Farmers question dairy checkoff leaders during 2020 meeting on Pennsylvania farm

By Sherry Bunting, published a year ago (pre-pandemic), Farmshine, March 11, 2020

PARKESBURG, Pa. — The promotion of fluid milk, especially whole milk, was top of mind for approximately 120 dairy farmers, many of them Amish, who gathered at a dairy farm near Parkesburg, Pennsylvania last Thursday (March 5) for a question and answer session with two top representatives of Dairy Management Inc. (DMI) – Marilyn Hershey, DMI chairwoman and UDIA board member along with Lucas Lentsch, UDIA executive vice president.

DMI manages the national dairy checkoff and is the board that brings together the National Dairy Board and the federation of state and regional promotion boards that make up the United Dairy Industry Association (UDIA) — under DMI’s unified marketing plan.

The farmers came equipped with information, questions and concerns around several key topics with much of the discussion centering on whole milk promotion. This was clearly at odds with DMI’s emphasis on cheese and other dairy products through a decade of “partnerships doing the advertising for us,” as it was explained.

Case in point, at the outset of the meeting, Marilyn Hershey stated that “consumers are not drinking dairy. Today, they are eating more of their dairy.”

Lucas Lentsch, who covers producer relations and oversees the federation of state and regional promotion boards under UDIA, stressed that “consumers can’t be educated to drink something. We have the consumer insights… and we have to move to where the consumers are.”

“These are tense times in the dairy industry, and we need to remain respectful,” said Simeon Beiler as he moderated the discussion. He and Melvin Stoltzfus and Steve Stoltzfus organized the meeting, which lasted nearly three hours and became heated at points when several key questions of fact, as well as questions of direction and board make-up and decision-making were left unanswered.

Also tense, were points at which Hershey and Lentsch — as well as other promotion board representatives in the audience — claimed that whole milk sales have been rising for years because of checkoff-funded efforts in research and in-store stocking and promotion programs. The checkoff leaders even questioned the impact of the Drink Whole Milk 97% Fat Free campaign started by Nelson Troutman’s Milk Baleboards in January 2019 — going so far as to say that while they appreciate these grassroots efforts, the message is “confusing consumers.”

DMI chair Marilyn Hershey and UDIA executive vice president Lucas Lentsch take questions from farmers at the March 2020 meeting in southeast Pennsylvania.

Hershey told the group of her background growing up on a dairy farm and today operating a dairy with her husband in Chester County, Pennsylvania. She said she has enjoyed serving producers and feels DMI “can make a difference so that dairy farmers can do what we do best – produce milk.” She has been involved in dairy promotion for nearly seven years, today serving on the UDIA board, which led to becoming DMI chairwoman almost three years ago.

Lentsch introduced himself as growing up on a dairy farm in South Dakota, serving in the military and coming home to be appointed as the state’s secretary of agriculture. Then, four years ago, he became CEO of Midwest Dairy Association before taking the national job this year with UDIA. He talked about taking seriously “the servant leadership mindset” of “working for real people who make this country great.”

Lentsch repeatedly took note that there are facts and there are perspectives and that the perspectives in the room may be different, but he was “loving the dialog and wanting to do the work that benefits farmers.”

At several points, Hershey shared that the DMI board “doesn’t work that way” or the way people seem to think it does — in terms of how the goals and perspectives of the group of attending farmers could be met.

Lacking throughout the discussion was the ability to answer specific questions on points of fact as Hershey described the relationship dairy farmers have with the National Football League (NFL). For example, she said the NFL players are “invested” in the work of getting breakfast carts to hungry children and that the week spent at Super Bowl venues begins a year in advance raising money from other businesses to fund breakfast carts for schools in the host city.

When asked specifically about what Super Bowl perks and expenses are paid with checkoff funds for board members, Hershey avoided the question and picked up in a different aspect, saying $820,000 was raised for breakfast carts last year when the Super Bowl was in Atlanta.

A follow up question was asked about what the dairy farmers’ checkoff investment is in GENYOUth that leads to those monies being raised. That question was not answered either.

A second follow up question was asked about what the more than $5 million represents, which was paid by DMI to the NFL in each of at least two years of IRS 990 forms (2016 and 2017), listing only the top five independent contract recipients, NFL being one of the top five.

Hershey and Lentsch seemed surprised by the question, and neither could nor would answer it, saying they would find out. However, this question had been asked by farmers in the past and by at least one reporter in a previous meeting as well as in writing, with yet no answer.

Congruent to the Super Bowl and GENYOUth questions were those about why all milk promotion is focused on fat-free and low-fat. Farmers wanted to know why DMI cannot support the choice of whole milk in schools (more on that in a future article).

In fact, the very first question asked by moderator Simeon Beiler — who fielded written questions from the attending farmers as well as calling upon farmers to ask their questions directly – was this one: “Why do we not see DMI-financed promotion of whole milk?”

Lentsch stopped the answering of that question by first asking the group to pause and look at the history of the dairy checkoff, which was legislated as mandatory in 1983 when he said there were 500 warehouses full of cheese and butter bought by the government.

“They weren’t going to keep doing that,” said Lentsch, explaining that dairy checkoff was implemented so that dairy farmers could “be a voice for themselves in promotion and research.”

In those 35 years, U.S. milk production has gone from 140 billion pounds annually to 220 billion pounds, Lentsch said.

As the conversation continued, it became clear that dairy checkoff — rather than being a way for farmers to “be a voice for themselves” — could be more aptly described as a voice for the government and its partners.

Why? Because the answers on the whole milk promotion question were given in contradictory ways as Hershey and Lentsch each explained their understandings of the government’s oversight.

“A few years ago, USDA made a rule not to support whole milk and we (checkoff) are held under that jurisdiction, but we can do research,” said Hershey, adding that there are 63 research papers in support of whole milk. She said that they explain the value of whole milk for children, but that the American Academy of Pediatrics and the American Heart Association are not wavering, and DMI “can’t get involved in political battles because it’s the preponderance of the evidence” that governs this.

Lentsch stated that it all goes back to the Dietary Guidelines, and he seemed to make a distinction about the difference between what can be promoted in general and what can be promoted in schools.

A follow up question was asked as to why Allied Milk Producers — a qualified milk promotion and research program based in Pennsylvania that can receive the dime for regional promotion nationwide – why they can put up “Whole Milk, whole nutrition, naturally” billboards and DMI maintains that it can’t do something similar.

Hershey stated that she sees these billboards when traveling, but that, “USDA never regulated Allied on this, but USDA could if it wanted to.”

From the audience, Mike Eby, a former Allied board member, stated: “It’s my understanding that Allied is under the same jurisdiction of USDA as any other checkoff organization.”

This is where Lentsch intervened to say there is a difference between whole milk promotion in schools, which he said the dairy checkoff cannot do, and whole milk promotion in general.

“USDA adheres to the Dietary Guidelines, and the science that you have funded (through checkoff) on early childhood nutrition shows whole milk is a huge bright spot,” said Lentsch. “That message is getting out, thanks to you for funding the research.”

But when the topic of the research was probed further by the audience, no specific research papers on whole milk were offered as examples. In fact, Hershey mentioned a CNN headline from that morning about a study showing whole milk reduces the likelihood of children becoming overweight or obese. The headline was about a study done in Australia that was similar to a study completed a few months ago in Canada.

The question was asked, specifically, did DMI fund the study in Australia or the one in Canada? Hershey’s answer was “no.”

Hershey also mentioned the 2015 Time Magazine cover “Eat Butter” as based on checkoff research and efforts to get the full-fat dairy message out, and that this changed the conversation on whole milk.

A member of the audience indicated that the Time Magazine article was explained by its author in the preface as being prompted by his review of Nina Teicholz’s international and New York Times best-selling book that year — “Big Fat Surprise” — and that Teicholz’s extensive bibliography only included two studies related to dairy checkoff on full-fat dairy (i.e. cheese and butter). The book mostly exposed the injustice of academics burying science for decades while the world latched onto the low-fat diet propaganda and made it law, so to speak.

There was no answer. No citing of specific checkoff-funded studies on whole milk – as a beverage.

Lentsch stressed that, “The battleground is the Dietary Guidelines. We have the science and the influence to have conversations at the World Health Organization and those conversations are happening at the global scale, to make sure recommendations are science-based.”

“This is the United States of America,” said one Amish attendee. “We know we could be advertising whole milk. The Dietary Guidelines are not operating on true science.”

Lentsch added that checkoff is “promoting whole milk, just not in schools. We can speak of the science. USDA has oversight so at the national level we can only talk about the science.”

Jennifer Heltzel, a dairy producer from Martinsburg, Pa., rose to introduce herself as “your representative on the national board.” She talked about why farmers don’t see the advertising checkoff is doing. “We don’t see it driving down the road. It’s on social media where the consumers are. The Got Milk campaign was an award-winning campaign and it drove awareness, but it did not drive consumption,” she said.

Lentsch added that there are 80,000 SKUs of beverages now available to consumers. “In the 1990s, we saw an explosion of innovation in the amount of choices consumers have today. But the good news is that milk is in 94% of households. It’s the trip-driver so it is very important,” he said. “We work promotion through brands that are facing consumers.”

“We now work with partners like Pizza Hut, Domino’s, Taco Bell and McDonalds and they do the advertising for us,” said Hershey. “Taco bell wanted to develop a taco made with cheese (a cheese shell in addition to cheese topping that will be launched this spring). We developed it with them in our kitchens.”

She said that $15 billion in advertising has been used by DMI’s partners since this partnership-style dairy promotion began in 2010.

“It’s a way for us to get our message out,” said Hershey, adding that MilkPEP, the fluid milk processors’ promotion organization is one of DMI’s partners. Fairlife is another example, and she said other dairy beverage brands are coming on as partnerships (more on that in a future article).

Berks County dairy farmer Nelson Troutman (right) and retired agribusinessman Bernie Morrissey (second from right) stop for a photo while talking with Chester County dairy producers Stan and Cathy Guest as they arrived at the March 5 meeting organized by dairy farmers with two DMI dairy checkoff representatives on the farm of Levi Stoltzfus near Parkesburg, Pennsylvania.

Milk Baleboard originator Nelson Troutman spoke up: “So the government regulates what we can say in school, but what about our partners like McDonalds? You just try once to buy a whole milk at McDonalds. It’s not available. Why can’t that be something we do with our partners?”

Troutman said further that the milk at the local McDonalds in Lebanon, Pennsylvania is zero fat milk from Upstate in New York. “Fluid milk drives the farmer’s milk check,” he said. “Whole milk really drives it. That’s why we’re not happy. We don’t win until they taste the whole milk.”

Another farmer then asked: “Why are our partners doing our advertising?”

Times have changed,” said Hershey. “This is how we do our advertising now and why it looks different.”

Troutman replied that, “This is why the 97% fat free effort is working.”

He was asked by Lentsch, “What are you basing that on? I do see it in your area. I saw one of the round bales driving in.”

Beiler noted that through various means (including web and social media), the 97 Milk message has become national, even worldwide as the British dairy farmers have a similar effort, and farmers from South America have asked to borrow the idea.

Beiler then redirected to ask point-blank: “Are you asking our fast-food ‘partners’ to serve or offer whole milk?”

Lentsch explained that, “McDonalds targets their Happy Meals to shoot for calorie targets. Everything is predicated on what we are allowed to do. I know that sounds like an excuse, but it is a reality.”

Hershey added that all they can do is put the research in front of their partners. She tried to bring the conversation back to DMI’s positive message on cheese consumption. “That is what is helping us right now. Cheese and butter consumption are outpacing production. America loves cheese. We have to figure out how to deliver the cheese.”

“We are in the business of moving dairy consumption,” said Lentsch, noting that 10 pounds of milk make one pound of cheese, saying cheese uses a lot of milk.

This is the point in which the attendees made it clear that if checkoff was started so that producers could speak for themselves and increase demand to return profitability, then “we need to promote whole milk because it drives our profitability.”

“We don’t have big cheese plants here,” said Troutman. “Pennsylvania is a fluid milk state with 12 million people, not to mention cities in other states in our region. Fluid milk sales are what keep farms in business here. That’s why we are talking about fluid milk.

“I hear you,” Lentsch replied. “We are studying dairy innovation, the value of what you produce, and trying to introduce new products. We have consumer insights, and we do some education, but you can’t just keep telling people that milk has 9 essential nutrients.

“We can be mad about what is not happening, or we can move to where the consumers are,” said Lentsch. “You can’t educate them to drink something.”

To which Troutman replied: “Yes we can. And we are! We tell them whole milk is 97% fat free, and we have consumers confirming with us already that this is something they never knew and they want to know more. This is why they have to know what we are selling, to see the 3.25% fat on the label.”

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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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