of promotion, research, education, innovation, issues management, international trade and public policy,” the statement reads. Though not named, the description of the two associations at the end of that sentence would be DMI and NMPF.

“These organizations recognize the need to bring manure management technologies and providers together with dairy farmers, researchers and other stakeholders in order to seize the opportunities from manure, while supporting environmental sustainability,” the statement reads.

In a sense, the Dairy Checkoff continues doing promotion, education and research, but is morphing with increased momentum since 2008-09 toward developing the unified voice and streamlined template by which dairy farmers will be measured for future participation in milk markets.

The Innovation Center for U.S. Dairy works like an “incubator” hatching new products, technologies, programs, guidelines, frameworks and strategies that not only unify the dairy industry message, but also streamline its participants.

With 98% of U.S. milk production enrolled in its premier programs, like FARM, the producer-funded direction is one that now possesses the increasing authority to mandate dairy farm practices, in some cases to a micromanagement level – all in the name of that beginning notion of building consumer trust.

The logos on the accompanying timeline tell this story.

Meanwhile, it appears that the idea of regionally-sustained dairy-sourcing is becoming diluted as Dairy Checkoff board decisions are weighted by shifting milk volume geographies.

-30-

Related links

Who is empowering whom? 1/11/19: https://wp.me/p329u7-1rG

Funding their own demise? 1/18/19: https://wp.me/p329u7-1rW

Finances raise eyebrows 2/1/19:  https://wp.me/p329u7-1sP

4th and 40 backed up to our own endzone 2/8/19: https://wp.me/p329u7-1t2

Money spent, points missed 2/8/19: https://wp.me/p329u7-1sX

How did we get here 2/15/19: https://wp.me/p329u7-1u3

Animal Ag in globalists’ crosshairs 2/15/19: https://wp.me/p329u7-1u9

‘Government speech’ rules, producers have little say 2/22/19: https://wp.me/p329u7-1uI

With science fiction, they socially herd us 3/1/19: https://wp.me/p329u7-1uO

Need for more digging is obvious 3/8/19: https://wp.me/p329u7-1v6

Keep zigging? or time to zag? 3/10/19: https://wp.me/p329u7-1ve

Should dairy farmers be forced to fund government speech?: https://wp.me/p329u7-1ve

DMI CEO on fluid milk 3/22/19: https://wp.me/p329u7-1vL

Funding real milk’s demise? 3/29/19: https://wp.me/p329u7-1vU

Peeling back the layers, 4/5/19 https://wp.me/p329u7-1wn

Truth and thoughts: a tragedy government won’t accept: https://wp.me/p329u7-1wN

Farmers bring questions to DMI chair 4/19/19: https://wp.me/p329u7-1×0

Childhood Nutrition Reauthorization in D.C. 4/26/19: https://wp.me/p329u7-1wF

Vilsack reveals Net Zero Project 5/24/19: https://wp.me/p329u7-1yf

“Government is between you and the consumer” 6/14/19: https://wp.me/p329u7-1xW

Farmers bring questions to DMI chair

By Sherry Bunting, Farmshine, April 19, 2019

GORDONVILLE, Pa. — “You are hearing the negatives, not the positives,” said Marilyn Hershey about the dairy checkoff during a meeting requested by Lancaster County dairy farmers hosted here in Gordonville on Friday, April 12.

Hershey has a dairy farm with her husband Duane in neighboring Chester County, and she serves as the national chairperson of the Dairy Management Inc. (DMI) board.

Approximately 12 of the expected 30 farmers attended the meeting with a range of topics on their minds, in particular fluid milk sales and whole milk promotion.

Hershey got involved in dairy promotion eight years ago, serving first on the National Dairy Board, then becoming vice chair of DMI, the board that combines various boards, before becoming chairperson two years ago. National Dairy Board has term limits, whereas the DMI board does not.

Accompanying Hershey for the discussion was Harold Shaulis of Somerset County, who served 25 years on state, regional and national checkoff boards. Having sold his cows, he is no longer a board member, but helps with promotion.


After a Q&A session with farmers, DMI chairperson Marilyn Hershey supplied this graphic of how dairy consumption has increased while product share has changed from 1985 through 2018. The chart represents National Milk Producers Federation (NMPF) analysis of USDA commercial disappearance. According to USDA, the agency’s commercial disappearance figures include imports and most exports.

Shaulis said the bottom line in dairy promotion is to sell more milk. He said total per-capita dairy consumption has grown since the 1980s, even though fluid milk sales have declined (Fig. 1). He also talked about trade missions to China and Southeast Asia.

“We are in a global market. One out of six loads of milk a day is exported, and we want to see that grow,” he said.

In addition to exports, Hershey said consumers are eating more dairy products, overall. “The National Dairy Council has funded 20 years of research on butter to get it back in the mainstream. We got butter into McDonalds in place of margarine, and 80% of McDonalds’ sales have a dairy ingredient in them,” she explained as an example of DMI’s partnership strategy.

By email, after the meeting, Hershey furnished the previously requested list of National Dairy Council research we will explore for a future edition.

However, a perusal of the science summaries section of National Dairy Council’s own website, where a few summaries are available, each download is prefaced with these words: “Low-fat and fat-free dairy foods are part of the Dietary Guidelines for Americans (DGA) and American Heart Association (AHA) dietary recommendations. You can download our full report, which shows further support for consuming low-fat or fat-free dairy foods as recommended in the 2015 DGA.”

The website also talks about “nourishing communities,” about farm animal care and sustainability measures (FARM program) adopted and funded by checkoff dollars that tie in with the low-fat and fat-free dietary theme.


This screenshot of the landing page for the Undeniably Dairy campaign’s website (https://www.discoverundeniablydairy.com/) illustrates the nourishing communities theme that DMI chair Marilyn Hershey says targets “conflicted health seekers.” She also said: “We want Undeniably Dairy to replace the Real Seal. That is the goal.”

Undeniably Dairy replaces Real Seal

Cross-referenced to the National Dairy Council website is the Undeniably Dairy campaign. Hershey said this promotes positive messages to targeted audiences with school curriculum and through social media.

At this website, the “nourishing communities” theme continues as well as the reinforcement of low-fat and fat-free dairy.

Hershey provided a handout on Undeniably Dairy and said: “We are targeting the ‘conflicted health seeker’ with four messages: Responsibly produced, nutrient rich, locally driven, real enjoyment.”

More interesting is where DMI wants to take the campaign.

“We want Undeniably Dairy to replace the Real Seal. That is the goal,” said Hershey. “We are combining MilkPEP’s ‘Love What’s Real’ campaign with our Undeniably Dairy campaign.” 

The Real Seal was previously owned by UDIA / DMI, but it is now the property of National Milk Producers Federation (NMPF). The Real Seal can only be used on milk and dairy products that contain real dairy ingredients, no imitation dairy ingredients and are made with milk produced and processed in the USA.

This posed a problem for DMI, since importers must pay a small checkoff fee for dairy promotion, so the dairy checkoff stopped promoting the Real Seal and came up with Undeniably Dairy two years ago.

Hershey fielded questions about the requirements for using the Undeniably Dairy Seal. How might those requirements differ from the Real Seal? She did not have the specifics and promised to get back with those details.

In the schools

Fielding questions on the school breakfast carts, Hershey explained that GENYOUth is the umbrella organization, and Fuel Up to Play 60 (FUTP60) is the boots on the ground.

“We don’t just have a foot in the schools, we are IN the schools,” said Hershey. “Companies would love to have what we have in the schools.”

The Northeast program is strong because there are seven football teams here so the program can affect a large number of kids in the Northeast, according to Hershey.

Asked what is on the breakfast carts, she said: “Yogurt, cheese, milk, fruits and vegetables, and some have smoothie machines.”

She said the Grab N Go Breakfast Carts have ice packs to keep the milk cold. She also stated that every dime ADA Northeast sends in to GENYOUth is returned to the Northeast region to fund FUTP60 and breakfast carts as well as other foodservice equipment grants to schools. (See ADA Northeast 2017 Annual Report here)

Hershey confirmed that the GENYOUth Gala raises more money than it spends by getting funds from other donors to buy more carts. She explained, as previously reported in Farmshine, that PepsiCo gave $1 million to translate FUTP60 into Spanish and pay for more breakfast carts. She said PepsiCo made a large 2018 commitment to the program, and that’s why PepsiCo recognized with the Vanguard Award at the 2018 Gala.

“We buy the carts, and we have multi-year contracts with the schools to keep milk on the carts,” said Hershey.

Acknowledging that the milk provided is fat-free or 1%, she stressed that, “As independent dairy producers, we can advocate for whole milk, but DMI, FUTP60, and GENYOUth cannot influence policy,” she explained.

“You have to go to your co-ops and Farm Bureau and G.T. Thompson to get that done. We can’t do it,” said Shaulis.

What we can do is put out our research and promote research,” said Hershey.

Shalis said the FUTP60 breakfast carts “absolutely sell more milk.”

He reported that 95,000 more children participated in school breakfast in 2018 compared with 2017. “That’s 95,000 more servings of milk since they have to take a milk.”

“But do they like it?” asked one farmer.

Hershey quickly replied: “It doesn’t matter if it’s 3%, 1%, 2% or 0%, they are getting the same nutrition. Even though they are not getting the fat content, they are getting the nutrients.”

A discussion of fat-soluble nutrients and bioavailability of nutrients ensued.

When asked if DMI, yes or no, believes 1% and fat-free milk are equal to whole milk, Hershey said: “We have no control over what we serve or promote in the schools. With that carton of 1% milk, we want children to know they are getting the nutrition, we can’t address the fat.”

When asked what DMI can do about 20-plus years of having the low-fat diet-heart hypothesis “forced on us,” Hershey’s reply was that, “It took 20 years to get here and it will take a while to turn it around.”

She informed the group that the American Heart Association has already written a letter to Congress signed by 18 health organizations protesting the House Bill 832: Whole Milk for Healthy Kids Act.

“They are against the bill, so there is a battle in front of us,” Hershey said.

On the positive side, Hershey said farmers can thank Dr. Greg Miller, global chief science officer for the National Dairy Council, for his use of the research on full-fat dairy. She also said dairy farmers can thank the dairy scientists in each partnering company’s kitchen as DMI develops new products for Pizza Hut, Taco Bell, Domino’s and McDonalds.

Beyond the fat

“Lots of things with school milk need changing, not just the fat,” said Hershey as she dove into the innovations side of DMI’s strategy.

“I appreciate that the fat content is your focus, but it has to be the right temperature, delivered correctly and packaged correctly,” she said. “We are working on this with processors.”

She said that giving high school teens the same packaging as kindergarteners doesn’t fly. She cited research showing that when schools switched from paper cartons to plastic bottles, milk sales grew by double-digits in the first year, and waste was down by 20% in those schools.

“Kids want to drink their milk from a bottle because that’s how they drink everything else,” said Hershey, noting that Rick Naczi, executive director of ADA Northeast, pointed this out at a fluid milk meeting DMI had in Chicago in February.

“School milk got a lot of discussion there,” Hershey reported. “But, let’s not get lost in this whole milk point. There is a huge price difference (between whole milk and 1% or fat-free), and school contracts are lost by one-quarter of a penny per carton.”

Some of the farmers in attendance said that didn’t matter unless other beverages can compete for those contracts. The bottom line would be whole milk going into the schools.

Time was also spent talking about the trend toward smaller containers and ultra-high temperature (UHT) pasteurization. “All the milk in Europe is UHT, and it tastes good,” said Shaulis.

Some of the farmers in the room disagreed, sharing their concerns that UHT leaves a less valuable product nutritionally and in flavor. To which, Hershey and Shaulis said the entire food industry is going that way, and there’s nothing they can do about that.

“What we have to try to do (in promotion) is stand by the value milk has and promote what we are able to promote,” said Hershey.

She shared figures showing that overall fluid milk sales represent 18% of total milk production: “79% of consumers are not eating meals as a family. Everything is grab and go. That’s where we need to be,” said Hershey. “We have to meet consumers where they are with our innovation and packaging.”

Citing fairlife, she explained how “that product came through our fluid milk committee, and now others are following. Darigold has a new high protein ‘fitness’ drink. DFA has a couple things coming out under the Live Real Farms label. Kroger and Shamrock are coming out with beverages – all this year. These products have a lot of milk in them,” she said.

Farmers learned that these new products are not Class I products. They are largely Class II.

“We partner on these products,” said Hershey. “We give money for research. They do the product research. We only contribute to the research to try and get the innovation out there in order to survive.”

“We gave up on selling milk. ‘Got Milk’ did nothing,” Shaulis added. “Generic milk advertising doesn’t work.”

Farmers wanted more statistics to back up this claim, and they referenced the overwhelming reaction among consumers to the 97 Milk Baleboards and campaign done voluntarily at a grassroots level, starting in Lebanon County, Pennsylvania with signs and baleboards now in five states and spreading nationwide and internationally through the website and social media.

Hershey did share the news that retail data show whole milk sales grew more in the first quarter of 2019 than the already higher whole milk sales in 2018.

She later sent an email stating that in the Northeast, retail sales data show 40% of fluid milk sales are coming from whole milk sales. She also reported that, nationally, whole milk sales as a percentage of total fluid milk sales rose from 29.7% in 2014 to 39.3% currently.

As one farmer noted, “DMI has done a good job promoting cheese, what we are asking for is more focus on fluid whole milk than we are seeing now.”

Farmers were concerned that if they continue to be forced to pay into a checkoff program that represents their market less and less, what does the future hold for them?

Hershey had explained that the national checkoff boards are represented geographically by milk volume.

Some wondered if making the checkoff voluntary would allow them to put money into promoting local whole milk, and to take on the imitations head-to-head without the restrictive oversight of USDA.

“It’s all or nothing. That’s how the whole world of checkoff programs work,” said Shaulis. “These farmers on the board look at every penny spent, and they look at what is best for the industry while regions look at what is best for their region.”

To be continued.


DMI chairperson Marilyn Hershey and former board member Harold Shaulis met with dairy farmers for a question-and-answer session in Lancaster County, Pennsylvania on Friday, April 12. Hershey explained that DMI, the board she chairs, combines the National Dairy Board and the UDIA board. In this way, DMI brings together the national 5-cent spending with the portion of the 10 regional cents that is brought into national efforts under the unified marketing plan.

Peeling back layers of dairy checkoff report to Congress

The 2016 report touts a $5 to $1 return, but here is a deeper look. More transparency needed, sought

By Sherry Bunting, Farmshine, April 5, 2019

WASHINGTON, D.C. — USDA released the 2016 Dairy Checkoff Report to Congress on April 1, and it focuses on quantifying the return dairy farmers received for their 15 cents per hundredweight — over $320 million collected annually — in mandatory checkoff investment.

Well, not really.

The headliner is that farmers received a $5 to $1 return on their promotion dollars. But let’s look a little deeper.

The $5 to $1 return is an evaluation made by the independent analysis of Texas A&M based on the dollars spent on “demand enhancing” and “promotion” activities, not a return on investment calculated on all dollars mandatorily invested by dairy farmers.

Digging into the charts, this puts the evaluated dollars at around $250 million, and that includes the processor funds in the MilkPEP program. The total dairy farmer checkoff of 15 cents per hundredweight amounts to $320 million annually and the MilkPEP processor funds are close to $94 million annually, according to the report.

Meanwhile, a bipartisan bill was introduced in the U.S. Senate to bring transparency to checkoff programs for all farm commodities. The bill — Opportunities for Fairness in Farming (OFF) Act — was reintroduced a week ago by U.S. Senators Mike Lee (R-Utah), Cory Booker (D-N.J.), Rand Paul (R-Ky.) and Elizabeth Warren (D-Mass.).

According to an advocate of the bill — the Organization for Competitive Markets (OCM) — the OFF Act would put an end to the “most egregious abuses” committed by the boards and contractors of the federally mandated commodity checkoff programs.

OCM states that, “Checkoff programs have fallen under the control of commodity trade organizations representing global agribusiness interests,” noting that “farmers are struggling amidst increasing consolidation, low commodity prices, and excess supply. Net farm income is at a 19-year low. Along with recent trade disruptions and natural disasters, such as the flooding in the Midwest, the last thing farmers want or need is their tax dollars working against them.”

The OFF Act is intended to “rein-in conflicts of interest” and “stop anti-competitive activities” by forcing checkoff programs to publish their budgets and undergo periodic audits so that farmers and ranchers know where their mandatory checkoff dollars are going. It would also stop federally-mandated checkoff dollars from being transferred to parties that seek to influence government policies on ag issues and increase the transparency of the individual boards’ actions by shedding light on how these funds are spent and the purpose of the spending.

In light of this new bill, let’s look at the 2016 Dairy Checkoff Report to Congress released on April 1.

According to the 2016 Report’s executive summary, “… the combined effects of 2016 promotion activities on the consumption of fluid milk, cheese, butter, all dairy products, and dairy exports includes benefit cost ratios (BCRs) for dairy producers, dairy importers and fluid milk processors. For every dollar invested in demand-enhancing activities, the BCRs for producers were: 1) fluid milk $4.11, 2) cheese $4.81, and 3) butter $22.74, 4) exports $8.10. The BCR for fluid milk processors attributed to fluid milk promotion activities is $3.73. And the aggregate BCR on every ‘demand-enhancing’ dollar spent was calculated at $4.78.

Putting those BCR’s in perspective, the 2016 Report totaled the mandatory dairy promotion contributions at $415 million, of which $94 million was contributed by the Milk Processors Education and Promotion Program (MilkPEP), which are the funds paid by fluid milk processors for fluid milk promotion.

When looking at the graphs accompanying this report — since the report does not include the raw data points for 2016 — the total amount of domestic dairy demand-enhancing funds from which the BCRs (aka returns on investment) were calculated, comes out to around $250 million for the year. And a large chunk of that came from the fluid milk processors (over $80 mil).

From 1996 through 2016, the amount of money collected topped $7 billion, according to the report.

During those 20 years, the dollars spent on “demand-enhancing” activities for fluid milk have declined, and the fluid milk sales have declined also. Of the roughly $110 million spent on fluid milk demand-enhancing activities in 2016, most of those dollars came from MilkPEP generic promotion.

Also, keep in mind that the fluid milk sector is the sector held most notably to the standard of “government speech” in its “allowable” promotion i.e. the low-fat and fat-free USDA Dietary Guidelines that have precipitated the decline in fluid milk consumption.

In fact, whole milk sales rose in 2016 while the entire fluid milk category fell. But whole milk was not promoted with any of the producer or processor promotion funds overseen by USDA and evaluated in this report. Consumers chose whole milk based on external factors that are driving the discussion of fats and proteins in the diet.

The fastest growing demand-sectors in recent years include butter. The 2016 Report to Congress states that farmers received a $22 to $1 benefit cost ratio (BCR, aka return on investment) in that category.

That looks really great, right?

But again, this is based on the amount of “demand enhancing” funds actually spent on butter promotion in 2016 — right around $8 million for the year — the lowest category of all product promotion sectors to receive promotional funding, but the fastest rising in demand and value.

Put simply: Very little of the dairy farmer’s promotion funds (less than 2% of total checkoff funds) were used to promote butter, but sales have risen so fast in that category that the return on investment seems to be quite impressive. The “return” may have nothing to do with the “investment” under this scenario.

Meanwhile, Dairy Management Inc. (DMI) has continued consolidating the way it uses its national share of individual farms’ mandatory checkoff funds through business-to-business (B2B) partnerships where the goal is to influence the amount of dairy utilized by the top restaurant chains, pizza chains, and other foodservice companies in what they offer to consumers. This may become increasingly important as the government dietary guidelines and other factors pressure companies to use more plant-based options. But the drawback is that this B2B use of dollars feeds into further consolidation of the industry in terms of geographic winners and losers.

The key to looking at the 2016 Report’s BCR (returns on investment) calculations is the choices consumers are making where they actually have choices. Consumers are choosing whole milk and full-fat dairy at rising rates. Where they don’t have a choice, the low-fat and fat-free versions are enforced and offered. So while $110 million might have been spent by farmers and processors to enhance fluid milk demand, precious little, if any, has been used to promote the whole milk message due to USDA oversight of all advertising messages.

Part of the other half of checkoff funds not included in the “demand enhancing” and “promotion” BCR (return on investment) calculation is in dollars funneled toward the Innovation Center for U.S. Dairy.

What is the Innovation Center, farmers wonder?

The Innovation Center is the part of DMI that is considered “pre-competitive.” This includes new product development, like fairlife.

The Innovation Center also includes the FARM program that governs animal care standards and is increasingly seen as a methodical tool to control and cull dairy farmers by management style. Dairy producer checkoff funds have paid for the FARM program through DMI’s Innovation Center even though National Milk Producers Federation (NMPF) implements and administers FARM with DMI paying NMPF for certain services and NMPF paying DMI for other services.

The Innovation Center also includes the “sustainability” standards being set for FARM in conjunction with World Wildlife Fund (WWF) to streamline the dairy “industry” for WWF’s sustainability stamp-of-approval.

This alliance is clear when spending a little time browsing the WWF website at https://www.worldwildlife.org/industries/dairy. The DMI “partnership” with WWF through the checkoff-funded Innovation Center is also at this link https://www.worldwildlife.org/partnerships/innovation-center-for-us-dairy

Both links are housed by WWF’s website and WWF is also working in alliance with the beef checkoff to set sustainability parameters for U.S. cattlemen as well.

Meanwhile, HSUS is among the proponents of the OFF legislation introduced by Senators a week ago. This is the counter we here, how farm organizations seeking competitive markets are working on the same side with HSUS.

For the record, Dairy Checkoff and Beef Checkoff are working with WWF, and WWF is barely one step away from HSUS in terms of having an anti-animal-use agenda.

Both organizations seek to greatly decrease, or end, the use of animals for food, work, etc., and they seek the re-wilding of lands where farmers and ranchers have gone out of business to accumulate massive sanctuaries for wild animal proliferation while working in close partnership with EAT Lancet-supporting companies to shift the U.S. diet away from animal products to plant-and-laboratory-based-imitations.

What is missing in the “sustainability” discussion that farmers are helping to pay for with their checkoff dollars through their dairy and beef boards is the truth that the plants need the animals and the animals need the plants and we humans need them both for healthy bodies and a healthy planet.

What is also missing is the food security and regional economics of the food industry consolidation that is occurring in the name of “sustainability” through the very checkoff-funded “sustainability” programs that are being developed to appease groups like WWF.

If companies want to consolidate and streamline this way, that’s free market enterprise. They are free to do so. But should farmer checkoff funds be helping to pay for it?

For example, dairy farmer checkoff funds were used — according to the 2016 Report to Congress — to develop a variety of programs aimed at transforming the industry. This has been going on since 2009, according to the Report.

This means a portion of the dairy farmer checkoff funds collected from all dairy farmers on all milk from 2009 through 2016 has gone into developing programs that are not considered demand-enhancing and that are — in effect — picking winners and losers within the dairy farming sector.

These funds have been used to implement aspects of FARM in animal care and environmental sustainability.

These funds have been used to launch programs to reduce greenhouse gas emissions across the dairy supply chain, including a “fleet smart” program that touts its ability to help processors and cooperatives transform their trucking and distribution.

Read that sentence again. What does it mean?

Dairy farmers have funded — through mandatory checkoff — the development of the very programs that are streamlining and consolidating their industry in the name of so-called “sustainability.” As proprietary and co-op processors adapt the transportation and distribution ‘fleet smart’ modules, farmers are, in essence, paying for that with checkoff funds and other assessments put on them by their cooperatives, and in turn, those transformations make some farms desirable and others undesirable simply by size or location.

The invisible hand of the free market picks winners and losers. But in this case, should mandatory dairy farmer checkoff funds be the helping hand to pay for that? To pay for their own demise, in some cases?

It is interesting also to know that USDA is paid for its extensive time and costs to do all of this oversight – paid by these funds to keep the troops in line on toting government speech, among other things.

Here is how the 2016 Report to Congress describes USDA oversight:

“USDA has oversight responsibility for the dairy and fluid milk promotion programs. The oversight objectives ensure the boards and qualifying partners (QPs) properly account for all program funds and administer the programs in accordance with the respective acts and orders and USDA guidelines and policies. USDA reviewed and approved all board budgets, contracts, and advertising materials. USDA employees attended all board and committee meetings, monitored all board activities, and were responsible for obtaining an independent evaluation of the programs. Additional USDA responsibilities include nominating and appointing board members, amending the orders, conducting referenda, assisting with noncompliance cases, and conducting periodic program management reviews. The boards reimbursed the U.S. Secretary of Agriculture, as required by the acts, for all of USDA’s costs of program oversight and for the independent analysis.”

To be continued.

Is mandatory dairy checkoff funding real milk’s demise?

Through futuristic lens: Is it time to end USDA control of dairy promotion?

No matter what innovations they come up with in the future, real dairy milk will always be the completely natural, minimally-processed, clean-label product with the superior combination of complete protein, healthy fat, and long list of essential natural nutrients, not additives. Treating real dairy milk like a cheap commodity must end. Innovative marketing may be more important in today’s times than innovative manufacturing processes. Government rules make it difficult to truly promote real dairy milk. It’s time to re-think the government oversight of the mandatorily farmer-funded milk promotion business so that truly competitive promotion can happen. (Istock photo).

By Sherry Bunting, Farmshine, March 29, 2019

“It’s not that the bad guy came and took it (fluid milk sales), it’s that us, the dairy industry collectively, did not keep growing and innovating and doing what we should do. Instead of getting in a lather about plant-based food companies, let’s do what we are supposed to be doing as an industry. Let’s do marketing. Let’s do innovation. Let’s have dairy-based protein in 3-D printers and whatever comes next. That’s where we need to be.”

These were the words of Tom Gallagher, CEO of Dairy Management Inc. (DMI) to his dairy checkoff board recently as shared here, and in the March 20, 2019 edition of Farmshine from a video of his comments.

A glimpse into what that might mean was revealed at the IDFA (International Dairy Foods Association) convention in January, where DMI’s vice president of global innovation partnerships, Paul Ziemnisky told attendees that 95% of households have milk and buy milk, but that these households engage in “fewer consumption occasions”, according to a recent convention report in Dairy Foods magazine.

To increase ‘consumption occasions’, DMI has been investing checkoff dollars toward innovations in “milk-based” beverage growth, he said.

Through its Innovation Center for U.S. Dairy, DMI has invested checkoff dollars in these types of “pre-competitive” innovations in the past — an example being fairlife.

It is interesting that in both Gallagher’s comments to the DMI board and in the presentation by DMI’s Ziemnisky’s to processors, the term dairy-based or milk-based is used.

As we’ve reported previously, the direction of dairy innovation over the past 10 to 20 years has not been lacking in its drive to pull out the components of milk for inclusion in a variety of products — taking milk apart and putting it back together again — in a way that is new and different or in a way that presents milk and dairy as a new product.

Expect to see this type of innovation increase via these investments of dairy checkoff dollars into developing combination beverages that include pieces of milk in entirely new beverages.

This is what is meant by innovation.

At the IDFA convention, DMI gave processors a glimpse into some of the innovations they are working on to address four consumer targets that DMI has identified:

1)      A milk- and nut-based combination beverage,

2)      A milk with lavender and melatonin to promote sleep,

3)      A yo-fir product (kefir plus yogurt) beverage,

4)      A milk beverage that provides just a hint of flavor,

5)      More concepts in high-protein milk-based beverages,

6)      A ‘plosh’ blend of tea, coffee and milk, and

7)      An all-natural concept of milk blended with fruit.

As the overall beverage sector is exploding with new beverages of all kinds every year — some winners and some losers — DMI is looking to do more in the re-creation of dairy in the beverage space with new combination beverages that include milk, or components of milk, but are not identified as milk. These beverages will compete with non-dairy beverages, but in a sense, this track would further compress real dairy milk into its age-old commodity posture. Of course, those who are engaged in promotion of real dairy milk can position it as the wholly natural choice in a beverage sector of further processed combinations and concoctions.

Something to watch and be aware of is that PepsiCo – a company the dairy checkoff organizations are forming stronger bonds with — is on the frontier of turning drink dispensing machines into a hybrid of 3-D printing and multi-source create-your-own beverage dispensers. On the CNBC’s early-morning Squawk Box business news a few months ago, this concept was discussed showing a prototype where consumers can create their own unique beverage by pushing buttons for a little of this and a little of that. Millennials look for unique and “personalized” foods and beverages — we are told. And we see this trend in the “craft beer” category, for example.

A caveat to follow in this trend is the importance of labeling by USDA and FDA as the new gene-edited cell-cultured animal-based proteins and genetically-altered vat-grown yeast-produced dairy-based proteins move from the lab to the market in the next 12 to 24 months via partnerships between the billionaire-funded food technology startup companies and the world’s largest agricultural supply-chain companies. 

While everyone is watching what happens in the cell-cultured fake-meat category and the partnerships there with Cargill, most of us do not realize how close the dairy versions are to scaling-for-market — since Perfect Day company partnered last fall with ADM (Archer Daniels Midland). That partnership is predicated on ADM providing the facilities and mechanisms to ramp up the production of ‘cow-less’ so-called dairy proteins, and USDA research labs do the gene-altering to provide the seed-source of yeast for the process.

As these other proteins are introduced into the food supply, it is yet unclear how – exactly – they will be identified and differentiated in the marketplace. While the dairy and livestock sectors pushed hard to soften the distinctions of proteins in food from animals that have been fed GMO crops, the downside of USDA’s new Bio-Engineered (BE) food labels is that these fake proteins that are on the horizon may not be labeled or differentiated when they are a part of the final food or beverage product.

On the bio-engineering side of animal-based cell-cultured fake-meat protein production (cell-blobs grown in bioreactors), USDA and FDA are still working out the details of their combined food safety requirements.

But on the bio-engineering side of the yeast that have been genetically-altered to possess bovine DNA snips to exude ‘milk’ protein and perhaps other components (grown to exude dairy protein and components in fermentation vats), there is far less discussion of inspection or oversight.

As for the labeling of both types of bio-engineered protein, there is little discussion of how foods containing them will be labeled.

Just three months ago, U.S. Agriculture Secretary Sonny Perdue announced the new National Bio-Engineered Food Disclosure Standard that will be implemented in January of 2020. It is the result of the July 2016 law passed by Congress that directed USDA to establish one national mandatory standard for disclosing foods that are – or may be – bio-engineered.

USDA Agricultural Marketing Service (AMS) has developed the List of Bio-Engineered Foods to identify the crops – and foods – that are available in a bio-engineered form throughout the world and for which regulated entities must maintain records that inform whether or not they must make this bio-engineered food disclosure.

Some are voluntarily complying already, as I have seen this BE statement in very small print on small containers of some Kraft ‘cheese’ spreads.

The bottom line in this mandatory BE labeling requirement is that it only pertains to the main ingredient of the further-processed food or beverage and only if there is “detectable” genetically-altered material in that food. This means that the BE labeling may not apply to fake meat or fake dairy. In the case of the fake meat, the bio-engineering is the editing of DNA to grow muscle (boneless beef for example). In the case of fake dairy, the bio-engineering is yeast altered to include specific bovine DNA, but the resulting cow-less ‘dairy’ protein would have no detectable difference, its creators say.  

All animal protein checkoff programs have a tough road ahead. If farmers and ranchers continue to fund promotion of the foods and beverages that come from dairy and livestock farms, these fake iterations of the real thing will benefit unless promotion can be targeted to the real thing and consumers see the difference on a label in order to make a choice for the real thing.

This all sounds so futuristic and like science-fiction, but in foods today, this is where we are headed and our checkoff programs should be aware and should be able to stand up for the real thing. They should be allowed to lobby regulators for fair treatment and distinct labeling because the government requires farmers to pay these checkoff deductions to promote their products. Thus, if the government does not provide a clear path to distinguish fake from real, then the fairness of requiring a checkoff should no longer be considered valid.

As for dairy farmer checkoff funds, specifically, the future is here and DMI is already moving down that road to innovate dairy-based or milk-based products that dilute the meaning of dairy and milk in the marketplace – in effect paving the way to new innovations and products in which real dairy-farm-produced milk components can be replaced by fake-dairy components from genetically-altered yeast grown in ADM fermentation vats.

Perhaps checkoff funding should be directed in these difficult and changing times toward true promotion of what is real. We see that starting to happen with the “love what’s real” campaign, launched by the Milk Processors Promotion and Education Program (MilkPEP) and supported by DMI’s Undeniably Dairy social media campaign.

More than ever, the future of our dairy farms will rely upon promotion of what is REAL – moreso than using dairy farmer checkoff funds to find ways to put pieces of milk into other products or into 3-D Printers. Profile those components. Provide the benefits of real dairy components for the manufacturers that are moving into 3-D printing of personalized foods and beverages, but keep the powder dry for a full-out real dairy campaign. If USDA does not allow real dairy farmer checkoff funds to talk about why they are so much better than the fake stuff that is here and that is coming… then it is time to get the government out of the promotion business and return these funds to dairy farmers so they can voluntarily use them to promote their real products, their true dairy brands.

In a future of murky food sources – farmers must be able to stand up for what they produce. They must be able to promote Real Milk that is unfooled-around-with, that is from the cow they have fed and cared for.

With the food revolution here, dairy promotion will need a marketing revolution to welcome people back to what’s Real — especially as more household decisions are made by people growing up without knowing what Real Whole Milk tastes like.There’s an idea. Real Whole Milk is tastier, healthier, with a truly cleaner label than about anything else that is here or that is coming to compete with it in the beverage sector.

Ditto for Real Yogurt and Real Cheese, etc. in the food sector. Undeniably Dairy – the dairy checkoff program – has a nice ring to it. Love what’s Real has a great message to it. But if dairy farmers can’t use their mandatory funds to take the fake stuff head-on, then it’s time to stop taking mandatory checkoffs and allow farmers to use their money to promote their product – no holds barred.

When the competition is funded by Silicon Valley billionaires, has the backing of major food and agriculture supply-chain companies, is sourcing genetically-altered material from USDA, and does not have government requiring distinctive labeling – then dairy farmers need a level playing field to use their hard earned $350 million plus to put a stake in the ground to promote why Real is better. Checkoff staff often say the competition is doing brand advertising and “we can’t.”

That being the case, perhaps give the money back to the farmers so they can form voluntary promotion groups or voluntarily give the funds to the brand that receives their milk to get in the game of head-to-head advertising instead of, in essence, funding a path to their own substitution and demise.

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DMI CEO on fluid milk

‘Let’s have dairy-based protein in 3-D printers and whatever comes next.’

Schools represent more consumer touch-points for milk than all other sectors, combined

By Sherry Bunting, Farmshine, Friday, March 22, 2019

CHICAGO, Ill. — The fluid milk category is receiving much attention after a decade of rapid declines in sales. What does the CEO of the national dairy checkoff organization DMI have to say on the topic?

For starters, he says the dairy industry should stop blaming the alternative beverages and start looking at its own failures.

In his CEO’s Report, delivered at the February DMI board meeting, DMI CEO Tom Gallagher addressed the fluid milk question. While no press release or public statement or copy of the CEO’s Report was provided to Farmshine, a video was posted to the private Dairy Checkoff facebook page and was subsequently provided to Farmshine by a dairy farmer participant.

Since Gallagher states while giving his “CEO’s Report” that this information is ‘public’ and that “we want you to take pictures of it and share it, do what you want with it, it’s yours.” So we are sharing with Farmshine readers what was shared with us by dairy farmers what was shared with dairy farmers via the closed facebook group.

Gallagher began his report talking about farmer engagement. 

“The power of the industry is within the industry, it’s the farmer,” he said. “We can commit to activating the dairy farmer at the local and national levels, then we can have a big voice, especially, on what it is that your checkoff really does.”

He talked about the changing world of consumer influence, saying that, “When you think about the things we need to do, more and more they are moving away from the things we are familiar with.”

From there, he referenced a presenter for the following day who would be talking about the future, about 3-D printing of food.

“Well, it’s not the future because you can go on Amazon today, and for $2000, buy a 3-D printer that will print dessert for you,” said Gallagher. “We think, why would people eat that? They don’t like processed foods. But the people who make those and the food production people — and hopefully dairy protein will be in that, not plant protein — they don’t need the 90% of people consuming your product. They just need 5 or 10 or 4% to have a very successful business. If that’s what people are going to be doing, we need to be there.”

Gallagher announced that DMI will be buying a 3-D printer, a few of them. “We’ll buy one, and we’re going to figure it out and we’ll figure out how to approach these 3-D printing companies with dairy-based proteins in foods to be used in them,” he said. “We can’t afford to be nickeled and dimed with 4% of consumers here and 5% there.”

He went on to observe that just 4% of consumers identify as vegan and that vegetarians are also a small number. “What is really driving plant-based foods and beverages is not predominantly the vegan movement, it’s because these companies are investing  hundreds of millions of dollars and are getting really good at taste, are phenomenal at marketing and great at innovation.”

He referenced diets that promote being vegan or vegetarian before 6:00 and other consumer trends.

“I think our goal is it is not either-or, it can be both… We have to be honest with ourselves, there will be plant-based beverages out there, and people will buy them, and they will gain share, not because people are vegan or concerned about sustainability… it’s because the food and beverage companies are doing a great job at what they do,” Gallagher said.

“If we do the same job in the dairy industry, we will be just fine. But if we sit back like we did with fluid milk, we will be where we are with fluid milk,” he added.

Referencing a report in the 1980s before the checkoff was authorized by Congress, Gallagher said: “That report laid out everything that needed to be done for fluid milk, and that same report would be valid today because none of it was done — not until fairlife and a few other things.”

“It’s not that the bad guy came and took it (fluid milk sales), it’s that us, the dairy industry collectively, did not keep growing and innovating and doing what we should do,” said Gallagher from a marketing, not policy, standpoint. “Instead of getting in a lather about plant-based food companies, let’s do what we are supposed to be doing as an industry.

“Let’s do marketing. Let’s do innovation. Let’s have dairy-based protein in 3-D printers and whatever comes next. That’s were we need to be,” said Gallagher. When it comes to policy, nutritional values and sustainability discussions, that’s another discussion we need to enter into.” 

In the breakdown on sales, he said foodservice milk is up slightly even though retail and other sectors are down. The data was by servings, and he explained how sales figures are pieced together and how program evaluations fit into those.

He also talked about a meeting DMI had with the top persons from the five top coops for packaged fluid milk salesn — DFA, Select, Prairie Farms, Darigold and Maryland-Virginia — along with Jim Mulhern of NMPF, Tom Vilsack of USDEC, Rick Naczi of ADANE, Marilyn Hershey, president of DMI, along with a former CEO of fairlife with some insights. 

“We came out of that meeting as positive about fluid milk as ever on how the industry can work together to change the trajectory,” said Gallagher, explaining that they looked at how much of fluid consumption is really pushed down into Class II, and to see if getting and including that number, what that would do to the per-capita fluid milk consumption numbers. 

“The group focused on kids. Kids is the deal — at 6 billion containers a year, when everything else is 5.3 billion,” said Gallagher. “So while schools only represent 7.7% of consumption, it represents more touch-points with consumers than everything else combined. So, they, on their own, quickly came to the conclusion that we have got to deal with the kids for a variety of reasons — sales and trust. And they asked DMI to put together a portfolio of products for kids inside of schools and outside of schools. What are the niches that need to be filled? What’s the right packaging? What needs to be in the bottle? And we can do that,” he said.

Depending on the results of the next meeting, the circle could be expanded. And regulatory, legislative and standards of identity issues were brought up that DMI can’t be involved in, but NMPF can. 

Author’s note: Meanwhile, all of those kids in school, those 6 billion touch-points for milk every year that surpass all other touch-points for milk, combined, are forced to consume (or discard) fat-free or 1% milk. The simple answer would be to give them whole milk that tastes good so they know what milk is vs. trying to re-invent the wheel. As an industry, we can’t know what the per-capita fluid milk consumption figures would look like today if the 60 billion touch-points over the past 10 years had been permitted by the government to consume whole milk. Before reinventing some pre-competitive proprietary wheel, shouldn’t those touch-points (schoolkids) have an opportunity to try real whole milk?

To be continued